Education loan demand rises in smaller cities, tier II, III markets account for 86.5% applications

Mumbai: Demand for education loans is increasingly coming from smaller cities, with tier II and III markets accounting for 86.5 per cent of applications received on Kuhoo Finance platform, the lender said in a report released on Tuesday. Over 86.5 per cent of applications came from tier II and III cities, against 13.5 per cent from tier I markets, signalling how educational aspiration is now firmly taking root beyond metropolitan India, Kuhoo Finance stated.

The report is based on over 2.5 lakh loan applications received on Kuhoo platform for education loans between January 2025 and July 2026. According to the report, Uttar Pradesh and Maharashtra led the volume of loan applications with 12.87 per cent and 12.52 per cent, respectively. These two states were followed by Karnataka with 7.16 per cent, Bihar (6.91 per cent), and Tamil Nadu (6.77 per cent).

Also read Locked Toilets to Teacher Shortage: CJP’s school audit campaign reveals chronic neglect of govt schools

Besides, borrowers from Andhra Pradesh, Madhya Pradesh, Telangana, West Bengal, and Rajasthan, also applied in large numbers. Applications for financing job training courses accounted for 41.70 per cent of total disbursals, followed by MBA programmes (29 per cent), online courses (9.80 per cent), engineering (5.50 per cent), and medical education (4.70 per cent), reflecting how learners are increasingly investing in skills with clear career payoffs.

"What this data tells us is that ambition is no longer concentrated in metros; it is rising fastest in India's smaller cities and towns. As higher education becomes increasingly outcome-driven, students want financing that is transparent, accessible, and aligned with their long-term goals," Kuhoo founder and CEO Prashant A Bhonsle said.