Schools are partnering with fintech companies to enable parents convert fees into easy installments in Covid crisis
One of the biggest responsibilities of a parent is to provide quality education to their children. However, the pandemic has posed a huge challenge on the finances of both schools and parents. With fintech lenders providing financial support to parents, paying off school fees has become easy and hassle-free.
As per a survey by a leading bank, Indian parents’ expectations about their children’s education is the highest globally. Hence 70 per cent of Indian parents spend over 30 per cent of their income on educating their children. This is a huge burden leading to families cutting down on essential expenses to offset rising education costs.
A pandemic-stricken economy has made it harder for parents to meet payment deadlines, leading to a jump in demand for school fee financing. A 2020 SBI report estimated that the country’s per capita income would decrease by 5.4 per cent in 2020-21, with families in established and emerging metropolises such as Delhi and Chandigarh amongst those worst hit by the crisis. Companies across sectors laid off employees or sent them on unpaid furloughs, en masse, for months while temporary salary reductions had also become a norm.
School’s Finances in Shambles
Due to Covid-19 causing a temporary shutdown of schools and educational institutes, many schools have lost out on their most critical source of income, i.e., the school fee. The vast majority of private schools in India are facing this crisis, as parents are unable to gather funds to pay the school fees. Many private schools catering to the lower middle class even face risk of shutting down. To help parents and themselves sail through the pandemic, schools are partnering with fintech lending companies to enable parents to convert the fee into No Cost or Easy EMIs while they receive the fees upfront.
EMI Based School Financing
This facility enables parents to convert the school fees into EMIs, which can be paid without bearing any interest, i.e., no cost EMI. Schools, universities, EdTech platforms partner with education financing platforms and provide the EMI option to parents. Credit eligibility of the parents is checked and the fee amount is paid to the educational institutes directly. This, thus, makes it easy and affordable for parents to manage finances for their child’s education without burdening their pockets.
School Finance Approval Process
Few fintech lenders in India tie-up with educational institutes to provide school fee financing. If a parent applies directly or through the school, then he has to submit the required documents including identity proof, address proof, and income documents. A few fintech lenders in India also offer loans regardless of whether they have a tie-up with the school or not. The credit profile of the applicant is assessed and based on eligibility; the loan is approved. The approved loan amount is disbursed directly into the school’s account and the parent can pay it back to the lender in EMIs ranging from 6 months-24 months. The school fee finance option is offered digitally via the lender’s platform, making it convenient for parents to manage funds for the child’s education.
For instance, if the yearly school fee of a child is 1.5 lakh and the parent opts for the tenure of 12 months, then the fee can be easily repaid in EMIs of Rs.12,500 with a No Cost EMI.
With school fee on EMI facility being more convenient and flexible, it puts both the parties, i.e., the school and parents in a win-win situation.
The author is Founder, Credit Fair
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.