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Amid tightening of policies for international students in the US and several other developed nations, Indians have drastically cut down on the money they are sending abroad for the education of their children, with latest data from the Reserve Bank of India (RBI) showing that the amount transferred in the first half of 2025 was the lowest in seven years.
As per data from the central bank, Indians’ outward remittances in January-June 2025 under the Liberalised Remittance Scheme (LRS) stood at $1.16 billion. Not only is this figure down 22 per cent from last year, it is the least amount of money sent under the scheme in the first six months of a calendar year since 2018, when $1.06 billion was sent abroad for foreign studies.
Notably, a slightly larger chunk of outward remittances under the LRS is sent in the second half of the calendar year in line with admission cycles. However, money sent abroad in the first half, that is from January to June, is sizeable and on average accounted for 45 per cent of full-year transfers on an average over the last five years.
In June, data for which was released on August 28, just $139 million was sent under the LRS – the lowest since the COVID-hit month of April 2020. Under the LRS, the RBI permits Indian residents to send up to $250,000 abroad every financial year for certain transactions, including travel, studies, medical treatment, and investments in foreign stocks, among others.
New entry barriers
Spending on foreign studies by Indians has come at a time when it is becoming increasingly difficult for students to meet qualifying criteria to study abroad, with key destination countries such as the US, Canada, the UK, and Australia tightening visa and admission policies for international students.
Canada, for instance, has more than doubled the minimum proof of living expenses in the last couple of years to 22,895 Canadian dollars starting September 1. Meanwhile, Australia last year increased its minimum IELTS score — a measure of applicants’ English proficiency — for certain categories of international students.
Just last week, the US Department of Homeland Security proposed to end the so-called ‘duration of status’ system which permits certain students to stay in the US for as long as they are enrolled full-time and are compliant with visa rules. The draft regulations intend to cap the stay at four years, beyond which students will have to apply for an ‘extension of stay’. This followed a battle earlier in the year between the Trump administration and Harvard University that saw the famed institution being barred from enrolling international students before a court issued a temporary restraining order against the order.
Lenders cut US exposure
According to Malvika Bhotika, a Director at Crisil Ratings, two broad factors are at play when it comes to the reduced overseas remittances by Indians for foreign studies: a shift in geographies from the US to other countries such as Germany and domestic higher-education institutions seeing renewed focus. Analysts at rating agency ICRA had noted the same in a report in June, saying that tightening of student visa norms would lead to Indian students exploring options at home.
The shift has already resulted in a marked fall in growth in education loans given by banks. As on June 27, Indian banks’ outstanding education loans were up 14 per cent year-on-year compared to the 20 per cent growth recorded a year ago.
Even the business of non-banks has suffered, with Crisil predicting in July that the education loan book growth of these shadow banks will almost halve to 25 per cent in the current fiscal. According to Crisil, the share of US in non-bank financial companies’ (NBFCs) overall education loan portfolio stood at 50 per cent at the end of 2024-25 – down 300 basis points from a year ago. This share is expected to fall further as other countries come into greater focus.
“Predominantly, the same factors as NBFCs are at play for banks also. While banks do have a large domestic portfolio, around 50 per cent or just over that is linked to overseas education,” Crisil’s Bhotika said.
