India is currently witnessing an unprecedented demand for vocational and skill-based courses, with many young individuals completing secondary education each year, who want to be equipped with skill sets that the employer requires, shared Steve Hardgrave – CEO & Co-Founder, Varthana, in an exclusive interaction with Srajan Agarwal of Elets News Network (ENN).
The impact of the pandemic on education has been profound, particularly for low-income families. Can you elaborate on Varthana’s initiatives to address the digital divide and support schools in adapting to remote learning, considering the longlasting consequences on enrollment levels and the increased dropouts observed in 2022-23?
India witnessed one of the longest school closures globally due to the COVID-19 pandemic. Schools were the first to shut and last to open. Due to the closures, educators and students had to adapt to remote learning. The basic requirement of remote learning is to have proper access to smartphones and the internet.
This radical shift to remote learning posed a significant challenge to these low-income families who had been severely affected by COVID-19 due to loss of income and had to shift to their native, which was essentially a rural setting, to earn a livelihood. Now, these families have to purchase expensive smartphones and internet data packages to address the digital divide created between families in urban/ semi-urban regions and can afford the digital infrastructure for learning.
In order to address this digital divide and ensure continued learning for students, Varthana launched the Unlock School Program, which focused on providing students of grades 1-8 with printed remedial material and supplementary videos in Maths and English. This aimed to help schools restart academic engagement, stem learning losses and help students transition back to school. Close to 1000 schools across India benefited from the Unlock School initiative, with nearly 1400 physical workbooks distributed per month, impacting approximately 300,000 students overall.
We also developed a teacher certification program to assist teachers in transitioning to online teaching, particularly those who may not be proficient with technology; the program emphasised lesson planning and assessment strategies to ensure uninterrupted learning.
In addition to the above initiatives, Varthana also provided loans to schools for acquiring or revamping the digital infrastructure available at the school to bridge the digital divide gap. By the end of FY 23-24, Varthana would have funded close to 10000+ schools in India and impacted around 4.5 million students across 16 States/UTs.
The interventions provided by Varthana and other education focused entities did help in bridging the learning gap and enrollment ratio. The year 21-22 has seen enrollment ratios improved and school dropout percentages being reduced as per the economic survey 22-23 report. This report consolidates the information from the UDISE Data shared by the schools with the Education Ministry of India.
Vocational courses have gained traction due to job losses and the demand for specific skill sets. How is Varthana playing a role in financing such courses to bridge the gap between demand and supply, and what impact does it foresee on the overall employability landscape in India?
India is currently witnessing an unprecedented demand for vocational and skill-based courses, with many young individuals completing secondary education each year, who want to be equipped with skill sets that the employer requires. In parallel to this, the current workforce needs to be re-skilled and up-skilled to catch up with the industry and technology demands.
While the surge in vocational training courses is promising, it brings along challenges, particularly those from lower and middleincome families in financing their upskilling or re-skilling journey.
Loans for these courses, which are typically called education loans or student loans, help bridge the gap between the financial resources available to the student and those required to pursue a course. Now, banks usually focus more on the premier institutions offering postgraduate programs. Not too many bank loan options are available for undergraduate courses, vocational courses or upskilling courses, as these are typically marked by lower-ticket, shorter-tenor loans. Newer fintechs or NBFCs like Varthana offer these.
The student loan business at Varthana is partnering with domestic higher education institutions and training centers to provide timely loans to students to pursue their dream careers. This business specifically focuses on segments of the Indian market that currently find it difficult to access financing for higher education; many of our customers are bottomof-the-pyramid households that traditional finance providers are leaving behind. This includes students (and families) who are:
New to credit, i.e. do not have a track record of banking history l Earn their income from informal or entrepreneurial activities l From lower-income households earning INR 20,000 – 30,000 per month
40% of students who availed of Varthana loans to pursue education would have had to compromise on their aspirations by choosing to pursue a cheaper alternative, while another 10% would have had to give up their pursuit of higher education altogether, as per a sample survey conducted by Varthana in Oct 2022 to understand the impact of its student loan initiative.
In the context of the demand for quality and affordable education in India, how does Varthana perceive the evolving needs of students and parents, and what strategies does it employ to support and promote quality education while ensuring affordability?
Varthana was founded with a vision to transform affordable education in India by providing loan capital so they can expand their infrastructure, invest in teacher training, and introduce new learning methods into their classrooms.
Varthana would have financed close to 10,000+ schools by the end of FY 23-24. With this, it would have catered to a wide set of urban, semi-urban, and rural schools to provide access to quality and affordable education. Varthana has already impacted close to 4.4 million students from diverse economic backgrounds through these schools.
