Avodha, Income Sharing Agreement and the new financing in Education
Income Sharing Agreement is a form of payment wherein the students do not have to pay the entire fees for their education during their learning period but rather can pay the fees once they get a job that pays a salary.
The cost of education has gone up by over 20 times in the past 10 years, on a CAGR basis the cost of Education constantly increases which is why India sees so many educational institutions and some of the most exorbitant fees in the world being charges by educational institutions here, along with this we see the rising phenomenon of Educational startups or EdTechstartups coming up across the country and attaining billionaire valuations. A peculiar trend seen in e-learning that is not quite visible in other areas is the exorbitant cost of the courses, most of these companies that command a Billion dollar valuation in India sell their courses for a price above ₹40,000, with some institutions charging as high as ₹1 lakh. This has lead to further research into the segment in trying to determine the factors that influence these prices. Upon closer examination, we find that the curriculum is largely the same for a lot of these platforms and institutions, despite having similar curriculum and course content why is there such a great disparity in pricing. "Pricing is largely influenced by branding and closing, you will find students that have paid different prices for the same course in the same platform", says Joseph E George the 24-year-old founder of Avodha that is looking to change the traditional pricing models in Indian higher education.
Income Sharing Agreement is a form of payment wherein the students do not have to pay the entire fees for their education during their learning period but rather can pay the fees once they get a job that pays a salary. This model is at the core of Avodha wherein students pay ₹2800 as an initial fee which is roughly 25% of the course fee, the rest of the fee which is ₹10,000 is paid in installments once the student lands a job related to the course they've studied with Avodha, inspiring their unique tagline Learn Today and Pay the Fees after you Land a Job. Avodha is the first platform to implement this model on a pan-India basis. Income Sharing Agreement is a model that first originated in the United States as a result of the increasing load of student loans that the student community in that country faced, as the epidemic of student loans spread across Europe a similar trend was seen there wherein a lot of the Educational Institutions moved towards an Income Sharing Agreement model, however, in India this model was yet to be implemented. The burden of student loans has not been so acute in India yet, particularly due to the robust system of public-sponsored higher education. This situation however changed with the onset of the novel coronavirus. The virus brought with it the downturn of the economy and subsequently lead to decreasing purchasing power among the students and their decision-makers. It is at this time that Avodha launched this unique model, first in Kerala and then grew rapidly throughout the nation to build out a large brand. Today with offices in New Delhi, Bangalore, Coimbatore, Kochi, Kannur, Trivandrum, and Mumbai Avodha has successfully implemented models across the country. When asked as to why the brand was able to grow so rapidly, Joseph says, "The brand has seen rapid growth due to the message of the brand, which is Learn Today and Pay the Fees After you Land a JOb, the students see for a fact that Avodha is invested in them getting a job unlike traditional players in the space that collect the entire fees upfront", Avodha's unique pricing model has helped build out the confidence of the customer base with the brand.
At such a low price point how is Avodha able to propel the company forward, Joseph explains that Avodha's unique business model focuses the entire organization to look at student placements not just as a marketing stunt but as a source of revenue. They also have a jobs website. By making placements a core business function Avodha.com has been able to place over 70,000 students during the span of its existence. It would be ideal if more and more educational institutions would move towards greater dependence on learning outcomes rather than just the process of learning since most students that join a job-oriented course will be doing so to land a job and therefore it simply seems logical that the service provider, in this case, institutions should have the bulk of their revenue come from attaining this outcome.
In any case, Avodha's journey so far has proven that India is ready for this change and is eagerly waiting to see more institutions follow in the footsteps of Avodha and introduce pricing plans that will enable students to pay for their education after getting a job and a salary.
Disclaimer: This is a company press release. No HT journalist is involved in the creation of this content.