Technology-driven Non-Banking Financial Corporations and Private players have focused on student loans. These players can play a crucial role in the education loan sector in bridging the gap in demand and supply. Currently, there are many new options opening up. Moreover, they have been providing loans at reasonable rates. Their process is easy and efficient. Also, any student who is aspiring must do diligent research and analysis. For their funding needs, they must choose the best financial institution.
There has been a great increase in interest in foreign education as per the latest study. It is believed by almost 83% of Indian students that studying abroad will help them in landing in better jobs. However, these dreams are being dented and curbed by financial hurdles.
Therefore, a viable option for the student is to avail of a student loan. However, students and their guardians are reluctant to avail of this facility. This is due to a lack of awareness that prevails in Indian society.
Financial Infrastructure of the Student loans
A report was released by the Reserve Bank of India. The data has shown that in public sector banks, the approval rates of student loan applications have dipped to almost 25 per cent. This is due to a higher rate of negligence by the students as well as parents.
It has been reported that banks have carried almost 3.5 times Non-Performing Assets in student loans. This is in comparison to their retail loan portfolios. It is seen that 2 million students would be flying abroad for international education. They will be spending over 100 billion dollars which amounts to approximately 100,000 crores in Indian Rupees.
These numbers are very much higher if we add the domestic need for education funds. Banks have so far disbursed approximately 11,000 crores in the current year. This is not even near the actual demand for such student loans.
Current Situation of Education Loans in India?
Getting a student loan currently involves multiple visits to branches. Also, there is a high rate of declining loan applications. This has discouraged students from applying for loans. The banking system has various conventional policies that require guarantees from third parties and collaterals. Moreover, the minimal moratorium period acts as a major barrier for students who wish to avail themselves of student loans.
Benefits of Taking a Student loan
Even though there are various hurdles before availing of a student loan, there are various benefits offered by them:
- It helps a student in becoming self-reliant. They are not in need of depending upon their parents or others to fund their education.
- Tax benefits of the Income Tax Act allows the entire interest paid on a student loan to be free of tax.
- A student can build a healthy credit score that will help them avail themselves of cheaper loans in future by taking an education loan.
- The students also take the burden of funding their education by themselves away from their parents and gift their future back to them.
The Future of Student Loans
There are various emerging new-age online student loan platforms. This has been done by recognizing the gaps in the current system and the wide gap in demand and supply. These new platforms work to make education accessible for all.
They provide student-friendly loan products that are used for all types of education loan needs.
Concurrently, they are reshaping the customer experience and customer journeys through a dedicated focus on technology in this domain. There are various features provided by them. They include:
- Processing that is Quick and Online.
- Application status is shown in real-time.
- They do not require parents as co-applicants for some products.
- The funding is done for up to 100 per cent including tuition fees, travel and living expenses.
- There is also no requirement for good students for collateral security against the loan.
- They also offer flexible repayment options.
Role of Edu-fintech companies
Edu-fintech companies have been working relentlessly to utilise technological innovation. They are working on creating agile and modern loan products. Chiefly, they have been focusing on student needs.
Accordingly, the need for collaterals and guarantees has been reduced through effective underwriting. They have been trying to broaden their reach and provide access to financial assistance. This is exclusively for lower-class and middle-class families who are in genuine need of it.
Also, technology-driven Non-Banking Financial Corporations and Private players have focused on student loans. These players can play a crucial role in the education loan sector in bridging the gap in demand and supply.
Currently, there are many new options opening up. Moreover, they have been providing loans at reasonable rates. Their process is easy and efficient. Also, any student who is aspiring must do diligent research and analysis. For their funding needs, they must choose the best financial institution.
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