Contrary to what most might think, the education sector has not remained immune to the ghastly effects of the pandemic, Covid-19.
According to a report released by UNESCO spanning 180 countries across the globe, 24 million students are unlikely to return to formal education, since the advent of the pandemic and the consequent attempt of digitization in education.
Just as most industries and businesses struggle with capital investments and revenue generation, the education sector struggled with fee collection and challenges that involved a handicapped technological infrastructure.
Furthermore, a revised Union Budget states a 6% decrease in the budget allocated to the education sector. This poses a major bump in the momentum of digitization in India, as that extra financial boost could have served the welfare of millions of children who were forced to drop out of school, as a consequence of the financial and infrastructural limitations brought on by the Pandemic.
The financial crisis brought on by the pandemic has led to a rise in educational credit worldwide. Traditional banks are unable to finance the rising demand for credit in the market and NBFCs seem to be the growing oasis to borrowers. NBFCs have proved to be a faster and easier alternative to avail credit amidst the growing stringency of traditional loan creditors a.k.a banks!
Not only do they cater to individuals and businesses but also anyone and everyone who might have failed to meet the stringent criteria of banks. This is especially true in the education sector for students applying for higher education where certain courses and streams attract simpler, more lenient terms for loan procurement as compared to more offbeat streams.
Banks are not to be blamed entirely for not being able to extend education loans. As per data released by the Finance ministry, as of 31 December 2020, 9.55% of Education Loans were categorized as NPAs owing to rampant job losses & education drop-outs. The current outstanding Education Loan NPAs are valuated at no less than 8,587.1 Crores.
Public sectors banks have for long serviced the demand of the nation in education but simultaneously suffered huge losses against it. Some may argue that the governmental push behind the risk taken has been detrimental to the impact on banks, but the truth is that banks lacked the innovation and proactiveness to rework the risks involved in this process and turn around the losses into an opportunity.
The new-age NBFCs and fintech have improvised on this void created in the market and offered numerous solutions to the customers while managing the risk. In an effort to create a win-win situation for all, they have worked closely with the educational institutes to create consumer goods like products for the education space.
In the case of Educational Loans provided by NBFCs, not only do they tend to cover 100% of the tuition fees but also cover a spectrum of educational costs that incur in the process. They are more flexible and cover a wider array of courses for students applying for higher education. Owing to the speedy and convenient process, NBFCs are only growing in popularity in times where financial support is of utmost affiliation for customers and institutions alike.
MSFC’s sub-brand, EdCred realizes this need for a more empathetic approach towards loan servicing, with the mission of making quality education accessible to as many people as possible. Not only do they work in partnership with reputed educational institutes but also allow the student/ parent to indulge in No-Cost EMIs Loans to cover tuition fees. Having provided a solution to families under a financial strain, it also works hand in hand with premium educational institutions by providing Secured as well as Unsecured financial funding to better their infrastructure and quality of education.
EdCred like several other NBFCs is one step closer to bringing families and students in financial crisis, to fulfill their most basic right – Quality Education.