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Small-city aspirations power education loan demand

By Sohail Khan 18 August 2026, 6:59 pm

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Business News›Industry›Services›Education›Small-city aspirations power education loan demand

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Synopsis

Education loan applications are increasingly coming from smaller Indian cities. Tier II and III cities now represent over eighty-six percent of loan requests. Uttar Pradesh and Maharashtra show the highest volume of these applications. Job training and MBA programs are the most financed courses by students. This trend indicates growing ambition and a focus on career outcomes in smaller towns.

India's growing demand for education loans is undergoing a big evolution, moving beyond big cities and metropolitan India, with tier II and III cities now accounting for 86.5% of applications received on the Kuhoo Finance platform, according to a report released by the lender on Tuesday.

Applications from tier I cities accounted for the remaining 13.5%, highlighting the growing appetite for higher education among students in smaller cities, Kuhoo Finance said.

The findings are based on more than 2.5 lakh education loan applications received on the Kuhoo platform between January 2025 and July 2026.

Uttar Pradesh and Maharashtra led the volume of loan applications, with 12.87% and 12.52%, respectively. They were followed by Karnataka with 7.16%, Bihar with 6.91%, and Tamil Nadu with 6.77%. Borrowers from Andhra Pradesh, Madhya Pradesh, Telangana, West Bengal and Rajasthan also applied in large numbers, the report said.

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.

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