Education is supposed to be non-profit, but many educational institutions are now more focused on making money and providing high-end facilities to students. They want to develop the personality of a student who can face any challenge in life. One way they do this is by using technology, which has led to several schools and colleges partnering with EduTech finance companies. These companies offer education financing, which has become very expensive. Even for LKG, the fees can be over Rs 1 lakh.
Parents are now being turned into debtors of fintech companies via schools and colleges for years. One parent was told that they must register with Education Fintech company Jodo to pay the first term fee by May 10, and the second and third term fees by August 10 and December 10.
There are several fintech companies in this business, such as Finance Peer, Eduvanz, Gyan Dhan, and Leap Finance. They offer a “Solution as Service” (SAS) where the school outsources its entire fee collection and accounting administration to the company. They collect charges based on the value of transactions in the case of ECS mandates from the school. They offer finance from zero to anywhere with 8% interest.
Interestingly, all of these companies were founded by alumni of IITs or IIMs, prominent business and technology institutions. Some of them are tied up with NBFCs, while others are backed by prominent venture capitalists from within and outside the country.
