It’s a tough market out there for education businesses. Last month, Australia’s inflation rate reached 6.1%, the fastest annual increase in 21 years. Costs are rising, and education providers (EPs) are paying more than ever for labour, energy, and necessary utilities. As the cost of living expands, it’s possible that many students will choose to drop or put further education on hold while they work to make ends meet.
Education providers (EPs) are feeling the squeeze. They’re caught in the inflationary vise between the institutional pressures of running a profitable business, and the financial stress felt by students and their families. They don’t want to push students into uncomfortable financial decisions, but they also need to keep growing enrolments.
So what are the options for education businesses and prospective students in 2022? In this article, we explore the concept of study now, pay later, and the value it can bring to your education business in today’s tight economic conditions.
What is SNPL (study now, pay later)?
Although some students and courses qualify for government financial assistance, this is not the case for a large number of prospective students. In fact, data reveals that in 2019, there were three million fee-paying vocational students in Australia who were not eligible for government financial assistance. The limitations of mainstream and government finance options hold back certain students who don’t qualify for funding and can’t afford (or don’t want) to finance their studies upfront.
Enter SNPL (study now, pay later). ZeeFi’s SNPL product is available for courses valued between $500 and $20,000. It allows EPs to receive full course payment upfront, while students can start studying straight away, and benefit from a period of up to 36 months to pay off their course fees in flexible instalments.
What SNPL payment solution can do for your education business in 2022
Cash flow management
The biggest win for education providers offering a SNPL payment solution is security of cash flow. Traditionally, many EPs and registered training organisations (RTOs) set up in-house payment plans for students — but this comes with significant financial risk, spotty cash flow, and often some friction with students. Plus, when cash in and cash out don’t match, businesses are often forced to make short-term decisions that lead them to miss out on long-term growth.
Outsourcing payment operations means you’re also outsourcing risk; if your students default on payments, you won’t feel the pinch. When students sign onto a SNPL plan, students can put their studies first, while education providers are paid the full course fee upfront (minus a service fee). This gives both students and EPs the peace of mind they need to achieve their goals, whether it’s pursuing a qualification, or growing enrolments.
Working with a specialised finance partner like ZeeFi that offers end-to-end solutions for EPs can drastically reduce operational costs. Outsourcing all student payment-related tasks, from onboarding to payment collection, frees up your administrative teams to focus on delivering a better overall student experience. And since ZeeFi specialises in student lending and collections, you’ll get higher recovery rates and reduce your overall operational costs.
The advantage of an industry-specific payment solution
Specialists beat out generalists
If you’re in the market for payment solutions, look for a payment provider that specialises in education and training. (We can save you the time: ZeeFi is the only specialised solution for education.)
A specialised payment provider will offer a purpose-built B2B-2C solution built on a deep understanding of your unique business needs, that can accommodate your education business’s specific payment requirements. And as your company and industry evolves, they can adjust their platform to suit your needs.
Be sure to check that your provider is regulated. ZeeFi provides regulated consumer loans under our Australian Credit Licence. We comply with the National Consumer Protection Act 2006 (Cth), the National Credit Code, ASIC’s consumer lending requirements.
Responsible lending is sustainable lending
Most BNPL providers don’t do proper due diligence on their customers. This doesn’t just hurt their business — it can also hurt their customers. If a student can’t afford to pay for their course over the duration of their plan, they could accumulate debt that affects them for life.
At ZeeFi, our human-centred approach involves conducting credit checks, income assessments, and educating students about finance. We work closely with the students to understand how we can support them, and look at their whole situation to provide the best option for them. This helps take the stress off students, because falling behind on a payment is a big distraction from studying. It’s a win-win strategy, because it keeps our education partner’s cash flow steady, by improving the odds that students will complete their courses. Additionally, when a student’s circumstances change, we’re there to help them with flexible payment alternatives.
Looking for a student finance partner?
Talk to ZeeFi about our tailor-made payment solutions for education providers. We’re passionate about helping education providers unlock capital for increased enrolments, and removing financial barriers so every student can reach their full potential, without the wait.