While our initiatives have successfully supported affordable private schools in improving infrastructure and student learning outcomes, Varthana is committed to a holistic approach involving collaboration with all stakeholders. We have introduced targeted interventions such as school leader webinars, teacher certification programs, and parent surveys.
We recognise that a well-rounded and effective education system involves the active participation and empowerment of each and every stakeholder. Varthana strives to create a sustainable and inclusive educational ecosystem by providing resources, training, and collaboration platforms.
Affordable private schools face unique challenges. Can you shed light on why Varthana believes these schools should be a focal point, and what specific financial solutions or support does Varthana provide to ensure the sustainability and growth of such institutions?
At Varthana, we believe that affordable private schools should be at the forefront due to several compelling reasons:
Accessibility: These schools are important because they provide good education to kids, especially in areas without many other school options. By supporting these schools, we ensure all kids get a good education.
Innovation: Affordable private schools often have really innovative ways of teaching that work well for the local community. By supporting them, we encourage them to keep coming up with new and better ways to teach, which helps kids learn better.
To ensure the sustainability and growth of these schools, Varthana provides specific financial solutions and support:
We offer financial products and services customised to the unique needs of affordable private schools. This includes loans for infrastructure development, technology upgrades, and capacity building. We also understand the unique needs of our customers hence, by understanding the financial constraints faced by these school leaders, we provide flexible repayment options. This allows schools to manage their finances effectively while investing in their growth and improvement.
By providing affordable financing and support services, we ensure the financial sustainability of affordable private schools. This enables them to continue serving their communities and contributing to the overall improvement of education standards.
All our efforts stem from the belief that we are here to make a difference in the education sector. With our financial product we aim at catering to all students who want a quality education at affordable fees. Improvement in learning outcomes is the holy grail for us.
As an NBFC focused on the education sector, how does Varthana navigate the evolving landscape of education loan lending? Specifically, how has the approach changed not only for K-12 education but also for vocational education, and what role does technology, including AI/ML, play in shaping these changes?
India’s K-12 education landscape is diverse, with schools categorised by ownership of government, private-aided and private-unaided, along with different boards like CBSE, ICSE/ IB/IGCSE, and State boards, etc. Close to 53% of the country’s school-going population attend India’s 4,00,000 recognised Affordable Private Schools (APS) which charge fees as low as INR 500 per month.
These APS lack adequate financial resources to work towards improvements like expanding the capacity or renovating. Neither do the traditional financial institutions like Banks or NBFCs cater to this segment as they are looked at as philanthropic endeavors rather than enterprises and often fail to produce audited financial reports. This is where Varthana has stepped in and made a difference by supporting growth for these affordable private schools with timely financial aid – which the schools use to expand their capacity with additional classrooms, build math and science labs, procure digital classrooms setup, or invest in teacher training.
The landscape of higher education in India is evolving rapidly. Offers myriad options for students eager to pursue their dreams, ranging from traditional domestic colleges to specialised professional courses and vocational training programs to honing their skills to be future-ready.
85% of the schools fail to implement vocational education in school, with a higher percentage of drop-outs and low-foundational skills at secondary levels, leads to reduced readiness for vocational education programs and eventually building a gap in demand and supply of skill-based work as per the report of Landscape of School to Work Transition in India by Sattva Knowledge Institute Primer.
According to the same report, 36% of India’s youth population is NEET (Not In Employment, Education, and Training), and the situation is worse for women (>50%), especially in states like UP, West Bengal, MP, and Punjab.
The National Education Policy has directed to initiation of Vocational Education and Training (VET) from Grade 6 onwards to make students employable for a broad range of occupations after Grade 12. As per the Ministry of Skill Development and Entrepreneurship, there are requirements of 109.73 million skilled manpower in 24 key sectors. However, skilling preferences are towards the IT and Electronics sectors emphasising the importance of VET to meet the diverse needs of the economy.
Apart from the supply of skilled workforce, demand-side factors influence young people’s transition to work, like barriers in accessing financial resources, requiring migration from rural areas, low-paying entry-level jobs, outdated curriculum and technology that don’t match market-relevant skills, etc.
Barriers to accessing financial resources for Vocational Education and Training are being addressed by Varthana and other players in the market by providing timely loans to people who are new to credit or have a low household income.
Varthana Student Loan business has built a completely automated credit scoring model using historical data and regression models to predict the risk and creditworthiness of an applicant who aspires for VET at the time of sourcing a loan. Varthana has also integrated its internal application with online verification, credit bureaus systems, and banking systems to check eligibility.
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