AVANSE EDUCATION LOANS
The cost of education is increasing in India as well as globally. The average cost of attending a management, engineering or any other advanced education course in India, which now ranges in multiple lakh are beyond the reach of most families. Hence, the need for loans to finance courses in India is also going up. In this context, Curriculum Magazine spoke to Neeraj Saxena, CEO Avanse Education Loans, a DHFL Group com pany ( a major player in of real estate) and the first Indian lender in the education finance space set up last year.
Could you please tell us about the motivation behind your venturing into education loans? Is it because of the market opportunity or there is also a commitment in bettering education access?
Pursuing higher education, whether in India or abroad, has become a very expensive proposition. At Avanse, we make the task of pursuing higher education easier by providing 100% education finance at reasonable terms, thereby enabling every student to acquire the education of their choice and achieve their desired career goals. We see an India where every student can aspire for a better future, an India where dreams are not sacrificed at the altar of financial limitations. We understand the strength and potential of young India, and strive to be the wind beneath their wings, by providing education finance on the best terms possible..
In a small measure, you have been involved in providing education loans. So can you share with us the Indian scenario vis-à-vis awareness, willingness to avail loans by average parents? What are some of the difficulties they face?
Indian students have traditionally depended on family savings to pay for their higher education. With a significant rise in education costs, Indian families are turning to education loans for respite. However, education loan penetration is still not significant in India. This could be attributed to a lack of awareness and willingness to take education loans or limited access to such loans. Of these factors, a lack of understanding of education loans and its benefits emerges as the key factor keeping people away from availing the loan facility. Moreover, getting an education loan approval from banks has been a cumbersome and lengthy process thus dissuading prospective applicants from taking education loans. Lengthy paperwork and timelines involved, loan underwriting, delivery and servicing issues are few reasons that discourage most students and parents to avail these loans.
The entry of specialized and fully-dedicated education loan companies such as Avanse Education Loans eases the education loan process for such families, consequently resulting in more families opting for education loans to fund their children’s education.
Briefly, if I may, what are the basic criteria of eligibility for getting an education loan from you? Is it the reputation of institution, course or student background that has a role. Also, what about a student from economically weaker section or a remote area?
The student must be an Indian citizen or dual citizen who has confirmed admission to a course or is in the process of confirming his/her admission. The loan is supported or co-signed by an income earning family member or relative. This co-signer must also be an Indian citizen or dual citizen with a bank account in India with cheque writing facilities. Additionally, a collateral security may be required.
To process and approve the education loan application, Avanse looks at a host of factors including the course, institute and academic as well as professional background (if any) of the student, in combination with the co-signer and collateral offered for the loan. Avanse processes each loan application with a 360 degree view of the application.
Avanse provides financial assistance through 8 standalone offices and also through the nearly 200 strong DHFL network offices, some of those in tier-II or tier-III cities or in non-metro areas. If a student is in an area not covered by Avanse or DHFL, he/she has the option of providing us with an additional co-signer or guarantor from an Avanse or DHFL branch basis which we can process the students’ loan application.
We not only fund students travelling to all key international education destinations including US, UK and Australia among others, but also provide financial assistance for various executive education, part-time and vocational courses. At Avanse, we take the student’s merit and academic achievements in serious light. As long as the student is meritorious and deserving of quality higher education, we try to ensure that mitigations such as being from a financially weaker section does not thwart the students higher education plans.
In terms of competitiveness how are your services better than PSU or private banks?
As compared to other PSUs or private banks, Avanse is a focused education loan provider. We believe in enhancing the experience of higher education finance through a student oriented and transparent approach. The Avanse difference largely is on:
1. Customized loan structuring and maximum loan amount with 100% coverage of cost of education at competitively priced schemes. 2.100% finance means no ‘margin money’ or down-payment or own contribution requirement with Avanse. 3.Personalized counseling to educate the borrower about the benefits and pitfalls of loans. 4. Domain expertise and technology to deliver a hassle free experience. 5. Door-step service for documentation so students and parents can avoid multiple visits and avoid standing in long queues. 6. Allied services like foreign exchange, insurance, travel assistance under one umbrella/ 7. Facilities like online customer portal for easy access to post-disbursement services
You have also announced on providing loans to institutions for infrastructure development etc, can you elaborate?
In addition to providing financial access to students, Avanse also funds educational institutions such as universities, colleges, schools, pre-school and coaching classes, etc. for expansion, enhancement or improvement. We are looking at enabling better educational infrastructure in India, with our institutional lending business. Lending under this category could be for adding infrastructure such as buildings, libraries or laboratories, amongst others in educational institutions. The ticket size of such loans is in the range of Rs 50 lakhs to Rs 5 crore. We are the first dedicated education finance company in India to venture into lending for educational institutions, towards their expansion plans.
As per law, education is not a commercial activity in India, so do you still see a rising demand for such loans and good rate of return?
The stark reality is that education costs have gone up in India as well as globally and this rise has been quite significant. The need of the hour, in a developing economy such as India, is access to quality education with good return on investments, i.e. good employability after completing education. With a majority of our youth population aspiring for a better future via better education, the demand for higher education will continue to increase. And with the rising costs of such education, the demand for education loans will always prevail and/or increase.
Lastly, a thought about future plans
The immediate plan is to reach out to more Indian students and enable them to achieve their higher education aspirations. For this, Avanse has chalked out some innovative products and services. We are in talks with numerous global and Indian institutes to design customized loan products to suit their courses and needs. Rapidly expanding into the burgeoning executive education sector is also on our cards. Additionally, Avanse is also looking at the possibility of funding K-12 education.
Avanse Education Loans, is to underline the importance of responsible borrowing and building a credit history. We plan to continue this role and also venture into an advisory stance for students aspiring for higher education by making relevant data and information available to them. We would achieve this by networking with key stakeholders in the education sector.