Demand for education loans surges to 86.5% in Tier II, III cities, financing trends shifting, finds Kuhoo Finance report

There is an increasingly growing demand for education loans from Tier II and III cities, lending data from Kuhoo Finance platform over a one-year period showed. The report added that smaller cities in India now account for 86.5% of applications on the platform.

Among states, Uttar Pradesh and Maharashtra topped the list for number of applications; while job training and MBA programmes dominate disbursals as students prioritise career-focused, outcome-driven education, according to data between January 2025 and July 2026 on Kuhoo.

“What this data tells us is that ambition is no longer concentrated in the 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,” Prashant A. Bhonsle, Founder and CEO of Kuhoo said.

Evolving trends in education financing across India

The insights highlighted evolving trends in education financing across India tracking more than 2.5 lakh applications received by the education financing platform for education loans worth ₹7.5 crore, it stated.

The study found that there is a growing demand for structured education loans from students in emerging markets, with increasing preference for career-oriented programmes, and a rising need for financing solutions that accommodate diverse household income profiles.

• It found that 86.5% of applications came from Tier 2 and Tier 3 cities, against 13.5% from Tier 1 markets, signalling how educational aspiration is now firmly taking root beyond metropolitan India.
• Among states, Uttar Pradesh (12.87%) and Maharashtra (12.52%) led in volume, followed by Karnataka (7.16%), Bihar (6.91%), and Tamil Nadu (6.77%), rounding off the top five.

• Other states that made the top 10 include Andhra Pradesh, Madhya Pradesh, Telangana, West Bengal, and Rajasthan.
• The data also indicated a decisive shift toward outcome-driven learning.
• Job training courses accounted for 41.70% of total disbursals, followed by MBA programmes (29%), online courses (9.80%), engineering (5.50%), and medical education (4.70%), reflecting how learners are increasingly investing in skills with clear career payoffs.
• Self-employed co-applicant data was unavailable, as per the release.

Kuhoo Finance is an education-focused lending platform enabling Indian students to access quality higher education in India. It offers customised education financing through a digital-first approach, the release added.

What is an education loan?

A financial aid extended by banks and other lenders (public and private), education loan can help fund a student's education. The amount covers tuition fees, boarding charges, travel, and any other expense that you may incurs during study. Lenders tend to offer flexible repayment options and moratorium period, to allow students room to focus on their studies and start repayment once they gain employment.

There are many types of education loans one can avail, including — Undergraduate loans, postgraduate loans, profession advancement loans, and parent's loans (taken by parents to fund their children's education).

How can students apply for an education loan?

You can apply for an education loan online or offline.

• In the scenario where you apply online, you will have to visit the webpage of your preferred bank / financial institution and carefully read and compare the education loans being offered by each.
• Ensure that the loan you choose, best meets your requirements — be it funding, loan amount, security and repayment schedule.
• Once chosen, many banks / lenders allow you to fill and submit the application form online along with all required documents such as identity proof, address proof, and academic documents.
• The bank / lender will verify your submitted application and on satisfaction notify you of the approval and disburse the fund.
• For those who prefer to apply offline, you can visit the nearest bank branch / lender office and request an educational loan application form.
• Once the form is filled and attached with required documents such as identity proof, address proof, and academic documents, it can be submitted for verification.
• The bank / lender will verify your submitted application and on satisfaction notify you of the approval and disburse the fund.