By Aman Singh
If one had to list some of the “big” decisions in life, studying abroad would emerge as one of the leading candidates – and with good reason. A postgraduate degree from a foreign university can boost your expertise, give you a competitive edge in the job market, and open doors to unlimited opportunities. But this golden ticket to a better, richer, and fuller life comes at a cost. Here is a rough estimate. The total expense of a degree abroad can vary between Rs 35 lakhs to Rs 2 crores. Making the right decision on where and how to invest your financial resources is therefore not only important but essential to achieving your cherished dream of studying abroad.
Anticipate bad decisions
In India, students traditionally rely on personal savings, scholarships and financial assistance from their parents to finance their foreign degrees. But that’s not always enough to cover the full cost of education, which includes health insurance, housing, meals, transportation, books and supplies, as well as personal and miscellaneous expenses. Thus, at least 70% of students, on average, have recourse to bank loans. What they forget in this quest is to determine whether the educational program of their choice is even eligible for financial aid from banks. Being turned down because college is not “bankable” can lead to the untimely death of academic dreams. This uncertainty only adds to the stress for students. Compounding the problem is the lack of access to more viable financing options, with students accepting whatever loan they get, never knowing if it was the best they could negotiate.
Then comes the issue of sustainability. The structure of a loan-based system assumes that recipients will have better paying and secure jobs in the future, and repay the amount accordingly. Failure to repay only worsens student debt. More than 9% of education loans issued by public sector banks turned out to be non-performing assets at the end of 2020, according to data from the Ministry of Finance in March 2021.
Fintech platforms provide flexibility
As with most situations, a silver lining also seems to emerge here. Smartphone penetration, convenient internet access, and the new wave of digital acceptance have become important enablers of the higher education ecosystem. Riding this wave of digitization are emerging bidding platforms that are rethinking financing solutions to meet the demands of students, banks, and educational institutions.
Thanks to artificial intelligence (AI), these platforms are able to provide information on colleges that can be financed by the bank from the start of your selection process. And, in the event that banks are unwilling to fund the student’s current choice, the student is able to immediately consider potentially more viable alternatives and options. This ability can directly reduce the likelihood of students dropping out due to financial insufficiency. What will really benefit dozens of students across the geography is the ability to apply for a loan from anywhere without having to visit a branch.
When it comes to facilitating loan approvals, time is money. Many universities often require students to reserve their places on time and hence, getting a timely loan becomes necessary. Generally, the timing may vary depending on factors such as the bank’s experience with lending; the borrower’s industry; the responsiveness of the borrower to submit the necessary documents; and the accuracy of the information provided by the borrower.
Read also: What drives Indian students to take offbeat courses abroad?
Loan auction platforms allow students to know exactly where they are in the loan application process, unlike those without them, where students have no visibility into the live status of their loan approval. request. What these entities also enable is the seamless convergence of domestic and international lenders on a single online platform, thereby speeding up the loan application process. Here, banks compete with each other by offering various loan products to attract students; they can also see what their competitors are offering on the platform. This ultimately helps students get the cheapest loans and save between INR 1,00,000 to INR 5,00,000 in interest charges. This further translates into prudent financial management and stress-free repayment of loans.
This process also sped up the loan approval time from, say, one month to about two to three days. Banks can approve faster and also accelerate their growth as they wish. This solution anticipates the loss of marketing resources and reduces service costs for banks. With full visibility, banks don’t end up losing students after going through the entire documentation process.
Fostering Financial Inclusion in the Higher Education Ecosystem
In a rapidly changing educational landscape, new-age auction platforms are poised to be a game-changer as they stand at the intersection of education and innovation. Given their disruptive nature, they can provide insightful data-driven solutions to students and banks. By offering personalized financing solutions to a greater number of students, auction platforms have the potential to increase accessibility to quality education and, ultimately, to fill the gaps in the market for financing. financial inclusion.
(The author is co-founder, GradRight. Opinions expressed are personal)