These Education financing platforms partner with leading educational institutions such as schools, universities, or an EdTech platform to provide the monthly payment option to the parents.
With schools re-opening, parents have been caught between the pandemic and payment deadlines. To clear school fee dues this year, most parents are turning to EMI (equated monthly installment) options. Industry data shows that companies that are financing the K-12 sector, such as Financepeer and GrayQuest are registering high growth this year, and are getting parents from over 2,000 educational institutions applying for the EMI option. For instance, GrayQuest currently is associated with 2550 of the top educational institutions in India.
What is EMI based school fee financing?
These Education financing platforms partner with leading educational institutions such as schools, universities, or an EdTech platform to provide the monthly payment option to the parents. Most schools and colleges require parents to pay the fees in lump sum amounts. Hence, once partnered, these Education financing platforms pay the full fees to the educational institutions directly and help the parents/students to convert their course fees into smaller, affordable, and convenient bite-sized installments, usually at zero extra cost.
Sunit Gajbhiye, Co-Founder, Financepeer says, “Under EMI school fee financing, the parents can pay that amount in easy monthly EMIs. This makes it easier for the parents to manage the child’s education finances more efficiently without burdening their pockets.”
How are parents approved for this EMI option?
When a parent applies directly or through the school, these companies have due diligence criteria where the documentation process takes place. Tenure and rates vary from the number of months to the amount taken. Most of these companies offer anywhere between 6 to 12 monthly installments with low interest. Gajbhiye, of Financepeer, says “There are minimum documents which are needed and after the verification, the fee is directly given to the school/college to reduce any leakage. There is an algorithm that operates to determine these things.”
For instance, if the education fee is Rs 2 lakhs – now, instead of having to pay the education fee of 200,000 in two bulk installments of Rs 100,000 each, parents get to pay it in 10 monthly payments of Rs 20,000 each. Rishab Mehta, CEO, and Founder Of, GrayQuest says, “The entire sign up experience is designed to be extremely convenient and easy for parents – with most parents receiving instant approvals based on just their KYC details. There is no paperwork and the entire process can be completed in less than 5 minutes on our android app or website.”
Minimum and Maximum amount offered
Financepeer, for instance, doesn’t have any fixed criteria for the minimum or maximum amount as it is the education fee. If they are linked/partnered with the school they take care of the fee. Having said that, during due diligence all the necessary criteria are evaluated and then the fee financing disbursal takes place. Their normal ticket sizes range from Rs 30,000 to Rs 12 lakhs and above.
With GrayQuest, however, the payments range from Rs 50,000 to up to Rs 15,00,000. Depending on the size of the payment, they create a customized monthly installment plan whereby parents have multiple monthly installment options to pay the fee, ranging from 6 to 12 months.
Who should opt for this EMI option?
Experts say people across any the income brackets should opt for the services as it reduces their pain of paying a lump sum amount and they are at ease of making payment in EMI. Mehta, of GrayQuest, says “People from all income groups avail this facility. With the financial convenience of zero cost installments, a complimentary insurance cover worth Rs 10 lakh paying fees via the EMI option becomes the preferred choice for any parent or student at an educational institution that we are partnered with. The average ticket size of the fees is around Rs 1.2 lakh per annum.”
Education loans are generally given for a longer tenure and the option is majorly unavailable for school fee financing. The loan amount needs to be way higher for an education loan. Plus the high-interest rates for it comes as a burden for the parents. Mehta, of GrayQuest, further adds, “Education loans charge high-interest rates and take a long period of time for it to be cleared. Instead, opting to pay education fees through the EMI option allows parents to effectively utilize their capital and enjoy the convenience of paying in easy monthly installments at zero cost. It is a hassle-free process with easy online signup, instant approvals, and no paperwork.”
These school fee financing companies provide free funding for an amount as low as Rs 30,000 at low interest and zero cost. Parents can also directly apply for the loan via the company website or their app. For Financepeer, this option is available regardless of whether the school is onboarded with them or not.