Large, young population
India’s student-aged population is more than 400 million strong with only 260 million, currently enrolled in schools. Although India’s growth rate has leveled, its young population continues to grow. 32% of our 1.21 billion people is 0-14 years of age (WolframAlpha), compared with 20% in countries like the U.S. and China.
Belief in the importance of education
Indian parents, across all income levels, predominantly view education as the key to unlocking new opportunities for their children. In fact, low-income families devote almost twice the percentage of household income to education as high income families. There is growing evidence that household spending on education is as high as 13% for lower-income families (Consumers of Affordable Private Schooling, GMC-PI).
Most are not served by the public system
Only a fraction of the population can afford high-end private schools. Government schools and high-end private schools dominate the national dialogue on education, while India’s destiny is actually tied to the legions of locally managed, low-cost private schools.
Dynamic, local entrepreneurs across India have responded
Entrepreneurs are creating neighborhood private schools which strive to deliver affordable quality education. These dedicated school owners, often, former teachers or husband and wife teams, have launched and managed local schools using their own resources and are able to generate 20% -30% margins at price points that low-income families can afford. This segment, which includes more than 200,000 schools and 80 million students, grows bigger every day.
Affordable private schools lack access to capital
Schools rarely meet the traditional lending requirements of formal financial institutions. On the other hand, loans offered by micro-finance institutions are not large enough for school infrastructure projects while informal money lenders have extremely high interest rates. This lack of adequate financing alternatives has constrained the growth and innovation of affordable private schools.