NIIT - Student Loan Program

completed

- Project Description: IFC is considering providing a partial guarantee of NIIT''s student loan program, which NIIT launched with Citibank in January 2000. The total program size will be up to $90 million over a five year period. The proposed structure of IFC''s investment is a guarantee for 10% of the program, ie $9 million. The student loan program provides financing for students participating in GNIIT, NIIT’s flagship graduate educational programme. As with all NIIT courses, the graduate program is modular, computer-based and off-campus. NIIT is expecting to enrol 50,000 students in GNIIT in the next five years.- Project Rationale:By participating in the GNIIT student loan program, IFC is helping to support not only a highly unique and entrepreneurial model of private sector-led applied IT education for adults, but also the introduction of a new asset class, student loans. This program will show other Indian companies a working model of a student loan system which could be replicated India-wide; IFC could also assist NIIT to replicate the GNIIT student loan program in its other 15 emerging market teaching centres, including Bangladesh and Sri Lanka. - IFC’s Role: In the past, financial institutions in developing countries have avoided investing in students’ education with the view that it this is either a state, a charitable, or a loss-making sector. IFC’s guarantee is helping to launch a new asset class in India: the student loan. IFC by itself could never fill the private education sector "funding gap" of a country. But as IFC demonstrates the feasibility of profitably investing in the education sector, it can encourage other financial institutions to become active players rather than remaining on the sidelines. IFC can also play a significant role in spreading this ''model'' student loan program by helping NIIT replicate it worldwide. - Developmental Impact:The GNIIT student loan program will have numerous developmental impacts: - This project extends educational opportunities. It attempts to reach families from many income groups. Equity in access to knowledge, which empowers the disadvantaged, is a key outcome. - It will help to establish resource mobilization (including beneficiary cost-recovery) mechanisms to ensure that sector financing is both equitable and adequate. - It emphasizes innovation, skilled management, motivated and skilled staff, parental satisfaction, and improved performance on standardized tests. It can demonstrate successes for emulation by other schools in the community and reach out to help them. Finally the project contributes to economic growth through enhancing the quality and size of a country’s stock of human capital, its key asset. It can create modern facilities and programs at reasonable cost.