Three Fintech Startups Show Commitment to Addressing Education Problems

Three fintech startups engaged in lending, Dana Cita, Dana Didik, and KoinWorks, have shown their commitment to continue to develop educational financing solutions for students by continuing to add partnerships with higher education institutions. Through the partnership, it is hoped that more students will be helped and can start a better career in the future.

This commitment has been shown more aggressively after President Joko Widodo asked banks to encourage the distribution of education credit, as in the United States, which was made in mid-March during a limited meeting.

The challenge given by the President was answered by a number of banks, such as BNI and BRI by launching education credit or credit cards student loans. BRI presents Briguna Flexi Pendidikan, which is intended for domestic S2 and S3 students who already have a steady income.

Meanwhile, BNI utilizes a partnership with ITS for the BNI Flexion-Education program by targeting students and lecturers from undergraduate to postgraduate degrees at domestic and foreign educational institutions.

What is different from these banking institutions, these three fintechs are playing into the education sector which is more "bold" because it enters the realm of student financing for the diploma level, up to the bachelor's degree. This level is actually full of risks because students have not graduated from college and do not have a clear career, so they are less attractive to banks.

"The total state budget for the government sector is 20%, but all of them are still targeting primary and secondary education. What about higher education? That requires the role of the private sector, therefore fintech is here to help solve this problem," said Dana Co-Founder Cita Susli Lie, Tuesday (3/4).

Susli said, Dana Cipta was present at the beginning of last year with a focus on education financing loans for students who are still in college and vocational schools in Indonesia. Currently the company has facilitated financing for 50 students from 27 PTN and PTS, including UI, ITB, IPB, PNJ, and STMIK.

The Cipta Fund provides an opportunity for students to get financing facilities of up to 100% of tuition fees, the maximum tenor is six years and the interest varies depending on the applicant's profile and study program.

Students can apply through the website, if approved the fees will be disbursed directly to the relevant educational institution according to the payment schedule. To overcome bad credit, the company requires each applicant to submit an application together with a parent or sibling who meets the requirements as a supporting borrower and person in charge.

"12% of our total borrowers are the first generation who want to get a bachelor's degree. 33% of borrowers have parents with self-employed jobs, who have but uncertain. From this it can be seen that sitting in college has the potential to achieve a better job career, although it has not yet been measured when it will be realized," said Suslie.

Slightly similar to Dana Cita, Dana Didik utilizes loan funds with a crowdfunding system. The company provides loans with a maximum tenor of four years with a revenue sharing model so that it does not burden students. Dipo Satria Ramli, Co-Founder of the Education Fund, said the company has three financing products for education programs in the fields of health, technology, and general education loans.

For a refund, if before the graduation period and/or the student has not earned an income, the student is able to repay the loan, they can get 0% interest relief. Meanwhile, those who are already earning adhere to a profit-sharing scheme with a range between 10%-30% depending on the amount of student income later.

"Personally, many investors are interested in investing in the education sector because they want to help children who want to take school seriously. Interest is high, but they have satisfaction there. From students who have paid their installments with us, their income has increased 3x double the amount of the loan," said Dipo.

Ask for incentives

Although business-wise these three fintech startups are brave enough to enter the realm that banks are still reluctant to enter, they ask the government for incentives to encourage financing in the education sector to be more enthusiastic.

KoinWorks CEO Benedicto Haryono said the incentives could be in the form of tax relief for investors, funding assistance for a longer tenor, and so on.

"Of course, if there is an incentive, it will be more pleasant for investors and companies, if there is a reduction in income tax, it will certainly be more fun," he said.

KoinWorks has two lending products that target different target consumers, for SMEs and education entrepreneurs (Koin Pintar). Gradually, the company developed Koin Pintar with the initial target of students being a short course program (non-formal), then developing it to a further stage to the formal sector of higher education.

Since it was first established in 2015, the company has financed education for 100 students with a composition of 30% of them for formal education and the rest for non-formal education.

"We hope that the composition will be balanced 50:50, for that we will increase partnerships with universities."

In providing distribution to the education sector, KoinWorks has always relied on funding sources from foreign institutions, such as from Japan and Hong Kong, as investors.