Higher education in India poses a considerable financial challenge for students. Despite the government”s efforts to alleviate this burden by establishing prestigious institutions like the Indian Institute of Technology (IIT) and National Institute of Technology (NIT), their limited availability has led to a rise in private colleges. The influx of private educational institutions has resulted in steep tuition fees, often unaffordable for the majority of students, who come from modest backgrounds.
As a result, many students resort to loans, which they struggle to manage alongside the pressures of launching their careers. This financial strain adversely impacts their personal and professional lives.
Engineering and Medicine: The Preferred Career Paths
Traditionally, degrees in engineering and medicine have been highly valued in India, seen as gateways to respected careers and financial security. Institutions like IIT and NIT are particularly coveted. However, competition for admission to these elite colleges is fierce; for instance, IIT Bombay has an acceptance rate of around 0.2%. In 2024, over 1.2 million students attempted the Joint Entrance Examination (JEE) to secure a spot at these institutions, forcing many to consider private colleges due to the intense competition.
Financial Challenges of Private Education
Private colleges and universities charge substantial fees, with engineering programs averaging between INR 500,000 to INR 2 million. For medical courses, the costs can be even higher. Current reports indicate the median income for Indian households is between INR 336,000 to INR 380,000, which compels many students from middle and lower-middle-class families to seek educational loans. The Reserve Bank of India (RBI) has reported a staggering 95.83% increase in outstanding education loans between March 2019 and March 2025, indicating a growing reliance on loans for higher education.
Employment Realities for Graduates
While the media often highlights the lucrative salary packages of graduates from IIT and NIT, these figures can be misleading. Many of these jobs are located overseas, with salaries frequently quoted as “Cost to Company” (CTC), which includes bonuses and stock options, inflating the actual take-home pay. Additionally, currency conversion can give a false impression of financial viability, as the cost of living abroad is seldom factored in. A significant number of graduates find themselves unemployed; reports suggest that more than one in ten graduates and postgraduates were without jobs in the previous year, with unemployment rates notably higher among women.
The Rising Issue of Loan Defaults
The high tuition fees charged by private institutions do not correspond with competitive industry salaries, making it increasingly difficult for graduates to secure well-paying jobs and repay their loans. The RBI“s Financial Stability Report from June 2024 indicated that educational loans have a Non-Performing Asset (NPA) rate of 3.6%, the highest among all loan categories. This statistic underscores the significant challenges borrowers face in fulfilling their repayment obligations. Reports also show that students from states like Kerala exhibit higher default rates, particularly graduates returning from abroad without job offers, exacerbating their financial difficulties.
The Impact of Automation on Employment
As Artificial Intelligence continues to evolve, the job market is undergoing rapid transformation, with many entry-level positions now at risk of automation. This shift has led to increased unemployment among recent graduates, leaving them uncertain about how to manage their education debt efficiently.
Despite these challenges, students can adopt strategies to improve their loan repayment prospects. Conducting thorough research before acquiring a loan is crucial; students should evaluate the potential return on investment by engaging with alumni and industry professionals to gain insights into employment trends in their fields. Additionally, while academic degrees provide foundational knowledge, practical experience is equally important. Students can enhance their employability through online courses, workshops, and internships.
Moreover, considering freelance work during their studies can provide a supplementary income while offering relevant experience that may facilitate future employment opportunities. Networking with professionals through online platforms and attending industry events can also be beneficial for building connections that support career advancement.
As the demand for higher education continues to rise, it is essential for students to weigh the financial implications of education loans alongside the realities of the current job market. Future students should approach their educational and career choices with careful planning and realistic expectations. By acquiring relevant skills and building a robust professional network, they can better navigate the challenges posed by unmanageable education loans and work towards financial stability.
