[Exclusive Interview] This Startup Helped 5000 Students Get Rs 1500 Crore Education Loan! How It Works?

GyanDhan is a unique financial startup, that helps students to get educational loans for studying in India and abroad. Students can checkout different loan providers, their interest rate, and then make an informed decision about their loans.

We caught up with GyanDhan founder and CEO Ankit Mehra, and asked him more about his vision, mission, and the future aspirations.

Here are the highlights..

Q1- Tell us about GyanDhan and what inspired you to build the company.

Ans. GyanDhan is India’s first and largest education financing platform. We have helped more than 5000 students to get funds for their higher education in India and abroad. The aim was to equalize financing options and tap into segments of the market that were left untouched by traditional lenders. The idea stemmed from the personal experiences of me and Mr. Jainesh Sinha, who co-founded the company with me. We struggled to finance our higher education, finding it extremely difficult to convince lenders to fund even an MBA from one of the top-10 schools in the world. The experience underscored the inconsistencies in the lending business, including but not limited to product limitation, archaic documentation process, procedural delays, and collateral requirements. We streamlined the loan procedure and partnered with major lenders in the market to facilitate education loans in a smooth and hassle-free manner. The company began its operations with a focus on abroad education financing. Lately, we have expanded to financing domestic student loan needs. 

Q2 – How are data analytics and proprietary systems utilized in planning the Courses, Loans & Universities? 

Ans. GyanDhan has various in-house models and tools that help students in shortlisting and finalizing universities, reviewing their Statement of Purpose, and checking their education loan eligibility. The loan eligibility tool has smoothed out the loan process helping us, and the lenders take an objective decision on the loan applications. It is a step forward from traditional lenders that still use collateral as the standard marker for eligibility. The tool accurately calculates the creditworthiness of the applicant, assigns them a credit score, and determines their repaying capacity while also matching them with an ideal lender. Other tools that utilize data analytics are the University Compare tool and Admit Predictor. As the name suggests, the Admit Predictor tool helps students shortlist universities and check their admission chances to their target universities. The University Compare Tool compares universities, helping them choose the best option for their higher education abroad.

Our SOP tool uses NLP to review the essays submitted on the portal. The tool is unique as it improves with every SOP that we receive, giving students formative feedback.

Q3 – What is the gender disparity in terms of education abroad? Any specific age group apart from generation X seen availing the loan?

Ans. The number of female applicants is considerably more. A similar picture is reflected in our sanction rate, wherein 5.9% of females get approved for education loans, and the male approval rate is 5.4%. As for the age groups, we receive applications mainly from students with an age group less than 25. The number keeps dropping as we move up the age group. But applications are received in good numbers up to the age group of 30 to 35. Beyond this age group, the number of applications drops significantly. Though, we have applicants from the age group 50 to 55 getting loan approvals. 

Q4 – The inflation rate is high in the education sector. How do you perceive the industry?

Ans. The inflation rate in the education sector is 11% to 12%, whereas the household inflation rate is 5.3%. This adjustment has been pending for a while as the demand has increased in comparison to the limited supply of quality institutes. The annual fee of the IIT was increased from INR 25,000 to INR 50,000 in 2008, to INR 90,000 in 2013, to INR 2 lakhs in 2016. The increase may seem steep, but the cost of education in India is still low compared to the rest of the world. The inflation rate in terms of abroad education is 16% over the period of 10 years (2011 to 2020). We expect the education inflation to outpace the CPI inflation. However, it will moderate after a point depending on the way EdTech and National Education Policy (NEP) ramp up the education landscape in India. The percentage change cannot be predicted and is yet to be seen.

Q5 – What are your growth plans for the next year?

Ans. The plans for the next year entail penetrating the loan market at a higher rate. So far, the penetration rate is 6% to 7%. The penetration rate target for the next year is set at 30% to 35% in the education sector. We are working to up our growth rate 4x times, specifically with our NBFC business and lending partners. New financial products will also be launched keeping in line with the needs of our customers, which may include a credit line.