Loan application

Low-income students drive increase in loan applications in India

Data released earlier this year by an international student loan company finance prodigy shows that the number of Indian students applying for student loans through its platform increased by 98% in the first quarter of 2022, compared to the same period last year.

Mayank Sharma, Head of India at Prodigy Finance, said News from the PIE that the trend continued in the second quarter of 2022, now achieving 100% growth in loan applications from India this year compared to last year.

In comparison, at this point in 2021, there had been a 78% growth in requests compared to 2020.

Speaking to an Indian newspaper The economic periodSharma attributed the increase to the reopening of international travel and the easing of other Covid restrictions, which helped the international education sector recover from the impact of the pandemic.

Indian cities are categorized into tier one, two or three depending on their population size and level of development, with tier one being the most developed. Significantly, Tier 2 and Tier 3 cities and towns contributed 176% of Prodigy Finance’s growth.

“Students from disadvantaged backgrounds do not have the option of providing guarantees or co-signers”

“We are very happy to see that many students from Tier Two and Three cities are now able to fulfill their study abroad dreams,” Sharma told The PIE.

“These students from low-income backgrounds do not have the ability to provide collateral or co-signers, which has so far restricted their access to student loans, especially for graduate study abroad.”

Sharma believes students are increasingly aware of and trusting fintech platforms such as Prodigy Finance to fund study abroad.

“More aspiring students are considering Prodigy as their lender of choice, which, in turn, is driving that growth for us,” Sharma said.

write in The pie earlier this year, Ashish Fernando, CEO of the edtech platform iSchoolConnectsaid online study agencies are also reaching more students in rural communities in India, leading to an increase in outgoing students from these areas.

University lifea student housing market that partners with providers of education loans, said it saw four times as many Indian students apply for loans through its website.

Its data also shows an increase in enrollment rates among Indian students from Tier 2 and Tier 3 cities.

“Students from rural India are more aware of the options available to them,” said Saurabh Arora, Founder and CEO of University Living, adding that Indian students are “increasingly seeing a student loan as an investment in their future.”

Similarly, Leverage Finance, the fintech arm of the study abroad platform Take advantage of education, said it has seen a 500% increase in loan applications from Indian students since its launch in January 2022.

But Akshay Chaturvedi, Founder and CEO of Leverage Edu, said that in the company’s experience, “it’s students and parents in big cities who still make up the majority of student loan disbursements.” .

“A large majority of students from Tier 2 and 3 cities in India prefer not to take out student loans,” Chaturvedi said.

“They could either opt for other traditional funding options or use their savings for the first few semesters and then seek part-time employment there.”

A report by strategy consultants Redseer published in October 2021 revealed that post-k12 education spending by Indian households has risen sharply, with the country seeing 30% growth in per capita income over the past six years.

However, Chaturvedi urged caution when it comes to linking loan applications to broader trends: “I wouldn’t necessarily correlate student loan growth with study abroad trends. . It’s here anyway, and not all students go for a loan.

In his report, Redseer found that 43% of Indian students planned to self-fund their studies abroad, while 28% hoped for scholarships. 9% said their first choice would be an education loan.