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Fee Financing: Catalyst For Reducing School Dropouts The school drop-out rate has always been a major issue for the Indian education system; however, the pandemic has increased the magnitude of the problem

By Sunit Gajbhiye

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India has always been known as a country of diversity. Diversities exist in almost every aspect of life and work. The education system in the country also exhibits wide diversities. On one hand, the country is marching towards implementation of the new education policy that has been designed to create the citizens of the future and make India the knowledge hub of the world; while on the other hand, millions of children in the country still struggle to get a basic education. The country boasts of world-class institutions such as IITs and IIMs producing world-class business leaders and also in the same country, the school drop-out rate is one of the highest in the world.

As per the data released by the Unified District Information System for Education Plus (UDISE+) in 2020-21, the school drop-out rate at the secondary level (Class 9-10) in India stood at 14.6 per cent.

The dropout rate among female students is much higher than male students. While there are several reasons such as distance and lack of interest in studies for the high dropout rate, the high cost of education and the parent's inability to afford the education is the most critical reason. The school drop-out rate has always been a major issue for the Indian education system; however, the pandemic has increased the magnitude of the problem several times. Although there is no consolidated data available on the number of school drop-outs during the pandemic, the estimates could range from 3.5 million to 20 million. Even on the lower side of these estimates, the number appears to be alarmingly high.

If India has to become the global superpower of the 21st Century, it cannot ignore the huge number of students quitting the schooling system. Uneducated citizens represent a huge economic opportunity lost for the country. While it is important to take measures to bring the economy back on track, provide employment to those who lost their jobs during the pandemic and make structural reforms in the education infrastructure; it is more important to take steps that will immediately address the menace of school dropouts due to cost. The economic and infrastructural interventions for the education system might take some years to bear the desired fruits and, in that time, valuable years of millions of students will be lost.

Providing education to their children remains an utmost priority for most parents. However, due to certain unavoidable situations, they are compelled to take the kids out of school. Total or partial loss of income is the most common of these situations. Besides the high cost of education, the real problem faced by the parents is that schools generally collect the fees either quarterly or half-yearly. The larger amount to be paid to the schools puts an additional burden on the parents which multiplies in the case of more than one child. If this amount could be converted into smaller installments, it would become much easier for the families to manage. Education loan is one of the tools that can convert fees into equal monthly installments, however education loans are not very popular for primary and secondary school fees and they come at a cost.

Fee financing can be the most effective solution for arresting school dropouts due to financial reasons. Under this arrangement, the financing company pays the entire year's fee to the school upfront and the parents can pay the amount back to the company in easy installments. The best part about fee financing is that it comes at no cost to the parents. With a reduced financial burden, parents are less likely to take their kids out of the schooling system. Fee financing is fast, hassle-free, and paperless and the approval comes within minutes. Therefore, parents also need not worry about lengthy paperwork, complicated processes, and the uncertainty of approval. Fee financing can be the real catalyst for arresting the school dropout rate in the country.

India is standing at a platform where it can project itself as the knowledge powerhouse of the world, however, the high school dropout rate will keep haunting it unless something substantial is done to take care of it. In the past few years, fee financing has emerged as the most viable innovation that has the potential to remove capital as a hurdle in the education sector. After serving millions of students in the bigger cities, fee financing is rapidly spreading its roots in the smaller town and rural areas. Having said that, this alone cannot move a mountain unless other social and economic indicators of development are taken care of. The collective force from all fundamentals need to work in cohesion so that the road to progress and prosperity appears promising.

Sunit Gajbhiye

Chief Business Officer, Financepeer

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