Private Capital Emerging as a Critical Tool in the Race to Close the Global Education Financing Gap
As governments, households, and donors struggle to meet the growing cost of education, development leaders are increasingly turning to private investment to help millions of children stay in school and improve learning outcomes.
.jpg)
Every year, world leaders gather to discuss the future. At this year's United Nations General Assembly, policymakers, investors, philanthropists, educators, and development leaders met again at Education House to discuss one of our time's defining challenges: ensuring every child has access to quality education. Yet despite decades of commitments, ambitious global targets, and billions in aid, we continue to leave millions of children behind.
Andrew McCusker, Global Head of Education Finance at Opportunity International, argues that “innovative financing models could play a decisive role in addressing one of the world's most persistent development challenges”. According to McCusker, “the global education sector faces a severe shortage of resources at a time when hundreds of millions of children remain excluded from quality learning opportunities. One of the big drivers of that is a lack of financing in the system”.
The figures reflect a long-standing global learning crisis identified by UNESCO and the World Bank. Data from the UNESCO Institute for Statistics show that more than 617 million children and adolescents worldwide fail to meet minimum proficiency in reading and mathematics, with many already in classrooms but not acquiring basic skills.
The financing challenge is equally stark. UNESCO's Global Education Monitoring Report estimates that low- and lower-middle-income countries face an annual education financing gap of about US$97 billion to achieve Sustainable Development Goal 4, which calls for inclusive and equitable quality education for all by 2030.
The challenge comes at a time when traditional sources of education funding are under pressure. UNESCO reports that education aid has been declining, while households in lower-middle-income countries often shoulder nearly half of education costs.
The financing challenge is equally acute for the schools themselves. Across Africa, Asia, and Latin America, affordable non-state schools play a vital role in expanding access to education, particularly in underserved communities. Yet many school owners struggle to access banking services and affordable credit needed to improve facilities, hire teachers, or expand capacity.
Research from Opportunity International consistently shows that when schools gain access to financing alongside professional development and leadership support, improvements often follow. A study of more than 1,100 affordable non-state schools found associations between access to School Improvement Loans and improvements in enrolment, teacher recruitment, infrastructure, and financial performance.
Against this backdrop, Opportunity International is promoting education finance as a mechanism for unlocking new capital. Since launching its education finance initiatives more than a decade ago, the organization has worked with local financial institutions to provide loans to schools and families. Those loans have helped schools expand classrooms, improve sanitation facilities, purchase equipment, and strengthen operations while enabling parents to cover school fees during periods of financial stress.
.jpg)
“Through that time, the education finance program has catalyzed about $2.3 billion of investment into global education,” McCusker said. “Our job now is to attract more capital into this sector so that we can accelerate the rate of investments that's happening and close that financing gap faster.”
Opportunity's own research provides evidence that access to financing can contribute to stronger educational outcomes. A recent EduFinance Key Insight examining 1,116 affordable non-state schools found continued demand for School Improvement Loans and associations between financing access and improvements in enrollment, staffing, infrastructure, and school performance. Another report found that schools accessing School Improvement Loans improved education quality scores 19.5% faster than comparable schools without financing.
The organization's research also highlights the role of School Fee Loans in reducing absenteeism and helping children remain in school. In Uganda, Opportunity International found that parents often relied on these loans to return out-of-school children to classrooms, while other analyses showed lower absenteeism among students whose families received fee financing.
According to Andrew McCusker, preventing children from dropping out may be the most immediate impact of increased education financing.
“The biggest impact that financing can have on educational outcomes for students is through the provision of school fee loans into families to stop kids from dropping out of school when families don't have the means to pay for educational costs,” he said.
Opportunity International's education finance model has now been implemented in 32 countries and has helped improve access to education for more than 23 million children, yet the potential market remains far larger. Opportunity estimates there are approximately 1.4 million independent schools across low- and middle-income countries that could benefit from access to financing, while only a fraction have been reached to date.
Recent Opportunity EduFinance findings also suggest that targeted support can strengthen equity within education systems. Research released in 2026 found female school leaders were more likely to access School Improvement Loans, diversify income streams, and maintain stronger infrastructure conditions than male-led schools. Additional studies in Kenya showed that training nearly doubled the proportion of women school owners intending to apply for financing.
For development practitioners gathered during UNGA week, the discussion reflected a broader shift in thinking about how education is funded. With public budgets constrained and international aid unlikely to fill the gap alone, advocates increasingly view private capital, blended finance, and education-focused lending as necessary complements to traditional funding models.
“The sector needs to raise about $97 billion in incremental dollars each year. Without that, we're not going to solve this problem. The education finance program has catalyzed about $2.3 billion of investment into global education,” McCusker said. “Our job now is to attract more capital into this sector so that we can accelerate the rate of investments that's happening and close that financing gap faster.”
As governments, donors, and development organizations search for solutions, one lesson is increasingly clear: improving education outcomes requires more than building schools or enrolling children. It requires sustainable financing mechanisms that enable families to keep children learning, empower schools to improve quality, and mobilize the resources needed to ensure that every child has the opportunity to thrive.