Hundreds of thousands of teenagers and young adults get on flights each year from India to a foreign land to pursue higher education. Upon landing, they face myriad challenges. One big one: They don’t have a local credit history, so they can’t avail a range of financial services, including a loan or a credit card — at least not without paying a premium for it.
For banks and other financial institutions, there is an increased risk when they engage with foreigners, so they charge more. An Indian student studying in the U.S., for instance, borrows money at an interest rate over 13%, compared to their local peers who can secure the same amount of credit, if not more, at less than half of that interest rate.
Leap Finance, a two-year-old startup with headquarters in San Francisco and Bangalore, is attempting to solve this problem — and many others. The startup grants loans to students at a fair interest rate by evaluating the data they generated — alternative and derived — in India itself.
Since the last time we wrote about Leap, the startup has evolved to address several other problems students face, explained Arnav Kumar, co-founder of Leap, in an interview with TechCrunch.
Kumar said Leap today is helping students with guidance on admission, visas, and test preparation. Leap has also developed a social network of sorts where over half a million students are talking to one another and use the platform’s other services to get admission in a college abroad.
About 10 years ago, when I was looking to join an engineering college, I reached out to several individuals who were already studying in the colleges I had shortlisted. Turns out, over a million students in India do the exact same thing each year when they are about to begin their college life. (If I may complete the loop, I did graduate and have a bachelor’s degree in CSE somewhere in the house.)
Kumar, who previously served as associate VP at venture firm Elevation Capital, said Leap’s community today is replicating the offline-behavior. Some students, to be sure, reach out to others on LinkedIn, or Facebook. But by just focusing on one problem, Leap is attempting to become the community for students who are looking to pursue higher education. (Its pages are indexed on Google search for better visibility.)
There is a massive opportunity for startups to better solve these problems.