1. EduFin Industry has witnessed a Strong Growth Trajectory, which is backed by Funding from Prominent VC firms.
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Over the last several decades, parents have been more reliant on loans to fund their children’s education. The shift in thinking toward ‘Study Now, Pay Later’ has aided the nation’s economy and accelerated the pace of digitization. Moreover, the Covid-19 epidemic has expedited the implementation of technology in India’s education system, which has usually been sluggish. Learners in India have prioritized learning and upskilling in order to capitalize on possibilities. EduFin firms have been crucial in leveling the playing field by giving loans without collateral, genuinely empowering the young, particularly in Tier 2 and 3 cities where the loan disbursal process comprised cumbersome formalities that discouraged applicants from accessing the same.
2. Education loan segment has seen noticeable buzz in the past couple of years.
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Students and parents are increasingly favoring SNPL, zero-cost, and seamless pay-later solutions in the education finance market. In contrast to traditional choices, there is a rising number of unique customer-centric education finance programs. Additionally, PMVLK is a one-of-a-kind platform for students looking for education loans. It offers students a single-window electronic platform for information access and prepares applications for Educational Loans and Government Scholarships. This program seeks to include all banks that offer educational loans.
This government effort is anticipated to help students across the country by providing a single point of entry to various Educational Loan Schemes offered by all banks. Furthermore, in the last 18-24 months, a new crop of startups, digital lenders, and NBFCs have attempted to fill the void in the education finance space by offering flexible loans at low or zero interest rates, admissions, and career counseling support, and a ‘Study Now, Pay Later’ option – an extension of FinTech’s popular ‘Buy Now, Pay Later.
3. Impact of COVID-19 resulted in a shift in preference towards EdTech courses leading to a boost in the EduFin industry.
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Several prominent EdTech learning platforms in India gave free trial access to their learning content at the start of the epidemic, resulting in a 103% increase in income in FY2021. Due to the closure of schools and physical coaching/test preparation centers, the user base, reach, and engagement on these learning platforms rose dramatically. Several major firms quickly expanded their product categories and capacities through organic and inorganic means.
Additionally, the National Education Policy 2020 (NEP) places an emphasis on technology and the development of e-courses. To encourage online learning in India, government programs such as SWAYAM and DIKSHA have been created. Furthermore, in FY’2021, EduFin firms saw a 114% increase in loan amount disbursal, with an emphasis on tie-ups with prominent EdTech organizations to build a strong hold on the sector. Due to the epidemic, EduFin players such as Eduvanz and Propelld imposed a halt on EMI payments for term loans/interest deferral. However, because of the increased acceptance of EdTech courses/platforms, Covid-19 has advanced the EduFin sector by at least 3-4 years.
4. EduFin Industry offers huge growth potential owing to the rapid adoption of the EdTech sector in India
New entrepreneurs are set to enter the EduFin market, funded by debt funding from VC firms. Partnerships with EdTech firms are intended to strengthen the company’s position in the market. In addition to this, the rise of FinTech businesses in the education sector will accelerate the country’s digitalization by encouraging more individuals to pursue high-quality education. Despite the severe impact of the Covid-19 outbreak on the country’s economy, the digital financial sector has expanded. While the epidemic has expedited the acceptance and use of digital financing, the delicate line between FinTech and banks is gradually blurring. Furthermore, many companies are in the process of launching their credit card for learners and students and aim to become the go-to financing solution for learners in all categories.