How cost-effective EMIs, flexible payment systems are attracting people to fintech
How cost-effective EMIs, flexible payment systems are attracting people to fintech
Venkat Narayan, a software professional from Bangalore, found it difficult to pay the school fees of his two children, as the school insisted on depositing fees for six months or one year in advance.
“The school asks me to pay 60% of the annual fees of my children, which is around Rs 1.2 lakh. I don’t have that kind of spare cash,” said Mr. Narayan. He could not get this amount in the form of interest-free loans from banks or friends.
That’s when, while exploring his options, he found a fintech that offered him an option to pay his children’s fees through Easy Monthly Installments (EMIs) at no cost.
“The flexible repayment system, which allows me to decide the date on which I can pay the installment, as well as the option to pay the loan through no-cost EMIs, came as a godsend to me, ” They said. Hindu.
Sree Narayan is among a growing number of people who are turning to fintech-focused startups in the education sector to pay for their children’s school and coaching fees.
Gurgaon resident Prabhat Agarwal had a similar challenge – paying his child’s quarterly advance school fees.
“Earlier, I had to pay around Rs. 22,000 in advance for my son’s school fees. Now, the no-cost EMI option provided by a fintech, allows me to pay this amount as per my convenience,” said Mr. Agarwal. For him, as with many other salaried employees, who spend around 10% of their income on the education of their children, breaking down their expenses into smaller pieces makes a lot of sense, especially given the rising cost of living. Happened.
number
According to a survey on ‘Household Social Consumption: Education’ conducted in the National Sample Survey 75th Round (July 2017-June 2018), the average expenditure per student made by a family for basic courses is around Rs 8,331 for general courses and Rs 50,307 was Rs. For technical / vocational courses.
The survey further pointed out that 24.3 percent of men and 17.7 percent of women are not involved in education due to ‘financial constraints’. Among those enrolled, the dropout rate was 10.6 percent at the primary level, 18.2 percent at the upper primary/middle level, 20.8 percent at the secondary level, and 6 percent at the graduation level.
The Economic Survey 2019-20 had said, “In the absence of a suitable financial support system and the high burden of course fees, especially in higher education, they are pushed out of the education system.” Students pursuing education in private aided institutions are spending significantly more than government institutions in rural-urban India, it said.
thriving business
In recent years, there has been a steady increase in the number of startup-fintechs offering various services to parents to make payment of student fees as convenient as possible. Jodo, a fintech start-up, offers flexible fee payment plans for parents with no interest or convenience fees.
Many other fintechs in this area, such as ‘Propelled’, ‘FinanceSpear’, ‘Eduvanz’ etc., offer a similar experience through their personalized financial models.
technical work
Explaining why schools have started asking for fees in large, advance instalments, Atulya Bhat, one of the founders of fintech startup ‘Jodo’, said that schools with small admin and finance teams are unable to handle multiple transactions. It becomes difficult if they do multiple transactions. The option of installments to the parents of every student.
He gave the analogy of a school charging a monthly fee of 2000 children. “Per year, there can be more than 20,000 transactions; The school must inform parents about these transactions; Submit fee, send reminder for payment and follow up hard for each and every delayed payment,” he said.
Varun Chopra, CEO, Eduvanz, which provides education loans for skill-based training, said that with the outbreak of Covid, there was a lot of financial uncertainty, as a result of which, “a lot of students and parents started holding back. Their Prepayment for courses.” His company has funded more than 100,000 applications since its inception in 2016.
Many other companies have become popular in this segment in a very short span of time. Rohit Gajbhiye, CEO and Founder of ‘FinanceSpear’ claims that his company has provided financial solutions to around 35 lakh students and parents since its inception in 2017.