In this 4.0
industrial era, one of the innovation results in finance is easiness in getting
a loan. Presently, debt is inclusively offered to everyone, both the affluent
and the needy ones, including college students. In May 2019, there were 113 fintech
lending firms registered in Financial Service Authority (OJK) of Indonesia, and
some of them are targeting college students as their customers. These fintech
firms understand that the huge number of college students is promising, and fulling
their needs can result in ample revenues. Several fintech firms explicitly
targeting college students are danacita.co.id, danadidik.com, koinworks.com, cicil.co.id,
and pintek.id. These firms operate conventionally, in a sense that they charge
interest to the borrowers. While Islamic fintech frim such as angsur.id charges
no interest, in fact it employs Islamic contract, i.e., murabaha contract.
Having a loan is
basically ‘normal’ because sometimes we, no matter what our profession is, need
cash to cover a particular need. In the US, university students can take a student
loan for paying their tuitions and then pay it back after graduating and
getting a job. This mechanism is helpful as those who do not have sufficient
fund can actually go to college. On the other hand, people may have a loan from
the early stage of their lives; being college students with debt. However, this
approach is currently less prevalent in Indonesia as the government has not
granted the permit to any commercial bank to provide students loan as in the
US. In fact, some fintech lending firms as outlined in the previous paragraph, have
taken an early action by giving credit to college students in Indonesia.
Some fintech firms in
Indonesia provide a small amount of money in a relatively short duration. Besides,
to be used for paying tuition, the money from the fintech firms can also be used
by students for purchasing things needed for the study, such as laptop, cellular
phone, shoes, and other study equipment. Again, this solution might be helpful
because not every student in Indonesia has money to make a pretty big purchase
such as low-to-mid range laptop with price ranging from three to five million
rupiahs. For the students to make a wiser decision, they need to at least
consider the following things.
First, before
getting a loan, they need to know how to pay it later. The students should
identify the sources of income which will be used to repay the loan. In
addition to relying on a monthly or weekly allowance from their parents, the
students are also encouraged to work part-time to earn more income. There are
actually a lot of ways which can be done by the students to make more money,
one of them is by being the research assistant of the lecturers who usually
have a research project in a semester basis. Lecturers need students to be surveyors
or enumerators, and this is indeed a worthy paid-job for college students.
Second, college
students should increase their financial literacy so they can decide any
financial transaction wisely. At least, they should be familiar with how to
calculate interest rates or margin charged by the lenders. In short, they
should know which one is cheaper and which one is more expensive in terms of
cost of fund that they will pay. Knowing the difference between nominal
interest rate and effective interest rate is a must because fintech firms
usually display interest rate on a monthly basis. The shown (nominal) interest
rate is definitely not informative because the borrowers pay back the loan in a
longer duration of more than one month. Thus, the students should know how to calculate
effective annual rate. In the case of Islamic fintech, the payment is fixed
from the beginning until the end because the contract is a buy-and-sell
contract where the borrowers pay the loan in installment.
Third, college
students should purchase only the essential things. For instance, if someone is
currently in need of a laptop but cannot afford it, then he may go for a loan.
Having a loan must not be a habit as it may be a lifestyle in the years to come
when he has gotten a job. Finally, being able to differentiate wants and needs is
a fundamental skill so the decision to make a purchase, regardless by cash or
by getting loan, will be appropriate with the financial condition and stage of
life.