StepEx and balance sheet lenders like Lendwise and Prodigy Finance both play important roles in the education finance landscape, but they serve different purposes. While balance sheet lenders offer direct funding to students, they often face higher costs of capital, which get passed on to students in the form of higher interest rates and repayment terms that can result in students paying 2-3 times the course fee. This can be a significant burden on borrowers.
1. Lower Repayment Burden for Students
Unlike balance sheet lenders, StepEx works with education providers to create tailored payment plans that are more flexible and affordable for students. With StepEx, students donât have to deal with steep repayment amounts, as the finance options are designed to align with their future income, reducing the overall financial pressure. In contrast, balance sheet lenders are constrained by the need to pass on high costs of capital, meaning students often face much higher total repayment amounts.
2. Broader Access Through Customisable Criteria
Balance sheet lenders typically rely on strict credit scoring models, resulting in a significant number of applicants being rejectedâespecially those with non-traditional credit histories. StepEx, however, offers more flexibility with its customizable eligibility criteria. Within the regulatory framework, StepEx partners can adjust financial conditions to match their specific needs, allowing them to say âyesâ to a wider range of students. This opens the door to more applicants, including those who may otherwise miss out on financial support through more rigid models like those used by balance sheet lenders.
3. Cashflow vs. Course Demand: The Trade-Off
Balance sheet lenders provide direct funding, offering immediate cashflow to education providers. This is ideal for providers seeking fast liquidity but comes with the downside of limiting the number of students who can access finance due to high repayment obligations. StepEx, on the other hand, enables institutions to expand course demand by offering more varied financial products with longer repayment terms. While cashflow may not be as immediate as with balance sheet lenders, StepEx drives more student engagement and increases overall enrolments.
Conclusion
Balance sheet lenders like Lendwise and Prodigy Finance have a valuable role in the market, providing direct funding with quick cash flow. However, StepEx offers a more flexible, student-friendly solution that expands market access through customized repayment plans and broader eligibility criteria. Many education providers use both solutions in tandem to optimize their offeringsâcombining the immediate cashflow benefits of balance sheet lenders with the expanded market reach and flexible repayment options that StepEx provides. StepEx should not be seen as a replacement but as a complementary tool to grow student enrollment and provide affordable, long-term financial solutions.
