The PIE: Can you can you explain what GradRight is?
Aman Singh: It’s a platform that brings three stakeholders together – students seeking financing for their higher studies abroad, banks that finance such postgraduate students and counsellors or test prep centres who assist students in picking the right colleges. They can essentially work together and ensure that all students who need funding, get the funding and are able to go abroad.
The PIE: How does it work? Is it only for postgrad?
AS: Right now, postgrad. We’ve also done exceptional cases for undergrad loans, and the platform is scalable to any segment for that matter. But as a small company, we had to start with a thin slice of the market so that we got that right and then we move to other segments. So we started with this so-called very fundable market segment which banks love to fund.
“We started with this so-called very fundable market segment which banks love to fund”
As of as of now, the process flows like this: a student comes in the platform and says, I have gotten admittance from University X and I need X amount of money as loans, here is where I have studied, here is my GRE score, and so on and so forth. It’s around 20-30 data points and the profile goes to our 12 partner banks, and they see the profile and say, ‘well, here is what I can offer’, and they get to see each other bidding on the student.
So every bank is essentially bidding for this student and they get to see the other person’s bid in a very transparent environment on the platform. So the student is sitting pretty and essentially getting the best offer.
All these bids typically come within 45 minutes, sometimes it could take two hours, but not more than that. The student clicks on the bid they like and then is connected to the bank. The entire documentation process, which is quite tedious in our country, happens online and the approval is online.
So what could potentially have taken at least 30-45 days, takes two or three days based on how fast the student and the bank move. At a very simple level, students save because they will get the best rate, second, tremendous amount of saving on time and effort in getting those loans options. The student is not left to speculate that, ‘oh, what if I could have gone to that other bank’. The 12 partner banks covers close to 90% of the market.
And the interest rate that they offer varies from 6-17% – that swing is potentially lakhs of rupees, over the period of the loan.
Banks, on the other hand, always had a hard time knowing whether this student is really going to come to them or not. [They wouldn’t know] if the student would run away because they have got a better offer.
And so the banks have certainty, the student has certainty. The university has full visibility on whether this student is getting funded or not. So they know they have given admission to this candidate and GradRight is already arranging financing.
“Over the last year, around 4,500 students have asked for loans from our platform”
Every year close to 50% students miss out on finally going to college because the money didn’t get tied down.
The PIE: It seems like quite an innovative idea.
AS: Well, I think you’re used to entrepreneurs being somewhat unnecessarily excited about what they do, but we won this FinTech Innovation Challenge, which was for the overseas education and we were ranked as the most innovative company in this space, at least within India.
As far as we know, there is no such bidding platform for education loans anywhere in the world – of course, we have not seen every country out there. But we feel like if we scale this up across a few countries, we could add tremendous value to our students wherever they are, no matter where they are going.
The PIE: So is the aim to spread out beyond India eventually?
AS: Yes, we were very sure of that from the time we set ourselves up. We registered our holding entity in Delaware in the US, along with Indian entities, and we are in the process of registering a subsidiary in the UK.
The global postgraduate student traffic is all directed to some 10 countries, and each country has their own set of banks and within each country of origin the student has their own set of banks. The platform is quite simple, you have banks coming on it, it’s their game and the students’ game. So we see a lot scale here. And let’s see, where it flows.
The PIE: How many students have you helped so far?
AS: Over the last year, around 4,500 students have asked for loans from our platform. The loan requests amount that is right now sitting on our platform is $225m, and students have got $20m worth of loans approved on our platform.
“Since 2008, I was leading the set up of a university called Ashoka University”
It’s expected to [further increase] in Jan, Feb and March when students begin to start receiving admit offers for September.
And just to give you a sense of the pipeline, two of India’s largest counselling companies Manya Group and Jamboree, who between them have close to 50,000-60,000 students, now partner with us. Their students who want to get financing will go through our platform. So this is setting us up for the next trajectory of growth.
In the postgraduate market, typically at least 70% of students go on loans. 60,000, may be preparing, but not everybody is going to make it or get the college of their choice. So just with those two partners – I’m excluding the 20 other companies that we have as partners – around 15,000 people are expected to be going to us for their loans as we enter the next cycle, from here until June and July.
The PIE: How did you recognise that this was a problem that needed solving?
AS: Since 2008, I was leading the set up of a university called Ashoka University. One of the main parts of our efforts was building a popular narrative around liberal arts education. India is predominantly known for talent in engineering and science and management and so on, and those are the programs and universities that are considered the best.
But we felt there was a need to probably create a new paradigm around the idea of liberal arts. So our big job was to bring liberal arts into mainstream conversation. And for that, we had to do a lot of outreach, marketing, brand building and PR and so on. So I started travelling with my co-founder and I started meeting thousands and thousands of students, and between us, we must have visited 300 schools probably 20,000 students, maybe 1,000 parents – all direct conversations in small and large groups.
It became very clear that somehow our parents and students are somewhat irrational in making choices of which college to go to. They’re driven by a lot of social pressure, peer pressure, and hearsay. Someone in the family has gone in some college, so everybody has to go to that college and all that.
“Our parents and students are somewhat irrational in making choices of which college to go to”
And when it came to financing, they almost felt like they were at the mercy of whatever the university asked for and whatever the banks were offering. They were not thinking intelligently about funding.
It became very clear that a lot of parents struggle with financing both at an undergrad and postgrad level. They end up taking loans that are crazy 16-20% loans, and they make college choices that were not optimal for them.
We needed to think of an education financing company that does not aim to exploit students but aims to think innovatively about education financing.