Want to study abroad? This startup helps students with unsecured student loans
Many Indian students aspire to study abroad as the next step in their career development. However, the lack of credible information on the application process and the high cost of loans act as a deterrent.
To meet these two specific challenges, two friends and IIT-Kharagpur alum Vaibhav Singh and Arnav Kumar decided to launch Leap Finance in 2019.
The Bengaluru-headquartered startup is an intersection between the worlds of fintech and edtech.
“We wanted to be the one stop shop for everything a student needs to successfully move abroad,” said co-founder Vaibhav Singh. Your story.
From their IIT-Kharagpur days in 2005, the duo had always kept in touch, working for several global financial firms overseas.
Vaibhav returned to India in 2014 after realizing that he wanted to embark on the path of entrepreneurship. He has worked with Capital Float and InCred and played a key role in growing their business.
On the other hand, Arnav dove into the startup world with a few stints at a top VC firm and a startup, which gave an overview of the startup ecosystem.
While working with InCred, Vaibhav got a glimpse of a whole new world of student loans. First, Indian students who went abroad for higher education paid higher interest rates on their student loans.
Second, the students depended on several sources to get all the information about the admission process in a foreign university.
“An American student at Harvard borrows about 4-5%, but the same for someone from India is charged 12-14% on the student loan,” says Vaibhav.
This mainly happens because the student gets the loan from a bank in India at the prevailing interest rates in the country.
“We realized that student loans should not be given in Indian rupees, but in the currency of the destination country,” Vaibhav explains.
Another obstacle was that Indian banks usually ask for collateral for any student loan, which exceeds Rs 15 lakh.
The second challenge was that the entire college admission process – normally a 9 to 12 month process – students typically depended on various service providers, resulting in inconsistency in the quality of service.
Low cost loans
As Vaibhav says, “We support the present and future potential of students,” the Leap Finance, the startup’s first product provides 100 percent financing for education loans in US dollars and at much lower interest rates than in India. In addition, the startup is not looking for any collateral for these loans.
the Bengaluru startup with an office in San Francisco, California, goes through multiple data points of any potential student loan applicant, which includes academic background and work experience that spans over 300 data points.
In addition, he is also investigating the outcome of what the likely future roadmap of these students would be.
In addition, Leap Finance also provides a US bank account, a virtual debit card, student insurance, a credit card, etc., which are very useful for students when they start their student life in a foreign country.
“It is very important for a student that a credit history is built in the United States rather than in India,” says Vaibhav.
The startup the size of the student loan note is around $ 55,000, and reimbursement begins once the individual has completed the course. He paid more Rs 500 crore for such loans in several universities and courses.
Building a community
In addition to helping with loans, Leap Finance also felt the need to build a community around students considering going abroad for higher education.
“We realized that the first thing a student does when considering going abroad is to talk to five other people who are considering or have already gone abroad,” says Vaibhav.
This led to the emergence of his second product – Leap Scholar – who helps with test preparation, application processing, admissions, counseling, etc.
According to Vaibhav, every student applies to several universities and also to different countries. Hence, it becomes important to provide all credible information.
Leap Scholar provides all the information and advice students need when applying for a foreign university. It charges a certain amount for the services, depending on the country a student wishes to apply to.
These measures have led to the creation of a community of like-minded people and nearly five lakh students. In fact, more students are added to the group every month.
Growth and future projects
According to Vaibhav, in its first full year of operation, in 2020 it helped around 20,000 students go abroad. He added that despite COVID-19, it has increased by around 25% month after month.
Leap Finance has cumulatively raised $ 22.5 million in financing with the participation of investors, including Sequoia Capital India, Jungle Ventures and Owl Ventures.
The startup is aimed at students who primarily choose to study in countries, including in the United States, Canada, Ireland, United Kingdom and Australia.
Despite the second wave of COVID-19, Vaibhav believes Leap Finance would be able to grow 6 to 7 times in 2021 and at least help 150,000 more students to go abroad for higher education.
His confidence comes from the fact that there is a significant pent-up demand to study abroad. It competes with Eduvanz, GyanDhan, Auxilo, etc.
The startup remains optimistic that demand for education abroad will continue to remain high.
“Our differentiation is the complete platform given the pricing of our loans and a community-driven approach,” says Vaibhav.