- Claims to be first fintech to offer loans for full degree programmes
- The first Indonesian fintech lending startup to be backed by Y Combinator
WITH its sole focus on student loans, Indonesia-based Dana Cita is on a mission to democratise access to higher education in Indonesia.
Through its lending platform, students can obtain affordable loans to pursue tertiary education and training. Dana Cita claims to be the first in Indonesia to offer financing for full degree programmes.
Dana Cita co-founder Susli Lie (pic, right) tells Digital News Asia in an interview that she wants to help Indonesian students unleash their true potential and build a better future regardless of financial background.
“As the world’s fourth most populous country, Indonesia boasts 260 million people, the majority of whom are below 30-years-old. However, many young students are unable to pursue higher education, as evidenced by a Gross Tertiary Enrolment Ratio of only 28%, according to Indonesian Ministry of Research, Technology and Higher Education (Ristekdikti).
“One big challenge out of many challenges is the lack of financing options. The result is obvious, people tend to give up their dream to pursue higher education because they cannot afford it.”
She explains that Dana Cita, which means Aspiration Fund, envisions making higher education accessible to all, thereby inspiring her to focus only on providing student loans.
“To us, higher education has the transformative power to truly enable significant upward mobility and unlock a better livelihood for young people. Despite the immense potential, this market is currently underserved which led us to focus exclusively on student loans, with the end goal of enabling as many Indonesians to achieve higher education as possible.”
Dana Cita offers a simple application process and quick approvals. On their website, students can apply jointly for the loan with one co-borrower, who is typically a parent. The process from applying to loan agreement signing can take as little as a few days.
Once approved and disbursed, repayments are due every month. With a longer repayment term, usually twice the length of the study period or up to six years, students are able to use their salaries after they graduate to repay the remaining loan.
Dana Cita’s borrowers come from 27 tertiary institutes, ranging from public and private universities, polytechnics, and academies, with students pursuing Diplomas, Bachelor’s degrees, as well as non-degree short courses.
Susli adds, “As a P2P fintech lending company, we generate our revenue from the fees we charge to provide the loans.”
It offers interest rates from 1% to 1.5% flat per month and is able to offer a loan to cover up to 100% of the tuition fees, with up to six years to repay, enabling students to focus on their academic performance.
Set up in early 2017, Dana Cita has provided up to two billion rupiah (US$144,000) in student loans as of March 2018.
It also has graduated and received seed funding from US-based accelerator Y Combinator and other investors in Indonesia and abroad.
“We are proud to be selected by Y Combinator, the pre-eminent startup accelerator in Silicon Valley as one of the few companies from Indonesia. We had the opportunity to learn from our global peers and Y Combinator alumni in Silicon Valley from January to March this year.
“We are the only fintech lending startup from Indonesia so far that is backed by Y Combinator. Given the opportunities in Indonesia, we hope to become as successful as other Y Combinator alumni such as AirBnB, DropBox, Reddit, and Instacart.”
In terms of competition, Susli says that there has been very little focus on education financing in Indonesia to date.
“However, market needs and demand are growing and we have no doubt other players will start entering the market, which we view to be a validation of the market potential.”
Given the lack of consumer awareness, she views competitions to be a good thing as they work together to educate and grow the market.
“Ultimately, like in any other industry, we believe the best product will succeed - that’s why we work to ensure that our loans are affordable and easily accessible. Furthermore, we plan to grow and build our community of borrowers, to offer support beyond just financing to help them realise their full potential.”
She agrees that student loan schemes are quite common in other countries, but not yet in Indonesia.
“Most people today are not aware that student loans are available to fund their education. Our biggest challenge is to educate the market and enable students to realise their dreams. We are talking about millions of young students.”
When asked about the fintech scene in Indonesia, she hopes that this landscape continues to be welcoming to innovation and new solutions.
“As you might know, the vast majority of Indonesians fall outside of the mainstream financial ecosystem. Most do not have a bank account and only a very small percentage have access to any form of credit.”
She also thinks that, “the government so far has shown an openness to engage with the industry and fintech startups to make sure regulation is designed in such a way that balances consumer protection and rights, yet at the same time does not impede innovation and creative solutions to widen access to financial services and products.”
She hopes that the government will continue to engage fintech stakeholders and remain committed to promoting a welcoming environment for startups to raise funding from domestic and foreign investors, as well as recruit locally and globally.
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