After the Covid 19 pandemic, there has been a dramatic growth in the user base of online education, said Mr. Ankit Mehra, CEO & Founder, Gyandhan to Elets News Network in an interaction and added that the borrowing and lending trends are changing and demand is increasing for educational loans.
How is GyanDhan helping students to fulfill their study abroad dreams?
GyanDhan was founded with a motive to make the education loan process meritocratic and easy. The foremost step was partnering with major lending institutions in the market. After a deep analysis of the market, we found the process riddled with procedural delays, archaic documentation processes, and limited products. To optimize the evaluation and application process, we built an in-house evaluation model called the GyanDhan Score that calculates the creditworthiness of the applicant and the risk involved. The score assigned helps in making an objective decision on the profile with no personal biases in the mix, giving every applicant an equal chance of securing funds. The initial focus was on abroad education financing needs. Recently, we also forayed into the domestic market financing school fees, college/semester fees, vocational and other upskilling courses. Our NBFC license was recently approved, which will enable us to handle the end-to-end customer experience.
Do you think students are facing challenges in studying abroad due to a lack of financial support?
Banks have become stringent in their profile evaluation because of the rising NPA. By the end of December 2020, the NPA registered in the education loan sector was 9.7%. Even though education is a priority lending sector, students do not find an appropriate lending source. The pandemic saw several borrowers defaulting on their loans as servicing the loan was not a priority when people were losing jobs and facing pay cuts.
Another reason is the product limitation. While lenders have expanded their product line, the requirement for loan eligibility still rests on the collateral they can pledge. We have tended cases where the borrower could not pledge any collateral and had retired parents as co-borrowers. We find them suitable solutions, but several students are still facing loan rejection.
What is the future of studying abroad and the changing dynamics?
COVID has changed the global education scenario with the introduction of the hybrid model of teaching. Though, it initially put a damper on the study abroad plans as there were issues regarding vaccination and travel guidelines. But since then, there has been an increase in the number of students traveling abroad to start their sessions. Owing to the post-study work options, travel guidelines, and vaccination rules, a shift is seen in the choice of country. The USA has consistently topped the list of popular study destinations. While it has retained its position, many students are looking positively at countries with longer stay back options, such as the UK and Canada. Other countries, like Ireland, Germany, and New Zealand have also turned up in the mix.
How much corpus has been funded by GyanDhan for education financing in India?
Since the inception of the company, we have disbursed more than INR 1500 crore to finance overseas education as the initial operations of the company focused more on abroad education financing needs. We have made a name for ourselves as the leading financing institution for the abroad segment. Coming to the domestic segment, loan amounts disbursed is more than INR 50 crore since we forayed into the market. It has been an invigorating experience to have a successful start to our endeavor, considering we began the operations during the pandemic. The domestic segment includes financing school fees, college/semester fees, and vocational and short-term courses.
Did the education loan borrowing trends change after the Covid 19 pandemic?
Both borrowing and lending trends have been impacted by the pandemic. The delinquency rate during the pandemic increased because of job and pay cuts, which resulted in a higher number of bad loans given by financial institutions. It led to stricter eligibility criteria to avail of loans. Though banks increased the moratorium period to give borrowers some respite, it did not help the NPAs. Another option is restructuring the loan. The RBI allowed one-time restructuring if the borrower had made regular payments till 31st March 2021. Despite the complications, the number of borrowers has increased as the EdTech sector boomed. There has been a dramatic growth in the user base of online education, which requires education financing.