What is Pay After Placement? How does it work?

Introduction

Pay After Placement - a term that defines itself! In layman's terms, you pay the institution's fees only after securing a job above a certain salary threshold.

But where did the term originate, and how did it capture a large market share in India? The history dates back almost a decade! Let’s start on a subtle note.

I always hated Organic Chemistry! This is not necessarily because of the academic toll it took on my mind but because I will never be asked about the molecular formula of ‘Ethanol’ in an interview.

Though it might not be true for many folks, the only great thing I learned from college is good English, which I learned just a few months ago when I relocated to Bangalore (pun intended!)

I always thought, ' Will all this theoretical knowledge help me survive in the real world?’ To be honest, it didn’t. I always had a cold war in my head against the education system in general, and it kept strengthening every day when I confined myself to the notion that bookish knowledge would not help me secure a job in the real world.

That’s where Pay After Placement comes in! The PAP model strives towards bridging the skill gap between jobs in the current landscape and the students graduating fresh from college.

Let’s understand this in a bit more detail and hit the official statistics.

What is Pay After Placement (PAP)?

Pay After Placement is a relatively new segment in the ed-tech sector that is gaining immense popularity among students and job-seekers alike.

It is a financial agreement between the students and the institution offering pay after placement courses that binds the student to pay zero upfront fee throughout their learning tenure in the course.

The student only pays the course fee if they crack a job above a certain salary threshold, let’s say 3.5LPA. The placement assistance is provided by the institution offering the course.

If the student is placed below the salary threshold, they don’t fall under the ISA (Income Share Agreement), and they don’t have to pay the course fees. The entire course becomes ‘free of cost’ for them.

This is a risk-free method of learning and upskilling for students. According to recent statistics, the majority of students are compelled to take up non-core jobs like marketing, design, and analytics, which are completely different from their field of study in college.

This is due to the gap in the knowledge taught by colleges and the skills required by employers. Pay After Placement courses are the only means to bridge this current gap in today’s competitive landscape.

As a student, you no longer have to bear the hefty upfront costs of a course - be it to land a job or simply upskill yourself. Pay After Placement is the need of the hour!

Why should Pay After Placement be the new normal?

According to a report released by RBI, till Jan 2024 - education loans have increased by a whopping 23% to 1.17 lakh crore, which is a 15% increase from Jan 2023.

According to the latest report by the Ministry of Finance, the total outstanding amount on student loans has crossed 90,000 crores, growing at an annual rate of 15%.

Currently, the default rate on student loans is around 7-8% and has been declared as NPA (Non-performing assets) by the banks, which means students were unable to repay around 6300 crore worth of loans. (Varthana)

As per the latest Financial Stability Report (FSR) of the RBI, the share of NPA in education loans stood at a stunning 3.6% in the personal loans bucket, compared with 1.8% in credit card payments, 1.3% in auto loans, and 1.1% in housing loans.

According to the latest RBI sectoral credit growth data, education loans grew to 24.2% in the last 12 months ending June 2023, as compared to 16.5% ending June 2022. (Bad) Education loans are the third-highest-growing component of personal loans after credit cards and jewellery loans.

Outstanding education loan amounts have increased from Rs 83,000 crore in June 2022 to Rs 1.2 lakh crore in May 2024. (Money Control)

Why is the scenario so bad? The answer is simple - boom in education loans to build careers on one side and a lack of job opportunities and layoff rage on the other.

This is a sheer result that emphasizes the skill gap in the Indian workforce and why pay after placement courses should be given priority in the education segment.

Limelight on the Indian skill gap - Official statistics

The Indian workforce is estimated to be at 56.5 crores as of 2022-23. The youth unemployment rate dropped from 17.8% in 2017-18 to 10% in 2022-23.

According to the Periodic Labour Force Survey (PLFS), the urban unemployment rate for those aged 15 and above has dropped to 6.7% in Q3 of 2024 from 6.8% in Q3 2023.

The distribution of employment indicates over 45% of the workforce is engaged in agriculture, 11.4% in manufacturing, 28.9% in services, and 13% in construction. (Business Today)

The skill gap is another pressing challenge yet to be overcome! According to Business Today, 65% of the Indian workforce is under 35 and yet lacks the necessary skills required by a modern economy.

Currently, only about 51.25% of the youth are deemed employable, holding real-world skills to tackle the requisites of a job efficiently. (Business Today)

Let’s put light on the skill shortage in India, as cited by numerous resources:

1. While India remains the leader in engineering talent production, there is a significant challenge to employability for engineering graduates. The demand for engineers with advanced skills in AI and other technologies is expected to increase, and the gap between demand and supply is expected to widen. (Business Standard)
   
2. The demand-supply gap for digital talent is expected to widen to almost 30% by 2028. (Business Standard)
   
3. India is projected to face a skill deficit of 30-32 million people by the end of fiscal 2025 and 47-49 million by 2027. (Economic Times)
   
4. In 2022-23, 22.15% of the workforce was considered low-skilled, 66.89% semi-skilled, 2.37% highly skilled, and only 8.59% very highly skilled. (Sriram’s IAS)
   
5. In 2022, according to NSDC (National Skill Development Corporation), the demand for skilled workers was roughly 103 million, but the supply was short of 29 million. (Economic Times)
   
6. Only 33% of the workforce have the necessary skills that employers are looking for. (Sesame HR)
   
7. 67% of employees in India consider digital skills to be the most important to acquire. (Economist Impact)

How does Pay After Placement work?

