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Access to higher education in Indonesia is limited, particularly for disadvantaged youths from lower income households. There are currently 5.2 million enrolled tertiary students in Indonesia, in a country of 250 million people. At 28%, Indonesia’s tertiary enrolment rate is among the lowest in Southeast Asia (compared to the Philippines at 36% and Thailand at 49%). At the same time, despite a young population (45% below age 25), Indonesia has struggled to fill jobs with skilled talent at all levels. Moreover, only 2% of the lowest quintile income group receives higher education, compared to 60% from the top income quintile, clearly demonstrating an income correlation to education access. Aside from parental support and limited scholarships, no financing is currently available to fund higher education in Indonesia.
Our intervention is an affordable loan for existing and aspiring students who struggle to pay for tertiary education and vocational training. Unlike many developed countries, Indonesia does not offer government-backed student loan schemes. In fact, there are very limited public or private student loan schemes at present. Despite high liquidity in the banking sector, many banks and traditional lenders shy away from offering student loans, which on a stand-alone basis are fundamentally higher risk compared to the more lucrative asset-based and shorter-tem lending such as financing automobiles, motorcycles, or white goods. Dana Cita exists to make higher education available to all. Without Dana Cita, our students and their parents have limited alternative and usually have to borrow from informal sources (such as family, friends, microfinance, or loan sharks) which are more expensive and do not allow them to build a track record to enter the mainstream financial system.