Financial Access is Key to Affordable Education

Steve Hardgrave is the Wholetime Director and Executive Vice Chairman of Varthana. He has previously held the position of Senior Managing Director at Gray Ghost Ventures, which focuses on investing in early-stage ventures with a social mission. Steve's career began with efforts to assist at-risk youth and marginalized communities in Los Angeles while attending university. He subsequently worked with a community foundation in Mexico, where he established a successful microfinance organization. He has earned an MBA from the prestigious Haas School of Business at the University of California, Berkeley.

Recently, several state governments, including Tamil Nadu and Gujarat, have taken steps to regulate private school fee hikes, with the aim of making education more affordable and promoting equitable access for all students. Fee hikes are usually symptomatic of deeper issues, notably poor-quality education and inadequate funding. What is needed is a more effective and sustainable solution that enables a healthy flow of capital into the sector so that schools are well-funded and offer good quality education.

Education is deeply aspirational. Every parent, regardless of income, seeks the best possible future for their child. In pursuit of quality, many low-income families often opt for costlier private schools over free government options, driven by a belief that better education unlocks better opportunities. This clear preference underscores the value placed on quality education, even though it may strain household budgets.

However, fee regulation in isolation risks undermining the very institutions these families rely on, potentially compromising quality and access. A more balanced approach is needed - one that protects affordability without sacrificing quality that these families aspire to.

It has been seen that even low-income families routinely choose more expensive schools over free alternatives, revealing a clear desire for quality education. Attempts to cap fees in isolation then risk penalizing the very schools that families trust with their children’s future.

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Access to Finance
India’s affordable private schools, which charge nominal fees, are vital in bridging the education gap in low-income communities. Yet, most operate on razor-thin margins and are already struggling with rising infrastructure and costs. Imposing fee ceilings without ensuring adequate funding is liable to compromise teaching quality, and threaten the financial viability of these schools.

If we want the best education to reach the maximum number of students at the best possible price, we must ensure that affordable budget schools have access to flexible, affordable financing which will help them enhance the infrastructure, pay their

teachers well and offer a rigorous academic environment. Moreover, schools that show good results should be rewarded with easier access to credit and capital so they can grow, improve, and serve more students. An open, well-financed school market will ensure that inefficient schools cannot raise fees in an unchecked manner, as students will have the ability to choose from better-performing alternatives.

Global Models Show the Way
Globally, countries have developed innovative financing models to ensure that schools serving disadvantaged communities are thriving. These include targeted financial support, such as outcome-based financing, vouchers, and blended capital, to protect quality, incentivize improvement, and ensure sustainability.

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In Ghana and Nigeria, for instance, impact investors and development finance institutions have used Development Impact Bonds (DIBs) to improve learning outcomes while sharing financial risks with school operators.

To ensure that every child in India can afford quality education, we must recognize that schools need both rules and resources

In Latin America, countries like Colombia have integrated affordable schools into public-private partnership models, including voucher programs and per-student financing, providing stability to school operators. Social Impact Bonds have mobilized capital in the UK for early education outcomes, tying returns to measurable improvements.

These success stories show that policy reform must be supported by innovative financing if equity and excellence in education are to go hand in hand.

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The Power of Blended Finance
In India, several non-banking financial institutions (NBFCs) are stepping in to meet the needs of affordable private schools. While this is good, it is not enough as their reach and scale are often limited. What is needed is a blended model of finance where there is a combination of NBFCs, Commercial Capital (Banks), and impact investors to support the holistic growth of affordable private schools in India. This blended system creates a robust ecosystem and ensures that the funding model remains both financially sustainable and socially impactful.

To ensure that every child in India can afford quality education, we must recognize that schools need both rules and resources. Blended finance offers a promising path to unlock credit, scale what works, and de-risk investments in schools that serve the most vulnerable learners.

Thus, advancing education in India requires a well-calibrated approach between regulation and funding so that every affordable school is empowered to deliver high quality at the right price, and every child has the opportunity to learn.