Affordable Education Loans

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Affordable Education Loans
Affordable Education Loans
for Primary and Secondary Education levels
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SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Education
Formal Education
Business Model Description

Invest in business models offering short-term financing solutions through short term loans issued to students / households / educational institutions with tenure of less than or equal to one year and interest rates of ~1.5% per month, allowing the borrowers to pay enrollment fee in low-cost EMIs throughout the school year. (19) (20)

The loans can be offered to those who applied for the voucher system but are not covered by the said program.

Maybridge Finance, founded in 2008, as a finance institution lending to SMEs in healthcare, education, renewable energy, low-cost housing, and financial technology sectors, pivoted to becoming an education-centric finance institution since 2017 that focuses on bridging financing gaps in the Philippines education sector. (31) Funding for Maybridge projects includes Luxembourg-based Backbone Emerging Market Fund.

Maybridge Finance also provides financing to small private schools, its suppliers, students, and other stakeholders. It offers a lending program to Philippine private high schools that is complimentary to the Department of Education's (DEPED) Subsidy program. (18) (19)

This financing program allows schools to discount upto half of its subsidy claim – which is approximately USD 90,000. It issues loans at a monthly interest rate of 1.5%, i.e. ~19.56% compounded annually, and charges Loan Administration and Processing Fees of 1.75%. Payment of loans is dependent on DepEd's ability to process a subsidy claim. (19)

Phinma Education Holdings Inc., which started investing in education in 2004, is a private-owned education institution with a network of 10 schools in the country– 9 in the Philippines and 1 in Indonesia. In addition to providing quality education, Phinma Education also offers a financing program to its Philippine students. Tuition fees at Philippine Phinma Schools typically range from USD 800-1,000. (33) Funding source is undisclosed.

Phinma Education's "Bukas" program offers its students a flexible 12-month tuition payment plan, charging monthly interest rates of 1.5%, i.e. ~19.56% compounded annually, with a one-time service fee of 3%. Students may pre-terminate or fully pay these plans before 12 months without incurring additional fees/penalties. (20)

Expected Impact

Provision of financial solutions to support low-income individuals to continue their education and schools dependent on voucher system.

How is this information gathered?
Updated: 17 Mar, 2024
Philippines
Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in IRR)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Quality Education (SDG 4)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Gender Equality (SDG 5) Decent Work and Economic Growth (SDG 8)

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Sector Sources
  • 1) NEDA. Philippine Development Plan 2023 to 2028 https://pdp.neda.gov.ph/philippine-development-plan-2023-2028/ 2) Philippines: Learning in Brief (2022). Accessible at https://documents1.worldbank.org/curated/en/099000207152223103/pdf/IDU002b5536c0db4104ec3087d809906ec2eae56.pdf 3) INFF. Development Finance Assessment 2022 https://medium.com/@jp.inff.ph/2022-development-finance-assessment-shows-ph-financing-landscape-in-the-time-of-covid-19-and-the-68dcc39bcc19 4) World Bank (2016) Assessing Basic Education Service Delivery in the Philippines. https://documents1.worldbank.org/curated/en/507531468325807323/pdf/AUS6799-REVISED-PH-PETS-QSDS-Final-Report.pdf 5) Parreno, J. (2023) "School dropouts in the Philippines: causes, changes and statistics". Sapienza International Journal of Interdisciplinary Studies. https://www.researchgate.net/journal/Sapienza-International-Journal-of-Interdisciplinary-Studies-2675-9780 6) Banko Sentral ng Pilipinas, (2022) "Strengthening Financial Health through Financial Literacy" https://www.bsp.gov.ph/SitePages/MediaAndResearch/SpeechesDisp.aspx?ItemId=993#:~:text=The%20World%20Bank%20found%20that,countries%20surveyed%20on%20financial%20literacy. 7) Alegado et al. Closing the Gender Gap in Schooling Outcomes and Cognitive Ability among Filipino Children . UNFPA-OPS Policy Note Series No. 5. https://opsusc.org/pdf/UNFPA-OPS%20Policy%20Note%20Series%205%20Gender.pdf
IOA Sources
  • 8) Department of education (2019) https://www.deped.gov.ph/wp-content/uploads/2019/12/PISA-2018-Philippine-National-Report.pdf 9) Private Education Assistance Committe. https://peac.org.ph/educational-service-contracting-esc/ 10) Private Education Assistance Committe. https://peac.org.ph/senior-high-school-voucher-program/ 11) Republic Act 8545. https://www.officialgazette.gov.ph/1998/02/24/republic-act-no-8545/ 12) PSA Open Statistics. https://openstat.psa.gov.ph/PXWeb/pxweb/en/DB/DB__3I__G04/0023I3D41S1.px/?rxid=6c0be179-9234-4be0-87e7-f1a25f859b2e 13) Rappler (2022). https://www.rappler.com/nation/house-push-expand-aid-private-school-students-teachers-basic-education-revived/ 14) Lending Company Regulations Act. https://www.sec.gov.ph/wp-content/uploads/2019/11/2007Law_RA9474.pdf 15) SEC. https://www.sec.gov.ph/wp-content/uploads/2019/11/1963Law_RA3765.pdf 16) SEC (2023). https://www.sec.gov.ph/mc-financing-lending-companies/mc-no-03-s-2022/#gsc.tab=0 17) Landbank (2020). https://www.landbank.com/news/landbank-offers-direct-study-now-pay-later-loan-program-for-students 18) Maybridge Finance. https://maybridgefinance.com/about/ 19) Maybridge Finance. "Opportunity for Private Schools: Discounting of DepEd Subsidy Claims". 20) Phinma Education. https://bukas.ph/help-center/phinma-guide-and-faqs/ 21) Commission on Higher Education (2020) https://ched.gov.ph/wp-content/uploads/A1.1-Distribution-of-Higher-Education-Institutions-by-Institution-Type-AY-2019-2020.pdf 22) Philippine Statistics Authority (2022). https://psa.gov.ph/press-releases/id/168397 23) Overview of Education Budget and Financing in the Philippines; https://www.teacherph.com/education-budget-financing-philippines/ 24) Philippine Daily Inquirer, 2021 https://newsinfo.inquirer.net/1528071/unesco-36-percent-of-ph-families-incur-debts-to-send-kids-to-school 25) Philippine Statitics Authority (2022) SDG Watch https://psa.gov.ph/sdg/Philippines/baselinedata/quality_education 26) Bureau of Internal Revenue - CREATE https://www.bir.gov.ph/index.php/create.html