Melbourne-based fintech startup Study Loans has this week launched its responsible student lending service, with $5 million available to Australians seeking to finance their tertiary education.
In addition to completing a $2 million seed round to get the business off the ground, Study Loans co-founders Brett Shanley, Mark McCoach and Rhett Simonds raised $5 million debt equity from investors the Simonds Family and RMY Corp to distribute for the first tranche of loan applications.
Dynamic Business spoke to Study Loans CEO Shanley about how the startup will help students overcome a big hurdle to acquiring credit, the three-pronged market being addressed by the founding team and the milestones he hopes to hit within the first five years of operation.
DB: What is the elevator pitch for Study Loans?
Shanley: Study Loans is the first private dedicated provider of student loans in Australia. We work directly with educational institutions to pay a student’s tuition as they progress through their studies, instead of providing the funds to the student.
Our main focus is to make it easier for people to gain access to education so they don’t fall back on high interest credit options like credit cards or pay-day lenders. To do this, we built the first-ever dedicated credit engine for making decisions on educational loan applications because borrowing funds for education is fundamentally different to acquiring credit from a traditional bank or lender.
DB: What pain point/s are you addressing?
Shanley: As the Federal Government recently cut funding to TAFE and vocational education there are many people out there now unable to study. Unfortunately, some of these people turn to high credit interest options to pay for their studies. At Study Loans, we’re looking to combat this problem by empowering enrolment officers at selected institutions with another option for students when it comes to funding.
DB: What is the criteria for accessing a loan?
Shanley: Our business model is built around creating a student-friendly product. Unlike traditional lenders, we won’t turn away an application due to a lack of assets or credit history. For young people studying this can be a big hurdle to acquiring credit. Our main criteria is that a student applying must earn $20,000 per year and have a minimum 75% completion study rate. As most people work alongside study this isn’t a great barrier. As Study Loans is regulated by ASIC we always practice responsible lending and, as such, undertake extensive credit checks before approving an applicant
DB: What motivated the founding team?
Shanley: My two co-founders have over 15 years’ experience in the educational business space. With a background in educational technology, student management and content management, our expertise aligned perfectly with the Study Loans business model.
DB: How big is your addressable market?
Shanley: Our addressable market is broken into three sections. The first includes Vocational Education and Training (VET), certificates 1-4, diploma certificates and graduate diplomas. Our second market includes higher education including bachelor or masters degrees and PhDs. The third is in the non-accredited space and includes short courses for people looking to up-skill. They’re usually industry-backed and are particularly valuable for those working in the corporate space. In total, that gives us an addressable market of approximately five billion dollars.
DB: What are your big ambitions for Study Loans?
Shanley: Ultimately, we want to be an alternative to government funding for education. In 12 months, we’d like to build to 30 million dollars loan book size, which is 3000 loans. In 24 months, we’d like that to go to 100 million loan book size based on the average loan size of $10,000, and in five years we’d like to reach 500 million in loan book size. At the end of the day though, our main focus is helping students through the most critical part of their studies and career development.