Falling numbers of education-loan accounts alongside a sharp rise in average loan size suggest that formal credit is reaching the few rather than the many. Critically examine, with reference to recent RBI data and government interest-subsidy schemes.

RBI data on Scheduled Commercial Bank credit show that education-loan accounts fell 15.2%, from 25.76 lakh to 21.84 lakh (June 2016 to June 2026). Over the same period the average outstanding per account rose 178.2%, to ₹7.25 lakh [1]. The data largely support the claim that credit is narrowing, though there are some caveats.

Evidence that credit reaches the few

• Small borrowers have left: accounts of ₹2 lakh or less shrank from 11.44 lakh to about 3 lakh, while accounts above ₹2 lakh grew 31.6% [1]. The higher average reflects poorer borrowers leaving, not only higher fees.
• Credit-score barrier: the 372nd Parliamentary Standing Committee Report notes that first-time borrowers are rejected for having no CIBIL history [2].
• Targeting is selective: PM-Vidyalaxmi gives collateral-free loans only to students admitted on merit to Quality Higher Education Institutions [3]. These now number 1,425 [4], so students in lower-ranked colleges are left out.
• Sanctioned, not disbursed: Parliament found only about ₹688 crore disbursed out of ₹4,427 crore sanctioned under PM-Vidyalaxmi [2].

The counter-view

• Rising costs are real: the Committee links bigger loans to the rising cost of education, not just to exclusion [1][2].
• Safer bank books: gross NPAs on public sector bank education loans fell from 7% (FY21) to 2% (FY25) [5]. Banks keep lending when the risk is manageable.
• Schemes for the poor: CSIS pays the full interest during the moratorium for families earning up to ₹4.5 lakh. PM-Vidyalaxmi adds a 3% subvention for incomes up to ₹8 lakh and a 75% credit guarantee on loans up to ₹7.5 lakh [3].
• Growing uptake: 1,12,817 PM-Vidyalaxmi loans were sanctioned by July 2026 [4].

Assessment

• The data cover only SCBs, so lending by NBFCs is not counted [1].
• Lower NPAs may partly come from banks choosing safer borrowers. Collateral-free loans above ₹7.5 lakh are given only "case by case" [5].

Credit has grown in size but narrowed in reach. The subsidy schemes ease the cost of borrowing but not the barriers to getting a loan. Exempting families who receive free rations from the CIBIL test, as Parliament has recommended [2], along with faster disbursal and fee regulation, can turn education credit into a tool for broad access. That would serve NEP 2020's enrolment goals and SDG 4.