Singapore-based startup EduFi has raised funding for its student loan platform

EduFi, a fintech startup that enables financially disadvantaged students to get loans for their education, has raised $6.1 million in a pre-seed round led by Zayn VC with participation from Palm Drive Capital , Deem Ventures, Q Business and angel investors.

The Singapore-based startup launched an artificial intelligence-powered study now, pay later (SNPL) lending platform and its mobile app in Pakistan, a country without student loan products as a category; instead, users to get personal loans with high interest and long process, Aleena Nadeem, founder and CEO of EduFitold TechCrunch.

EduFi wants to address two issues in the country — high levels of poverty and low literacy rates — through its fintech platform. In Pakistan, about 40% of students attend private schools because of the poor quality of public schools, resulting in spending more than $14 billion on their education each year. In addition, more than 50% of the adult population of Pakistan no access to financial services such as bank accounts and insurance.

Nadeem, an MIT graduate who previously worked at Goldman Sachs and Ventura Capital, saw firsthand many children struggling with financial barriers to get a quality education while working at Progressive Education Network (PEN) in Pakistan. PEN is a nonprofit organization that provides free and quality education to children who cannot afford it.

“Many children in Pakistan go to high school, but there is a sharp decline in those who achieve a higher college education,” Nadeem said. “This drop is where EduFi tries to inject capital into the gap between high school graduation and first-year university admission.”

The two-year-old company already has partnerships with 15 universities, allowing the app to be used by about 200,000 students who need to pay their fees for undergrad, Master’s and PhD across Pakistan.

When a student (or a parent) applies for loans through the app, EduFi needs the financial status of the applicant (student or parent). For example, the last 12 months’ bank statements or a source of income that can support their loan payments, such as a salaried job, small business, or freelance work. If the student loan facility is approved, EduFi will send the money directly to the college’s bank.

During its beta phase over the past 18 months, EduFi tested its credit model against 80,000 consumer finance loans made by banks. Getting started that the credit scoring system allows for the dispersal of student loans within 48 hours of application and the quick payment of the loan. EduFi, which has received approval for a license to make loans from the Securities and Exchange Commission Pakistan (SECP), is waiting for the license to be granted, which is expected in November. Nadeem said it is currently validating its product and service with potential customers and collecting feedback and data to improve its service.

The company says that it has raised the traditional banking method, which involves high interest rates and a complicated application process, as well as taking at least three to four weeks to be approved. EduFi’s digital lending app offers users an easy, straightforward process and flexible loan terms and conditions.

“Education offers hope and changes people’s lives. I am an example of millions out there. EduFi offers this hope and can be a factor in changing people’s lives as we lift one of the biggest burdens of aspiring families,” Nadeem said. “For example, students in dental or medical schools have to pay upwards of $8,000 up front, which is unsustainable for most in Pakistan. Every student we help is a testament to the ambition, opportunity and empowerment we strive for. EduFi.

The company will use the pre-seed capital to reach more customers, optimize its platform, expand into neighboring countries and launch other fintech products, including student credit cards.

“This is an important step towards achieving financial inclusion for middle and low-income families. In Pakistan, families spend more than 50% of their income on their children’s education, which has become more challenging due to inflationary pressure. EduFi’s new approach will help ease this burden and empower families to invest in their children’s future,” said Faisal Aftab, general partner and founder of Zayn VC, said in a statement.

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