Education and affordability

By: Suleman Zia

In Pakistan, the rising cost of higher education has often put top-tier universities out of reach for many students, especially those from low- to middle-income backgrounds. However, recent innovations in financial technology are reshaping this landscape. One such development is the rise of Buy Now, Pay Later (BNPL) services and education-based installment loan platforms like Edufi and KalPay. These platforms offer students the opportunity to pursue their academic goals without facing an immediate financial burden, making quality education more inclusive than ever before.

BNPL and flexible education loans work by allowing students or their families to pay tuition and associated fees in smaller, manageable installments over time, instead of all at once. This approach is particularly important in Pakistan, where tuition fees for leading universities such as LUMS, IBA, and NUST can exceed PKR 1,000,000 per year—a significant sum for most households. Edufi and KalPay have partnered with dozens of higher education institutions to offer interest-free or low-interest plans that cover up to 100% of tuition costs. KalPay, launched in 2022, has since expanded into financing short courses and vocational training as well, reportedly reaching over 15,000 users by early 2024 (KalPay, 2024).

Edufi, on the other hand, has taken a bold step into the international education space. In early 2025, it became the first Pakistani BNPL platform to offer student loans for overseas education. With this move, Pakistani students now have the opportunity to receive financial assistance for attending universities abroad, bridging the gap that previously could only be filled by dollar-based international lenders like Prodigy Finance and MPower Financing.

These global lenders, though effective, are often out of reach for many Pakistani students due to eligibility limitations, lack of domestic support, or complex documentation. Edufi’s model differs in one key respect: it uses localized credit evaluation and offers rupee-denominated loans, making it easier for students to access and repay funds.

In a time when studying abroad has become more of a dream than a plan for many Pakistani students, Edufi’s international loan product offers renewed hope. The Pakistani rupee, which has seen continuous depreciation, currently stands at over PKR 283 per USD as of mid-2025 (SBP, 2025). The cost of a single semester abroad can easily exceed PKR 3 Million. As a result, many students even those accepted into prestigious universities have had to forgo their study plans. Edufi’s new loan option could serve as a vital bridge in such scenarios.

Positive Macroeconomic Implications

Beyond individual student benefit, these BNPL models hold broader macroeconomic potential. Firstly, they create a multiplier effect on human capital investment. When more students, especially from underrepresented regions, access higher education, the country’s overall skill base increases. This, in turn, leads to a more productive workforce, higher earnings, and greater tax revenues over time.

Additionally, employment generation is an indirect outcome. A larger, more educated workforce attracts foreign investment, particularly in service exports such as IT, finance, and healthcare—sectors that require tertiary education. According to a World Bank study, a 1% increase in tertiary education enrollment correlates with a 0.35% increase in GDP per capita in low- to middle-income countries (World Bank, 2022). Nevertheless, these fintech platforms also help formalize the shadow education economy. Many families resort to informal borrowing often at exploitative rates to fund education. KalPay and Edufi offer a regulated, transparent alternative. With proper documentation, these transactions become part of the formal economy, supporting financial inclusion and digital credit history development.

In turn, the use of BNPL services creates demand stability for educational institutions. Universities that face inconsistent tuition payment cycles now receive lump-sum payments upfront through these fintech partners, improving their liquidity and enabling better long-term planning. In effect, the platforms act as bridge financiers, easing both student and institutional cash flow constraints.

Furthermore, as fintech adoption grows, it fuels the digital financial ecosystem. Students introduced to mobile wallets and payment platforms via these loan schemes often continue using digital financial services later in life, advancing Pakistan’s journey toward a cashless economy.

The Road Ahead

However, success isn’t guaranteed. Pakistan still faces hurdles like dollar liquidity constraints, evolving regulatory frameworks for foreign lending, and financial literacy gaps. Many families remain wary of borrowing due to religious or cultural reservations. Moreover, inflationary pressure could affect repayment behavior, necessitating risk-sharing arrangements between fintechs and universities.

Still, Edufi and KalPay are pushing the envelope at a critical time. Pakistan’s tertiary enrollment rate remains around 12%—well below the South Asian average (UNESCO, 2023). With rising youth unemployment and underemployment, unlocking access to education through innovation isn’t just desirable: it’s necessary.

Conclusion

Edufi’s expansion into international student loans and the continued growth of KalPay’s BNPL model represent more than just convenient financing tools. They are building blocks for a more inclusive and opportunity-driven Pakistan. While economic headwinds and regulatory questions persist, the macroeconomic upside of these platforms is clear. If implemented effectively, they could lay the foundation for long-term growth by nurturing the very resource that defines Pakistan’s potential: its youth.

Suleman Zia is a transnational educational consultant.