Why dozens of Indian students are turning to crowdfunding platforms to fund education dream

Illustration by Soham Sen | The pressure

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New Delhi: It’s an emerging social media trend that has drawn contempt from some but support from many others. Several students dreaming of an overseas education have turned to social media with crowdfunding calls for help with the (often prohibitive) fees charged by leading institutions.

Many of these applicants refer to themselves as first generation learners hoping to use their experiences and teaching abroad to create change at the grassroots level. They tend to show excellent educational qualifications and resort to crowdfunding after securing admission to some of the most prestigious institutions in the world.

Some applicants say they are turning to crowdfunding because they cannot afford the loans – they say they come from a humble background and cannot offer anything as collateral, which leads to higher interest rates.

While others note that the scope of applying for assistance from banks and financial institutions has shrunk during the Covid pandemic, some applicants seek partial assistance, saying they are taking out a smaller loan or taking on a part-time job to meet the remaining costs.

The idea of ​​soliciting donations for education was criticized by many online wondering why applicants are not taking out loans. Hundreds of people tackle not only with contributions, but also with words of encouragement.

Ketto, a crowdfunding platform, says the number of fundraisers in the education sector has increased by 300 percent last year. Ketto is a co-founder of the educational fundraisers on their platform Zaheer Adenwala said: 46 percent were able to raise around 50 percent of their target amount, while around 25 percent achieved 25 percent of their target.

Another crowdfunding platform, Milaap, has hosted 2,374 fundraisers so far this year, and education is the second most common destination. after medical treatment.

Adenwala from Ketto said, “Crowdfunding has become a popular tool for students looking to study abroad. One of the reasons for this is that students can raise funds not only for their tuition fees, which a conventional loan grants them, but also for their living expenses.

“They usually come as the first option on our platform to raise money, as not all students can afford loans. Those who can later take out loans for the amount that was not raised on our platform. This reduces the burden on disadvantaged students, ”he added.

Also read: Covid is changing the way students choose overseas schools. How the country dealt with the virus is one factor

Foreign training costs

Foreign education is very important.

A Foreigner aiming for a master’s degree at an Ivy League university in the USA you would have to pay around 85 lakh Rs / year for tuition and an average of 14 lakh Rs for living expenses.

At Oxford University in the UK, tuition fees alone can set back thousands of pounds (£ 1 is around 103.65 rupees).

The education loan rates offered by Indian banks vary. While SBI offers a tariff of 8.65 percent, the rate is higher at private banks, from 9.55 percent at HDFC and 10.5 percent at ICICI.

Students can also apply for loans from private donors.

“The interest rate for education loans at banks in the public sector is between 7 and 10 percent, while private institutions and banks only start at 12 to 13 percent,” said a media professional who lives in Delhi and wants to study in Canada. “The fees for most management courses start at Rs 35 lakh per year. In addition, the students take out an additional (loan) of Rs 15 lakh-20 lakh for the total cost of living. “

As for repayment, he added, “private financiers have fluctuating interest rates that are subject to current market conditions”.

“It will be difficult for those who later get fixed salaries in their jobs. Public sector banks have low interest rates and fixed rates of repayment and allow a student up to 15 years to repay the loan, ”he said.

Parima Mehta, an engineer based in Bengaluru, added that “Loans without collateral have a very high interest rate that not everyone can afford.”

While affordability is the problem with some crowdfunding applicants, others point to a reluctance on the part of banks to provide educational loans, especially amid the pandemic.

However, the banks’ apparent hesitation in granting educational loans predates Covid amid concerns on growing distressed assets (NPAs). In 2019, banks had reported an increase in bad debts from the education sector.

Speaking to ThePrint on condition of anonymity, bank officials admitted that they have become more conservative on lending during the pandemic because “they have seen a sharp surge in NPAs or loan defaults. This is mainly due to the loss of jobs, high expenses for Covid treatments and massive wage cuts.

“The gross NPA for education loans was 7.5 percent nationwide in the last fiscal year. This year it should be 9 percent. The main cause of this is the pandemic-related job losses and income cuts, ”said an SBI official. “In times like these, even banks are becoming conservative when it comes to lending. Even if a banker feels that a certain person deserves the loan amount, they will not get it without strong financial metrics. Logically / practically, the loan is given to an applicant with better financial support. ”

Education loans are an additional risk compared to a home or car loan. “Unsecured education loans up to Rs 7.5 lakh are granted, no collateral is required. In an economic crisis, a borrower will first try to pay interest on the loans they are involved in, such as a home loan or a car loan. This is because he could lose a home or a car if the loan goes to an NPA. For this reason, education loans become secondary for them and lead to NPA. “

Also read: Vaccination regulations are the big new hurdle for Indian students going to overseas universities

No secured route

Even if students are increasingly turning to crowdfunding, it is not a surefire way to get support.

A 27-year-old anti-caste activist and rapper, Sumeet Samos Turuk, made headlines this month when he grew up Rs 38 lakh in 3 hours to study at Oxford but few have it that easy.

A journalist who has not yet achieved his goal said: “Being a minority brings extra baggage. On social media you are not only trolled, you also have to ask yourself insensitive questions. Not all applicants have the privilege of applying for large loans, not all students can afford to provide the collateral or pay the monthly interest. “

As a first generation learner, he said the loan could be a hidden setback for him and his family. “My family has no collateral to give in place of the loan, and loans without collateral have very high interest rates. I come from a humble family and we cannot afford it, ”he added. “Does that mean I have no right to study at a world-class university?”

(Edited by Sunanda Ranjan)

Also read: Students from Oxford and Cambridge collect over Rs 18 lakh for Covid aid in India

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