Pay After Placement courses follow a very streamlined approach, in contrast to the traditional ‘upfront fee model’ approach. Here is the flow of pay after placement.

1. Firstly, learners select the pay after placement course they want to enroll in, and pay the initial registration fee to block their seat.

2. Learners pay the remaining registration fee and sign the ISA (Income Share Agreement).

3. Learners are now provided with the complete course materials, including live lectures, assignments, and capstone projects, throughout the course's tenure. Pay After Placement courses are designed to empower the student with job-ready practical skills that are required in today’s dynamic job landscape.

4. Once the course is completed and the student passes the final evaluation test, placement assistance takes place.

5. The student pays the course fees only after they land a job above a salary threshold set by the institution. A certain amount gets deducted from their salary every month by the NBFC (Non-Banking Financial Institution) till the entire course fee is covered.

Advantages of Pay After Placement Courses

Of many, some of the most crowned benefits of pay after placement courses are as follows:

Zero upfront fee

No more financial burden of bearing hefty fees or student loans. You learn the course at zero upfront fees (provided you meet the eligibility criteria and pass the entrance exam set by the institution) and pay the fees in monthly instalments only after you secure a job.

Placement assistance

One of the core benefits of pay after placement courses is their placement assistance. Let’s admit it - looking out for recruiters on LinkedIn and Naukri is a hectic, tedious and time-consuming process.

Almost all institutions offering PAP courses have ties with hiring partners that they connect students with after they have graduated from the course.

Minimum salary threshold

Most of the institutions offering pay after placement schemes have a minimum salary threshold, typically starting around 3.5 LPA. So, you have the security that you will be hired at a package not below the threshold. If you crack an offer below the salary threshold, you have to pay ‘zero’ course fees.

Skill-based learning

PAP course modules are designed in a way that reflects skill-based learning than theoretical knowledge.

So, you are not only upskilling yourself but also equipping yourself with real-life skills that employers seek. PAP courses are taught not only by subject matter experts but also by industry experts.

Pivotal career point

The most underrated advantage of pay after placement courses in India is their contribution to an effortless pivot in their careers. These courses are typically aimed at the IT industry, so anyone looking for a career transition to the tech domain can be seamlessly integrated.

Best Pay After Placement Courses in India

Though there exists an array of platforms offering pay after placement courses in India, these 2 courses have been clearly ranked the top leaders, considering their demand and supply in the current market.

Full-Stack Web Development

According to Economic Times, the demand for web developers in India is quite high and is seeing an upward chart walking down the future.

Some sectors are expected to see a 17% increase in demand in 2023 and a 22% increase in 2025. The industry is looking for developers equipped with a wide range of skills, including technical and analytical skills, software architecture and testing, alongside emerging technologies such as AI and ML. (Economic Times)

Web development is a sough-after field in today’s digital landscape, and a full stack web development course can equip you with end-to-end skills required to develop and maintain websites and software applications.

Whether you are a seasoned developer, upskilling yourself, or just started out, Masai’s pay after placement Full Stack Web Development is just the right fit for you!

Data Analytics

Data analytics/Data Science is making an aggressive move to capture a cemented foot in Indian soil. However, there is a massive shortage of the skill in the Indian market.

Data Science is a rapidly evolving field that involves analyzing large data chunks and interpreting data sets to extract training models for AI (what we call AI Explainability or XAI) and make informed decisions.

As of August 2022, India has recorded 416,000 data science professionals, while the requirement was 629,000. The current gap for skilled data professionals is roughly around 51%, with this number projected to increase to 1 million by 2026. (NASSCOM)

For certain roles, such as data scientist, AI/ML engineer, and data architect, the skill gap is even worse - around 60% to 73%.

Masai’s pay after placement Data Analytics course is designed to tackle this skill gap. You will be taught Python basics, Data structures and algorithms, Databases, Analytics with Excel/PowerBI, Predictive & Descriptive Analysis, Data Management & Warehousing, and Machine Learning with AI, among many others.

You will also be trained in interview preparation and provided with doubt-clearing classes and real-world capstone projects.

With data science on the rise, Masai’s Full Stack Data Science course can equip you with the skills and expertise required to build a strong foundation for a successful career in the field.

Takeaway

Pay After Placement is an excellent approach to upskill yourself and get industry-ready without worrying about finances.

Whether you want to land a job, upskill yourself, or simply seeking a career transition to tech in the IT industry, pay after placement courses are your gateway to do so.

With the plethora of benefits that PAP courses bring, the model is geared to revolutionize the ed-tech sector and create a new wave of ‘outcome-oriented’ education in the country.

Do your research, select the best platform that aligns with your pay after placement needs, and start your learning journey. All the best!