Mumbai: Education loan demand is increasingly shifting towards smaller cities and towns, with Tier II and Tier III markets accounting for 86.5 per cent of applications received on the Kuhoo Finance platform, according to a report released by the lender on Tuesday.

The report is based on more than 2.5 lakh education loan applications received through the Kuhoo platform between January 2025 and July 2026. The data indicates that demand for education financing is no longer concentrated in major metropolitan markets, with students from smaller cities showing strong interest in funding higher education and career-oriented programmes.

According to the report, 86.5 per cent of loan applications came from Tier II and Tier III cities, while Tier I markets accounted for 13.5 per cent of applications.

Uttar Pradesh, Maharashtra Lead Education Loan Applications

Among states, Uttar Pradesh recorded the highest share of education loan applications at 12.87 per cent, followed closely by Maharashtra with 12.52 per cent.

Karnataka ranked third with 7.16 per cent of applications, while Bihar accounted for 6.91 per cent and Tamil Nadu for 6.77 per cent.

A significant number of applications were also received from Andhra Pradesh, Madhya Pradesh, Telangana, West Bengal and Rajasthan, highlighting the broadening demand for education financing across different regions of the country.

Job-Oriented Courses See Strong Demand

The report also highlights changing preferences among students seeking financial support for education. Job training courses accounted for 41.70 per cent of total loan disbursals, making them the largest category.

MBA programmes followed with 29 per cent of disbursals, while online courses accounted for 9.80 per cent. Engineering education represented 5.50 per cent, and medical education accounted for 4.70 per cent.

The distribution suggests that students are increasingly seeking financial support for programmes they associate with employment opportunities and career advancement.

Education Aspirations Expand Beyond Metros

Commenting on the findings, Kuhoo founder and CEO Prashant A Bhonsle said the data shows that educational ambition is no longer concentrated in metropolitan cities and is rising strongly in smaller cities and towns.

He also said that as higher education becomes more outcome-driven, students are looking for financing options that are transparent, accessible and aligned with their long-term career goals.

The strong contribution of Tier II and Tier III markets indicates a growing role for education financing in helping students from smaller cities access higher education, professional programmes and job-oriented training opportunities.