No credit score? No problem: How a new fee system is helping India’s invisible students stay in college

Many students, especially those from smaller towns and low-income families, are often left out of the formal education finance system for various reasons. However, a new kind of fee payment model is quietly removing these barriers, allowing them to continue their education without loans or credit checks.

Across India, thousands of students sometimes miss out on the opportunity to obtain traditional education loans because their families don't have a stable income, a credit history, or formal employment. These include children of gig workers, farmers, small business owners, first-generation learners, and students from Tier-2 and Tier-3 cities. For them, even after clearing entrance tests or getting admission, paying fees on time is a hurdle. “There is a Rs 9 lakh-crore education funding gap. Over 90% of the students are paying out of their own pockets. There are no proper financial solutions supporting them. Also, the fee structure of educational institutions is not very supportive. Colleges pressurise students to pay upfront, pay in bulk, or pay fees onetime. So we are still not able to support the aspirations of the students,” said Gunjal Kothari, founder of Flashaid, a fintech specialising in education funding.

A new alternative: EMI-based fee payment, without loans
“There are so many students who are sons of farmers, small shopowners, daily- wage workers. They might not be using things like credit cards, ITRs or have a steady income stream. Fees are continuously rising and this rise comes without notice. You cannot put your child in a lower category of school or college,” said Kothari.


To address this challenge, some institutions have started offering a structured EMI-based fee payment model that does not require a bank loan, credit score, or collateral. These systems allow students or their families to pay tuition in monthly installments, usually through UPI or NACH-linked auto-debits. No paperwork, no interest rates, no long waiting periods.

“Even colleges want good students and a good student does not mean a good CIBIL score. This parameter itself is a huge deterrent for colleges to get good students. All the fintechs, NBFCs want CIBIL score, credit proof and several other documents. So, students who cannot provide these documents, this EMI-based tuition fees is huge support to them. Even if a student is unable to pay regular EMIs, there is an option of flexible EMIs backed by insurance. In scenarios like job loss, business shutdown, health issues, hospitalisation, sudden death of an earning member, the burden of fees doesn't bother the family,” said Kothari. This approach is not tied to banks or NBFCs, making the new alternative more accessible to people with no formal credit footprint.

What makes this system different
Unlike loan-based options, these fee models are built for simplicity and predictability. Here's what sets them apart:
No credit checks: Anyone can apply, regardless of income documents or credit score.
Digital setup: Payments are automated, reducing follow-ups and delays.
Insurance backing: In some cases, the system includes basic coverage for fee protection in case of events like job loss, disability, or death of the earning parent.
This structure ensures that the institutions receive steady payments, and the student’s seat isn’t at risk due to sudden financial shocks.

Who is benefiting
Students with no access to formal banking, especially those whose parents work in unorganized sectors such as delivery, housekeeping, construction, or freelance gigs, are among the early beneficiaries. The model is also proving useful for students who switch from one course to another mid-year and face additional payment deadlines.

What this means for the future
As more colleges adopt digital and flexible fee systems, the gap between eligibility and affordability may start to narrow. While it’s not a replacement for full scholarships or education loans, this system is becoming a practical bridge for students who would otherwise be pushed out of the higher education system due to financial limitations. The fee model reflects a broader shift in India’s approach to financial inclusion, making education a right, not a privilege, regardless of paperwork or bank history.