Fintech loan platforms are bridging the funding gap for Indian students
Fintech companies have become a tool for greater financial accessibility for the new India. For many young Indians and their families, especially from Tier 2, 3 and 4 cities, it is vital to have a viable option to finance their education before they decide to pursue a more expensive education. Sometimes even the most promising students either give up on their dreams, or families pawn jewelry, ancestral land, emergency medical funds, etc. to enable their child’s education.
However, with modern fintech companies, this trend is gradually changing. Many companies make a concerted effort to produce specific loan products designed to help young aspirants access quick and easy online loans based solely on their academic potential and not their family wealth.
Fintech loans provide students with convenient and fast payouts
Sometimes low family income and lack of assets like property etc. to pawn are enough deterrents for Indian aspirants to discourage them from opting for higher education. While there are several national and multinational banks that offer student loans, most require many documents and some form of collateral for the loan. Banks find it difficult to accurately assess a student’s potential employability, so they continue to fund these loans with a conservative approach. The processing time of the application by the banks is excessively slow, sometimes extending for months compared to the fintech companies that offer quick payouts in less than 5 to 7 business days.
With the advent of digital, these companies are investing heavily in fully digitizing the entire loan application and approval process. This means people can now easily access the lending platform from their smartphone without having to physically visit an office. In this remarkable effort to bridge the gap between borrowing needs and the availability of funds, many of these fintech giants have raised seed capital large venture funds and media attention because it is the opposite of the traditional credit systems in the country.
While banks typically only fund tuition and charge between 8% and 15% interest, fintech players allow much more flexibility, using technology and analytics-backed lending models to underwrite the loan. Some of the companies even go so far as to cover ancillary expenses such as the cost of educational equipment, groceries, housing and health insurance, which are necessary but often considered non-essential by traditional lenders.
Fintech companies have an ever-evolving approach to customers
India is now home to 17 fintech companies that have achieved unicorn status. Additionally, the country’s alternative finance segments or digital investment market is projected to be worth US$14.3 billion by 2025. With evolving technology as well as a proactive and thoughtful lending approach, fintech companies are the fastest and easiest to deal with today. They eliminate queues, waiting times and all administrative congestion with their state-of-the-art hands-on approach.
With modern lending, students do not even have to deposit collateral for the sanctioned loan amount. New technology, data science and analytics are used to provide easy loans through a start-to-finish online application journey and offer collateral-free loans. This ease of lending was unthinkable before the arrival of these fintech giants, as most banks require mandatory collateral for any money they eventually lend. Fintech companies make these trips less stressful, with students’ needs and comfort at the forefront. Some companies have also developed innovative credit cards for their customers that can be used both internationally and domestically and are part of an active credit account instead of being a credit card per se.
The final result
In the face of COVID-19 and war-related economic imbalances, India’s fast-growing fintech sector is emerging today to serve a great purpose. They fund education for many Indians and bridge the country’s urgent class and geographic gaps. Fintech is the future of student loans in India and can act as a driving force to boost educational mobility.
The views expressed above are the author’s own.
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