How fintech platforms are making student loans accessible and affordable

Several students in India dream of studying abroad due to the multiplicity of courses offered and the broad exposure the programs allow. Contrary to traditional norms, higher education institutions are now more vested in providing holistic education to the students, including the use of new-age technologies, experiential mode of learning and industry-integrated curriculum. However, numerous aspiring students’ growth is impeded due to lack of adequate funds. The rapid expansion of the Fintech sector has opened up alternatives and possibly better options for students to avail loans. Here are some of the ways in which Fintech Platforms make student loans easily accessible and affordable. The estimation of creditworthiness Traditional lending institutions and banks find it difficult to collate large amount of data pertaining to innumerable colleges and courses world over, thus making it difficult for them to underwrite student loan applications based on the student’s future earning potential. Fintech platforms have solved this problem. These companies are future-oriented and employ AI, data science, and machine learning to draw actionable insights and devise effective strategies. Credit decisions can be made with more accuracy and precision. Empirical data and the meta-analysis of the potential of courses across the globe have led to more student-friendly loan products that do not require collaterals or for parents to be co-borrowers. It will make student loans equitable and accessible to all segments of society, especially to those whom the erstwhile systems have overlooked. Ease of planning Studying abroad necessitates much planning on the part of the student. An integral determining factor is the availability of finances. To initiate the process, the applicant must know whether they qualify for the loan and how much they are likely to receive. Students usually had to make multiple visits to the bank to get this information. Fintech platforms, through digitization and tech integration, have made this process far quicker and easier. Their websites have a user-friendly interface, and such estimates can be calculated with the simple click of a mouse. Automating processes means applicants receive regular reminders and virtual support while filling out their forms. Risk assessment and effective underwriting Fraud detection and risk management are integral parts of offering loans to students. Due to unreliable procedures involved in risk assessments, banks have shied from offering loans to certain sections of the population. Fintech companies have revolutionized this segment. Loan defaulters fall into three categories: those who want to pay but cannot do so because they did not get their expected jobs, those who are financially undisciplined, and those who do not intend to pay. The third cohort is tiny and requires legal intervention. However, Fintech companies have proved to be immensely helpful for the first two categories. Since the risk assessment is carried out before the loan is given with the help of the information obtained from account aggregators and intelligent analysis of academic records, the chances of defaulting due to the sparse availability of funds are reduced. Moreover, flexible EMI options, EMI holidays, and changes in EMI structure further help those who are unable to pay their loans. Bottom-line Fintech companies have revamped the student loan industry. Through a tech-first approach and an insistence on innovation, they have made this field inclusive and accessible. Students no longer need to rely on their parents to help them secure loans. They can pursue their dream of higher education independently and with dignity. The author is a Founder and Chief Executive Officer (CEO) of Kuhoo. Views are personal. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.