The Singapore-based startup introduced a synthetic intelligence-based SNPL (study now, pay later) lending platform and its mobile app in Pakistan, a country that has student loan products as a category; instead, users get private loans with maximum interest rates and a lengthy process, Aleena Nadeem, founder and CEO of EduFi, told TechCrunch.
EduFi needs to solve the country’s two problems (high levels of poverty and low literacy rates) through its fintech platform. In Pakistan, around 40% of students attend private schools due to the poor quality of public schools, resulting in an annual expenditure of more than $14. millions in their education. Furthermore, more than 50% of Pakistan’s adult population does not have access to monetary services such as bank accounts and insurance.
Nadeem, an MIT graduate who in the past worked at Goldman Sachs and Ventura Capital, saw many young people struggle with monetary barriers to get a quality education while working at the Progressive Education Network (PEN) in Pakistan. PEN is a non-profit organization that provides free, quality education to young people who are unable to do so.
“In Pakistan, many young people are reaching secondary school, but there is a sharp decline in the number of those accessing higher education,” Nadeem said. “This decline is the time when EduFi is looking to inject capital into the gap between high school start and freshman school admission. “
The company, which was founded two years ago, has already partnered with 15 universities, making the app available to some 200,000 academics who want to pay their undergraduate, master’s and doctoral tuition fees across Pakistan.
When a student (or parent) applies for loans through the app, EduFi demands the monetary prestige of the applicant (student or parent). For example, bank statements for the past 12 months or a source of income that can repay your loan, such as a salaried job, small business, or self-employment. Once a student loan service is approved, EduFi sends the cash directly to the school’s bank.
During its beta phase over the past 18 months, EduFi has tested its credit style on 80,000 customer loans made through banks. The startup claims that its credit scoring formula allows for the dispersal of student loans within 48 hours of the loan being applied for and disbursed. EduFi, which obtained approval from the Pakistan Securities and Exchange Commission (SECP) for a lending license, is awaiting the granting of the license, which is expected in November. Nadeem said he’s been validating his products and facilities with prospective customers lately and gathering feedback and insights at his service.
The company says it has changed the classic banking approach, which involves high interest rates and a confusing application procedure, and takes at least 3 to 4 weeks to be approved. EduFi’s virtual lending app provides users with a convenient and straightforward procedure, as well as a flexible one. Loan conditions.
The company will use the seed capital to reach more customers, optimize its platform, expand into neighboring countries, and launch other fintech products, adding student credit cards.
“This is a vital step towards monetary inclusion for families from low- and middle-income sources. In Pakistan, families spend more than 50% of their income on their children’s education, which is complicated by inflationary pressures. Cutting EduFi’s cutting-edge technique will help ease this burden and allow families to invest in their children’s future,” Faisal Aftab, general partner and founder of Zayn VC, said in a statement.
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