DeFi Lender Deploys $1M for Student Loans to the Philippines, Indonesia—But at What Cost?

2025-07-14 18:26:40 分类：Blockchain 阅读(1698)

• Pencil Finance has deployed $1 million in on-chain capital to fund student loans in the Philippines and Indonesia.
• The capital is split into senior and junior tranches, offering fixed and variable yields backed by repayments from education provider ErudiFi.
• The protocol runs via smart contracts on Arbitrum-based EDU Chain, marking what it dubs as a first-of-its-kind initiative in the education sector.

Decentralized lending startup Pencil Finance said Wednesday it has deployed $1 million in on-chain student loans, with funds directed to borrowers in the Philippines and Indonesia as part of a broader push to expand education financing in emerging markets.

Liquidity was initially provided by Animoca Brands, Open Campus—a DAO focused on decentralized education—and NewCampus, a business upskilling platform.

The protocol handles loan disbursement and repayment on-chain, with capital split between a $750,000 senior tranche offering a fixed 15% annual yield and a $250,000 junior tranche with variable returns and first-loss risk.

Pencil Finance said its protocol decentralizes capital flow, repayments, and—over time—governance, while borrower evaluation remains centralized.

Lending, yield distribution, and transaction tracking are handled via smart contracts on-chain, though borrower vetting still requires due diligence by the core team. The company plans to transition governance to $PEN token holders through a DAO model.

“The opportunity is considerable, to say the least.” “The student loan market is valued at approximately $3.3 trillion. The total value locked on-chain for all blockchains is around $115 billion.”

“If just 10% of the value of student loans were to be tokenized, that would roughly quadruple the current TVL of all of the worlds blockchains,” Sui added.

It wasnt until Li arrived in the U.S. that he says he realized how different things were.

“Many talented students in the U.S. rely on loans just to finish their degrees, and some even turn down offers from their dream schools because the debt burden is too high,” he said. “Now, being based in Asia, Ive seen how different—and in many ways worse—the situation is in emerging markets.”

“Even capable students are locked out because they have no credit history, no collateral, and no institutional pathway,” Li continued. “And when financing is available, interest rates can reach upwards of 20% APY, driven by the inability of global liquidity to flow into these markets.”

Degrees of debt

Undergraduate federal student loans in the U.S., meanwhile, carry a fixed interest rate of 6.53%, according to figures from the Department of Education.

In the Philippines, a government-backed loan program once offered families access to student financing at 5%, but the initiative, introduced during the pandemic, was phased out after the 2021–22 school year.

Since then, students have largely relied on private lenders, microfinance firms, or informal credit providers, where annual interest rates can run from 30% to more than 100%.

Pencil Finance said that ErudiFi typically offers interest rates starting at 1.9% per month, plus a one-time service fee of 4.5% to 10%.

Even though roughly one-third of schools in its network subsidize interest payments, allowing some students to borrow at 0%, the standard monthly rate compounds to an effective annual rate of approximately 25.34%, roughly four times higher than in the U.S.

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