India has almost 4,00,000 recognized private schools which charge fees as low as INR 500 per month and cater to over 53% of the country’s school-going population, shared Steve Hardgrave, Co-Founder & CEO, Varthana, in an exclusive interaction with Srajan Agarwal of Elets News Network (ENN).
Can you share the core mission and vision of Varthana and how it has evolved since the company’s inception?
Varthana has a dual financial offering that covers both the student and school loan portfolios. The company’s core mission is to ensure affordable quality education, with a vision to empower schools and students, particularly in the country’s underserved geographies. Since Varthana’s inception, it has been not only seen as a lender but a trusted partner in education financing.
Varthana’s core mission is to empower affordable private schools in India by providing them with the financial resources and support system to enhance their infrastructure, invest in teacher training, and introduce innovative learning methods in their classrooms. Since its inception, Varthana has focused on meeting the specific needs of school owners who often face barriers regarding resource capital, allowing them to focus on delivering high-quality education without the burden of lengthy and complicated processes. Over the years, Varthana has significantly contributed to the upliftment of the education ecosystem impacting several schools in the country.
Furthermore, recognizing the growing demand for skills-oriented employment, there is a large segment of students that opt for vocational programs for upskilling. Varthana specializes in financial aid for students who want to pursue further studies but struggle with finances. For the student loan portfolio, Varthana has experienced a notable increase in loan disbursements, processing approximately 2,500 to 3,000 student loans per month. The rapid increase in the student loan portfolio stands as a testament to providing students with affordable quality education and also equipping them for the evolving job market.
Varthana has touched the lives of millions of students directly and indirectly by empowering 11,000 private schools for school expansion and repair; by enabling schools to address funding limitations, they are transforming the educational landscape for underprivileged youth.
Varthana focuses on underserved Tier 2 and Tier 3 cities. What challenges and opportunities have you encountered while catering to these areas, and how have you adapted your strategies accordingly?
India has almost 4,00,000 recognized private schools which charge fees as low as INR 500 per month and cater to over 53% of the country’s school-going population.
We operate in a niche sector, and our school leaders often come from remote areas, working tirelessly to uplift the education landscape in their communities. The affordable private schools we support are typically located on the outskirts of cities or in rural areas, where knowledge of formal financial products is limited. The school owners often rely on hand loans or money from pledging the gold; many are not familiar with the idea of taking loans from financial institutions.
For our school loan business, we have a highly agile local workforce that is spread across 16 states/UTs in 40 branches of India to reach out to schools in urban and semi-urban, rural regions. We have been using a hub and spoke model for catering for the schools and scaling its operation process with Hub/Branch set up in cities and spokes are in tier II, tier III and tier IV locations where the Relationship manager has his/her base. Hub/Branch consists of sales, marketing, operations, credit and collections personnel.
Additionally, for our student loan business, we use a digital-first approach and tie-up with institutes for providing loans to students, these are student families who are being left behind by traditional finance providers. Larger banks, non-banking-finance-companies (NBFCs) are present predominantly in India’s large urban metro cities and also mainly target students that are pursuing education abroad or provide finance to only elite domestic colleges, offering loans to families who have good credit history with high salaries, leaving a large section of the aspiring youth in India specially the students from tier II, tier III and IV without a viable option to pursue higher education.
How does Varthana assist schools in upgrading their technology and infrastructure? Could you share some examples of how these upgrades have positively impacted the schools and communities you serve?
Varthana plays an important role in being the facilitator for low-cost private schools to upgrade their technology and infrastructure to equip themselves to provide a high-quality, up-to-date learning experience which includes building new classrooms, upgrading sanitation, enhancing sports facilities, and, importantly, integrating digital learning solutions. These loans are designed to provide these basic needs of affordable private schools to ensure that they offer quality affordable education without putting undue financial pressure on their operations.
We recently partnered with a school in Haryana, where the educator had been operating with limited resources, where he had to pay rent for the school premises and had access to only a few classrooms. Varthana supported the school in getting its land and then renovating its classrooms and library, considerably enhancing the learning environment. These improvements in the schools lead to an increase in the number of students enrolling in the school and in providing a stronger basis for future growth of education in rural areas that have been neglected by education.
We also help these low-budget private schools get technology-equipped products like LEAD School and KYAN which help their students learn better and hence these products enhance the real-life experience of learning. We are proud to associate ourselves with schools from very remote areas that have built a complete technology-enabled education for their students.
During the pandemic, when schools were required to conduct online classes, many institutions in Tier 2 & 3 cities faced significant challenges in acquiring the necessary equipment. However, with the support of Varthana, small school owners were able to secure loans that enabled them to invest in the required technology and buy these equipment to continue providing education, ensuring a smooth transition for their students and teachers. Through our UNLOCK program, we have also provided free worksheets and study materials to ensure uninterrupted learning for these affordable private schools.
What are some of the current trends you’re observing in education finance? How is the demand for loans evolving, particularly concerning private and vocational education?
A current trend shows that students are increasingly gravitating towards vocational courses, as these programs equip them with practical skills that enhance their job readiness and give them a competitive advantage over other candidates. There has been a rise particularly towards STEM fields (Science, Technology, Engineering, and Mathematics) because of the strong job prospects in these fields.
As per the most recent report from the state-level bankers’ committee (SLBC), there has been a notable 30% increase in education loans in the first quarter of 2023-2024. As India’s employment landscape shifts, employers are increasingly seeking candidates with practical, hands-on skills rather than just theoretical knowledge. This has led to a significant rise in the demand for private and vocational education, as students and institutions both recognize the importance of specialized training in fields such as technology, and healthcare amongst others, all of which has led to a spike in loan applications. This trend highlights the shift toward education models that prioritize employability, driving the evolution of education finance to support a workforce ready to meet the demands of a dynamic economy.
What are Varthana’s primary growth and innovation priorities for the next few years? Are there any new products or services in the pipeline that you’re particularly excited about?
At Varthana, our mission has always been to empower schools and students through affordable financial solutions, and this remains at the heart of our growth strategy. Over the next few years, we’re committed to deepening our support for schools by not only increasing access to finance and penetrating to tier III and tier IV cities of India but also integrating digital loan processes that simplify the applications and sanctions, making it quicker and more efficient for schools to secure funding.
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What truly excites me is our expanding focus on student education loans. We’re working to ensure that students from underserved communities have the financial backing to pursue higher education and vocational training, critical pathways for their future success. By developing more flexible and accessible loan products for students, we’re addressing a pressing need in the education ecosystem.
Additionally, we are exploring partnerships with institutes to offer value-added services for our student loan financial products. Ultimately, our goal is to create a holistic ecosystem that not only finances schools and students but also contributes to improving the educational landscape in India.
How does Varthana support vocational and skill-based education? What are your thoughts on the growing importance of these fields in today’s job market?
Varthana recognizes the growing importance of vocational and skill-based education in today’s job market, especially as the demand for specialized skills surpasses the need for traditional degrees. A LinkedIn study reveals that more than 76% of employers prioritize candidates with relevant hands-on skills over those with just formal qualifications. Competitive market where the job landscape is rapidly evolving, possessing additional skills beyond a degree has become essential to finding jobs.
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With the current job market scenario employers are looking for individuals who can adapt quickly and bring practical knowledge to the table. In a time where AI is taking over everything, having strong skill-based experience is more critical than ever. As AI transforms industries, the value of human-driven, skill-based expertise continues to rise, making adaptability and specialized knowledge key differentiators in the modern workforce.
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