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Education may be priceless, but it does come at a cost. Especially in a developing country like India, where millions of students are unable to afford higher education.
India’s gross enrolment ratio (GER) in colleges is only 25-27 per cent, as per industry estimates. This means only one-fourth of those who finish school goes on to get a college degree.
However, due to the rising cost of education and limited access to formal credit, the demand for education finance continues to soar. India’s edu-loans market is estimated to be worth $10 billion or more, according to Unitus Ventures. Currently, only 5 per cent is serviced by organized lenders. Hence, the opportunity is huge.
Financial technologies or fintech are evolving more than ever. Fintech aims to enhance and automate the distribution and maximization of financial services.
Traditionally, banks have offered education loans. But, due to rising loan defaults by students, banks have steadily cut down on education lending since 2018, as per the Reserve Bank of India.
Education loan providers are said to be leading the next wave of value creation in the sector. Student loan startups are seeing tailwinds of new investment and new customers as India faces a continued student loan debt crisis.
Startups in this space are developing technology to target both private and federal loan debt in areas, such as responsible lending, loan management, and refinancing, as well as make it easier for employers to create benefits that aid employees with their loan repayments.
As in the last 18-24 months, a new crop of startups, digital lenders, and non-banking financial companies (NBFCs) have attempted to fill this 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’.
Children can learn good money habits at an early age and now the New Delhi-based ed-fintech Auxilo Finserve Private Limited is developing child-friendly tools and resources toward that goal and attracting funding from venture investors who agree.
Founded in 2017, Auxilo Finserve Private Limited is an NBFC registered with the Reserve Bank of India.
Auxilo Finserve Private Limited’s chief executive officer and managing director Neeraj Saxena told EuroJournal India, “We believe that it is the right of every student to avail quality education. We are taking steps towards ensuring that students acquire the knowledge, skills and dispositions that they need to achieve their individual goals; and to maximize their contribution to society and the country on the whole. Our focus is on providing easily accessible education loans to deserving students for higher studies in India and abroad. We do not just make higher education accessible to all but have made it more convenient than ever.”
The platform offers a broad country coverage: whether it be the UK, USA, Canada, Germany, or Ireland, Auxilo expands the boundaries for aspirations. They claim to understand the dynamism involved in overseas education, thereby bringing a suite of features that make them the perfect partner to help conquer all the challenges. They offer loan structuring that helps mitigate unexpected costs of living abroad and are prepared for the experience, financially.
He further comments, “When it comes to the Indian educational framework, there is a substantial gap that needs to be catered to. And to bridge this gap as an education ecosystem enabler and a growth-focused socially responsible fair lender, we offer financial support through innovative financial solution delivery to a wide network of students as well as to a range of schools, colleges, and universities to develop a nation that takes pride in creating remarkable minds. The loans we provide are tailor-made to suit every Institute’s specific educational requirements. We cater to K-12 schools, boarding schools, primary/pre-primary schools, and coaching centres. India grows aspirational with every passing second and we at Auxilo, take pride in nurturing these aspirations and helping millions of Indians and hundreds of educational institutions get ready for the world.”
Saxena shares that in order to sell in the classroom and outside the box, they enhance the lifetime value of the aspirant with relationship maximization and pro-student and pro-education credit underwriting models across the education ecosystem – the student, his/her family, education institutes, and partners.
With the use of digital technology, lending transactions become seamless and it also allows the company to create lifetime value product segments and build a relationship that lasts a lifetime. Technology makes work more systematic and less tasking, for the company which is a must in today’s pandemic-induced situation.
He remarks, “Being the year of many firsts and COVID-19 pandemic, our core aim is to democratize financial access. We are working on an extensive proprietary underwriting algorithm which is a 3A model – aspirant, aspiration and access, is where we believe the core democratization work. We believe a deserving student with a promising career ahead can be given a better-structured loan even if his/her financial eligibility might come out as low.”
Saxena believes that fintech and edtech will remain mainstream in 2021 for enhancing pan segment and pan geography products which can be driven through partnerships (educational institutes and financial partnerships) and delivered using technology.
As of now, they have created a portfolio of over INR 500 crore with a steady pursuit of aspirants going to them. Students and educational institutions looking for financing from Auxilo are entrusting their future aspirations with them. As a responsible lender, they empathize with that thought and offer credit on the fairest possible terms with the clearest and transparent processing giving the customer unparalleled clarity for their financing which has been received very well from their customers.
From a growth percentage, the platform has a CAGR of 41 per cent considering FY18-19 as the base year of operations.
The NBFC has funded over 2200 students for their higher education in India and abroad across 25 countries and 148 education institutions. The most popular course stream funded by the company has been Science and Engineering.
Next trigger of growth the company is a pan segment and geography expansion of education finance lifetime products with a multi-distribution point for smooth access and as for the elevator pitch for the next level, Saxena aims to enable the freedom of financial access across the country by building inclusive financial algorithms and models that shall look at potential financing rather than the usual route of pure-play credit financing.