Fintech startup EduFi secures $6.1 million to launch student loans with “Study Now, Pay Later”
In the past two decades, the average cost of college in the United States has tripled, reaching $35,720 per student annually, showing a yearly growth rate of 6.8%. Despite the availability of scholarships, this upward trend has particularly disadvantaged thousands of minority and low-income students. This problem isn’t confined to the United States; countries worldwide are also grappling with the soaring costs of college education.
In response to this challenge, fintech startup EduFi has taken on a mission to empower students around the world to achieve their academic pursuits by helping them finance and plan for their education through its “Study Now, Pay Later” loan program.
Today, EduFi announced it has secured $6.1 million in funding, led by Zayn VC and featuring contributions from Palm Drive Capital, Deem Ventures Ltd, Q Business, Abhi, Adalfi, Techlogix, and various angel investors. EduFi will use the funding proceeds to bolster the growth of its Study Now, Pay Later lending platform.
Alongside the funding news, EduFi has expanded its operations to Pakistan, where 40% of students attend fee-paying schools, collectively spending over $14 billion annually on education.
Founded in 2021 and based in Singapore, EduFi is the brainchild of Aleena Nadeem, inspired by her belief in the transformative power of education. The platform, functioning as a fintech app, facilitates student loans for school fees. Leveraging partnerships with liquidity providers and schools, EduFi utilizes a proprietary credit scoring model tailored to the education sector. This model incorporates advanced machine learning algorithms and artificial intelligence.
The EduFi approach is grounded in research on the cultural, social, and economic factors influencing parental decisions on education and finance. The platform, designed to be intuitive, transparent, and secure, addresses the financial challenges faced by families navigating school fees.
Recognizing education as a driver of economic growth and social progress, EduFi aims to assist families, particularly those opting for fee-paying schools due to shortcomings in state school offerings, in managing the financial aspects of education.
EduFi envisions itself not just as a platform but as a lifeline and community for aspiring students, aiming to unlock their full potential. With partnerships established with 15 colleges throughout Pakistan, EduFi now serves over 200,000 students, facilitating the payment of their school fees.
In a statement, Nadeem said, “Education offers hope and can change the lives of people. I am one example of millions out there. EduFi offers this hope and will be a trigger for change in the lives of people as we lift one of the biggest burdens on aspiring families. For example, students in dental or medical schools have to pay upwards of $8,000 upfront which is not sustainable for many in Pakistan. Every student we’ve helped is a testament to the ambition, opportunity, and empowerment we are striving for at EduFi.”
A recent UNESCO report highlighted that families in Pakistan allocate 57% of their income to children’s education, totaling $14 billion annually. Pakistan ranks second in South Asia and Southeast Asia in terms of education expenditure, presenting a substantial opportunity for EduFi to support students on their academic journeys.
Commenting on the funding, Faisal Aftab, General Partner and founder at Zayn VC said: “We are thrilled to support Aleena’s vision for EduFi, which aims to provide financing options for families to fund their children’s higher education. This is a significant step towards achieving financial inclusion for middle and low-income families. In Pakistan, families spend more than 50% of their income on their children’s education, which has become increasingly challenging due to inflationary pressures. EduFi’s innovative approach will help alleviate this burden and empower families to invest in their children’s future.”