KoinWorks Releases Education Financing Product with a Maximum Tenor of 10 Years

P2p lending startup KoinWorks has released a Decade product for college financing with a tenor that can be repaid in installments of up to 10 years. This product is a derivative of the KoinPintar service line which specifically targets education loans.

CMO CoinWorks Jonathan Bryan explained that this product has a social mission to encourage the participation rate of Indonesian students from higher education to increase. The cost of education is one of the triggers for the low participation rate.

Referring to the BPS report, the increase in the cost of education penetrates 10% per year. This has an impact on the minimum number of students, according to the Ministry of Research, Technology and Higher Education, which only reached 32,9% of the total Indonesian population aged 19-23 years at the end of 2018.

"Not because they don't want to go to college, but because the costs are high. With the convenience of the Decade, we hope that the younger generation will be able to take the opportunities that exist to improve the competitiveness and quality of human resources in Indonesia," he explained, Tuesday (27/8).

decade is a development of KoinPintar where borrowers can pay their bills in installments for up to 10 years with flat interest starting from 0,75% per month (9% per year). As for the form of loans through KoinPintar, the tenor starts from 3 months to 24 months, with the same interest.

KoinPintar accepts applications for informal education including course and vocational institutions, such as Hacktiv8, Quipper, MoneySmart, Aku Pintar, and English First. There is also funding for universities, such as at Binus Online Learning.

The requirements for the Decade weren't much different. Eligible borrowers are those who have been registered as students from Strata 1 and above. Then include student data, guarantor data, and guarantor salary slips. Within two days, borrowers will be notified whether their application was accepted or not.

Meanwhile, pilot project A new decade has begun for students studying on the island of Java. The nominal financing starts from IDR 50 million to IDR 100 million.

"If it is less than 10 years the borrower wants to pay off, we give the opportunity for no additional fees at all or no early repayment fees."

Jonathan admits that there is no special handling for this product. This means that lenders will still receive returns as they generally invest through KoinWorks.

Overall, each distribution already has a reserve fund in case of default. If you are late, of course there will be a fine of 6% of the total arrears.

Talking about the achievements of KoinPintar, since its launch two years ago, it is claimed to have had 26 thousand borrowers or 20% of the total borrowers at KoinWorks of more than 130 thousand people.

Meanwhile, the distribution has only reached 10% of the total. Cumulatively, KoinWorks has disbursed more than IDR 1 trillion, with an estimated monthly distribution of IDR 200 billion.

"Although the percentage is small, the number of borrowers at KoinPintar is quite large because the average loan is IDR 10 million."

If the pilot project is successful, it will open up the possibility of opening up the scope of borrowers outside Java. There is even an initiation intended for financing studying abroad, considering that the OJK has set a maximum limit for distribution in p2p lending companies of IDR 2 billion.