Emerging Trends in the Education Fintech Sector to Keep a Close Watch in 2022
Learning never stops. This is especially true in today’s work market, where regular upskilling is necessary. Education has evolved into a continuous process. It does not end with a high school diploma or a college diploma. Every two to four years, the education sector comes up with a skill-based trend to keep up with the dynamic technology breakthroughs and the ever-changing needs for almost every job. This is slowly but steadily becoming the norm. Nowadays, most businesses are looking for a skilled workforce with up-to-date skills.
Fees have increased as a result of changing educational practices, highlighting the need for stronger funding. As a result, the education fintech sector is constantly evolving. The segment aims to bridge the gap between education and funding by utilizing digital and tech-enabled resources. Let’s take a look at some of the anticipated developments in the education fintech sector in the coming year, in light of ongoing technological advancements.
Education is rapidly becoming more outcome-oriented as job profiles across all sectors develop. More students focus on the abilities they’ll learn throughout the course and how they’ll use them to advance in their careers. As a result, funding institutes are increasingly using income-share agreements (ISA). An ISA provider pays for the student’s education and divides the repayment into smaller parts from the student’s earnings. This type of financing places a greater emphasis on the outcomes of newly acquired abilities following an educational course.
Fintech is a viable method for connecting educational institutions and students with financial organizations. Financial institutions meet the demand for cash flow management and working capital in education financing. The ongoing transformation of the educational system has resulted in more outcome-oriented finance. Allowing students to get an education in order to achieve their long-term career goals.
Altered repayment capabilities
‘Buy Now, Pay Later (BNPL) has become a common occurrence in the digital age. BNPL, zero-cost, and seamless pay-later alternatives are also gaining popularity among students and parents in the education financing industry. In contrast to traditional options, a growing variety of unique customer-centric education finance programs are becoming available.
As more industries adopt the pay-later approach, the education fintech sector is expected to follow the trend. For example, under a new financing arrangement. A student can pay the entire tuition fee upfront and then pay it back in many instalments afterwards. Instead of paying a lump sum payment all at once, students and parents can pay for their education in monthly installments to the fintech platform using the zero-cost option.
Customized financing plans
A loan transaction has traditionally involved only stakeholders in the financial sector. The situation is, however, steadily changing. For a better understanding of repayment capabilities and customization, the modern financing setup considers all stakeholders. Fintech involves the student (the borrower), the financial institution (the lender), and the educational institution in the case of an education loan (service provider). The entire project, that is, the educational course and its outcome, is taken into account.
Education fintech solutions, as a new type of finance, consider not only the borrower’s ability to repay. But also the project’s overall outcome. The education loan is approved based on the student’s academic performance and the educational institution’s prior performance after a thorough analysis.
The fact that the financial provider and the educational institution share risk produces a win-win situation for all stakeholders. Students can profit from tailored and flexible finance options on the one hand, and institutes can potentially improve top-of-the-funnel sales on the other.
Beyond the traditional educational system, education financing has become more rooted. With the emergence of new job opportunities in fields such as graphic design, hospitality, and interior design, the education environment has evolved. Previously, education was restricted to the classroom or the institution, but it has now broadened to include skill-based courses. The education fintech sector is experiencing tremendous growth due to increased demand for professional education in areas such as aviation, nursing, soft skills, vocational training, and Edtech courses.