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Credit score for students: An alternative in the digital lending era for students in different countries

DIGITAL VENTURES January 22, 2019 4:19 PM


We have previously discussed digital lending and a relating process such as credit scoring. We find that digital lending isn’t just confined to daily lives or business purposes, but it opens doors to those who wish to acquire loans for education. Student loans differ from other types of loans especially in the digital platform which requires a different credit scoring solution. Let us have a look at efficient credit scoring solutions in various countries and how they help to increase educational opportunities.



Digital lending and educational opportunities

Aside from loans for purchasing assets or business investments, today, loans for education is another prevalent type of lending. This is because education costs are continuously rising and not everyone has access to the scholarships. As a result, student loans become a fulfilling alternative, especially in the tech era which brought about all types of digital lending options. Examples are peer-to-peer lending wherein numerous individuals, both investors and borrowers, can access and find efficient credit scoring solutions, all of which increase the chance of successful loans. Generally, there are 2 main types of digital lending in education.

  1. Private Fund is directly providing all the loans via credit score assessments with strict standards. High scores will help borrowers receive offers with low interests while low scores may provide options to acquire loans from public sectors or give higher interests.
  2. Refinance is refinancing the student loans from the government, university, or other sources to seek new loans with more benefits. Refinance has a different credit scoring system which focuses on the appropriate offer.


Credit score solution: How are credit scores for student loans calculated?

For student loans, lenders consider specific information such as their high school, university, or the student’s major. Some service provider also considers the prospect of receiving income. This differs from other types of loans which consider financial history or information from the credit bureau. Student loans are able to utilize this method because it has a clear objective for the loan. If the money is not used according to the initial objective, it will be a breach of contract and prosecution can immediately take place.

Additionally, some companies may consider the educational status especially for students below undergraduates (loans for bachelor’s degree) and postgraduates onwards. This is because they view that undergraduates are compulsory while postgraduates are professional development. This is an investment with higher criteria and has higher interest rates. 

Nevertheless, student loan debts have better credits when compared to other types of debts when measured from the same value. This is because it has a high chance of increasing income and helps to build a solid foundation in life.



Examples of credit score solutions for education in different countries

Many lending services have student loan because it has a low risk when compared to other business loans. Also, it is considered to be a way of supporting the society. This gave rise to startups who utilize technology to build lending platforms and introduce various new credit score solutions. Below are some lending platform startups with their interesting solutions.

  • SoFi is a leading lending platform from the USA who operates refinances for student loans. Their credit score solution is well-defined consisting of acquiring credit scoring from various sources. Also, they assess behaviors such as current income level and frequency of loan payments. This helps to efficiently control risks and provide offers that match borrowers’ behavior. 
  • LendKey is a leading P2P lending platform for student loans with services both for private funds and refinance. The credit scores are calculated from numerous partners including banks, credit bureau, and other entities that help to evaluate risks.
  • Zomia is a social enterprise that offers educational opportunities to Myanmar students. They can acquire education via peer-to-peer lending wherein students will need to repay upon graduation which is similar to other service providers. The distinction is that the assessment involves referrals from previous borrowers and comments from partners such as schools, universities, and NGOs.


Although such operations are not yet prevalent in Thailand, we can observe that credit scoring solutions can alter according to the different products and target groups. This helps individuals who are in need of funds and helps to efficiently control risks so that it isn’t too high to create a loss. In our future blogs, we will have more stories about digital lending from other aspects. Follow us for more updates.

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