Finance Mechanism to Increase Participation in Formal Education

It’s more than one year since schools have shifted their base to virtual platforms to conduct classes online. The sudden outbreak of the Covid-19 pandemic, in 2020, led schools to face an unprecedented challenge called “No Physical Classes”. It further pushed them to quickly adapt to digital/online learning - without any warnings or any time to prepare.

Since then, massive transformations have been witnessed, especially in terms of digitalisation and digital transformation in schools. Before the pandemic happened, the online penetration in schools was merely 20 per cent, however, it has now gone up to 80 per cent. Hence, it’s no secret that a swift transition took place from traditional face-to-face learning to online learning.

Moreover, there is no denying that the holistic experience of studying at the school campus is still an important part of a kid’s life - as it helps in developing their overall personality including interpersonal skills, communication skills, and so on. In the absence of physical infrastructure, students are also missing their regular school-related activities such as sports. 

However, while many schools remain closed in India due to the current situation, digitisation became a necessity to ensure that students do not miss out on their studies. 

Is Digitisation & Online Learning the Way Forward? 

Even though the initial leap towards digitisation and digital learning was slower during the first wave of Covid-19, it simply accelerated post-second wave. More and more schools now realise the various advantages like location independence, flexible hours, travel free, time-saving, and convenience that online education is offering. Therefore, schools are seeing a great opportunity to revolutionise their learning pedagogy by digitising their ecosystem completely. And if structured properly, this model can work out to be cheaper and most importantly benefit students from rural areas, who have relatively unexposed to online means of education.   

Financing Digital Infrastructure

Now, there is already pent-up demand existing amongst people/parents as not much has been invested previously in the development of the school’s physical infrastructure. Schools are sometimes starved of funds, due to lower collection efficiency, and that restricts their infrastructural expansion. However, for schools to develop a digital infrastructure, financial assistance is the need of the hour. Hence, it’s required to invest in digital infrastructure so that schools are empowered enough to maintain the continuity of online learning. Investing heavily in digitising the ecosystem will also help schools in content standardisation and enhance their content delivery. From a broader perspective, knowledge dissemination will almost be similar thereby providing equal learning opportunities for lower, mid and higher-income students. 

At the same time, lending, which earlier functioned on a physical customer acquisition model, will see a significant change once the digital infrastructure is in place. The digital ecosystem will help in acquiring customers through proper underwriting thereby making the entire process more transparent and risk-free. Even micro-loans will become easy to  

Why Fee Financing Stands Essential?

In addition, scores of self-employed parents such as small shop owners, vegetable vendors, or those working in SMEs or particularly unorganised sectors faced job losses during the pandemic. This led them to withdraw their kids from schools as they were in no position to pay fees. At this juncture, fee financing came as a savior for parents - who can now avail of free financing with zero per cent interest. They can now pay fees for next year and schools are comfortable compensating institutions for interest.

That is why it has become important to interconnect schools with the financial institutions which have been operating in silos until the recent past. This integration will help financial institutions not just to develop a connection with schools but also know parents’ needs much better. All in all, fee financing is ensuring reduced dropout rates as well as continuity of education for kids, especially coming from lower and middle-income segments, where income losses have been high during the ongoing crisis. 

In conclusion, digitisation including digital infrastructure and enhanced content delivery will strengthen the overall ecosystem of online and also minimise digital learning gaps in the long term.

The author is MD & CEO, ISFC

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.