India's Education Finance Gap: Why Most School Fees Are Still Paid Without Formal Credit

India has close to 1.5 million schools, according to the Ministry of Education's UDISE+ data. Yet most parents still pay school fees entirely out of pocket — no credit, no EMI, no financial product of any kind. Here's why that gap exists and why it's about to change.

What the gap looks like

• Private school fees vary widely by city and school, and are often due in large term or annual instalments
• Few parents use a formal credit product for school fees
• The most common ways to pay are family savings and informal borrowing from relatives

Why this gap exists

Several structural factors have kept school fee financing underpenetrated in India:

• Small ticket size. A ₹1 lakh school fee isn't large enough for traditional banks to find it profitable to underwrite individually.
• No collateral. Unlike a home or car loan, school fees offer no physical asset as security.
• Thin credit files. Many Indian parents — especially homemakers or self-employed individuals — lack a formal credit history.
• School-lender disconnect. Banks don't have relationships with schools, making it hard to verify the fee amount or ensure proceeds go to the right party.

How Nishwik is solving this

Nishwik's approach to school EMI financing solves the structural problems directly:

• B2B2C model. Working with schools directly lets the fee amount be confirmed with the school and lets the lender pay the school directly, which reduces the risk of funds being diverted.
• Lender-led underwriting. The regulated lender decides whether to approve each application under its own credit policy; Nishwik does not underwrite loans.
• Credit assessment is per the regulated lender's policy. Some lenders can use consented cash-flow data (for example via the Account Aggregator framework) alongside credit-bureau checks, which may help applicants with thin credit files.
• Reach through schools. One school partnership makes the option visible to every family at that school, without each parent having to find a lender on their own.

The market opportunity

Only a small share of private school fees is financed through formal credit today, so even modest adoption of fee EMI products would represent significant new, regulated credit for families. The infrastructure exists. The need exists. What's been missing is the B2B institutional layer that connects schools to NBFCs at scale. That's what Nishwik is building.