What role can impact investors play in the global education sector? Which investments in private schools are effective? What criteria should investors use when deciding which schools to support?
In this VoxDev webinar, Sandeep Aneja, Jishnu Das, Steve Hardgrave, Asim I. Khwaja, and Laura Savage explore how impact investment can help schools, particularly low-cost private schools, to thrive—discussing recent research, practical experience, and the future of financing schools in developing countries.
You can watch the webinar below, and read about Jishnu Das and Asim I. Khwaja's research with Tahir Andrabi and Selcuk Ozyurt here.
Private schools: A growing force in global learning
Das and Khwaja explain the growing importance of private schools, which now serve around 30% of primary students globally and up to 50% in South Asia.
"If we are serious about making sure that every child learns, we have to be serious about ensuring that the kids in private schools are getting the learning they need to thrive." Jishnu Das
However, many private schools face high closure rates. In some contexts, it is estimated that 30-40% of these schools will close down over in the next 8-10 years. These closures disrupt education and create instability.
"We want to understand whether policies can help private schools survive, and we want to do it with private money." Jishnu Das
Private finance helps schools survive
Khwaja summarises research from Pakistan that tested whether providing schools with grants or loans could improve outcomes. In one such study, schools were given unconditional grants and showed both financial and social benefits.
"The money actually led to both private and social returns." Asim I. Khwaja
In another study, schools were offered commercially viable loans with minimal screening. These loans significantly reduced school closures.
"These loans reduce closure rates substantially, in fact they almost eliminate closure rates." Asim I. Khwaja
Loans provided schools with liquidity to manage temporary financial difficulties, helping them stay open.
Investing in education: Practical experiences
Aneja, Founder of Kaizenvest, has worked in education finance for over a decade, focusing on early childhood education, affordable higher education, and edtech.
"Founders who intentionally act towards improving lives not only deliver better impact but also deliver better returns." Sandeep Aneja
Aneja highlights that credit access is still a major barrier for many schools, particularly in underserved markets. He suggests that financing both formal and informal schools can help address this gap.
School lending at scale in India
Steve Hardgrave, CEO of Varthana, shares his company’s experience of lending to over 12,000 schools in India, supporting around seven million students in the process. Varthana focuses on lending to schools for infrastructure improvements.
Hardgrave stresses that many local school owners have already made personal investments in their schools and simply need access to growth capital.
"They just need that petrol to fuel their additional growth on this base that they've set up." Steve Hardgrave
The funding gap and the role of philanthropy
Laura Savage, Executive Director of the International Education Funders Group, highlights that aid for education is declining.
"The aid actors are, some of them, even singling out education as a sector to pull away from." Laura Savage
Meanwhile, education remains a top priority for families, domestic philanthropies, and local entrepreneurs. Savage points out that many education organisations want to move towards sustainable financing but lack knowledge of how to engage with investors.
"[Organisations] are going for philanthropic or investment capital, but they’ve got no knowledge of how to start navigating the capital space.” Laura Savage
How to grow school finance globally
The panel agrees that existing financial structures could support expanded school lending if better aligned with the needs of lower-fee schools.
"It’s a broken market: there’s not efficient capital availability to reward the better performers... [in] most efficient markets capital chases after and supports the better performers and they rise to the top." Steve Hardgrave
There is also concern that some development finance institutions (DFIs) have labelled low-cost private schools as "unlendable."
"We are calling poor children unlendable. That’s the biggest human rights violation I can think of." Jishnu Das
The researchers and investors suggest that blended finance—combining commercial and philanthropic capital—could help address this gap and expand financing to more private schools in developing countries.
The importance of competition and smart loan design
Khwaja emphasises that loan design matters. When only one school in a community receives financing, it tends to attract students from other schools without improving overall quality. In contrast, when multiple schools in the same area receive financing, competition encourages schools to improve quality for all students.
He also highlights that improvements in private schools can create positive spillovers.
"When private school quality improves, public school quality improves and vice versa." Asim I. Khwaja
Reframing the value of education
Savage and Das both caution against viewing education only through the lens of test scores.
"Things like empathy, tolerance, grit, or democratic values are things which are teachable." Asim I. Khwaja
Savage adds that many organisations are focused on expanding quality education, but current funding priorities may not align. Hardgrave highlights the risks of underinvestment, pointing to the challenges posed by large, under-educated youth populations in many developing countries.
"The costs of education are high right now, the cost of not educating will just be insane." Steve Hardgrave
Closing reflections
The panellists agree that bridging the gap between education organisations and investors is key.
"We are on it. We will put the burden upon ourselves, whatever it takes, including evidence." Sandeep Aneja
The discussion underscores the potential for impact investment to help schools thrive but stresses that smart loan design and shifting the education narrative are essential to making this a global success.