Education is becoming expensive by the day and it is increasing becoming difficult for many parents to afford their child’s education. In this edition of Money Guru, Zee Business’ Swati Raina takes a deep dive to explain what parents must do to manage the expenses. She speaks to experts Amit Kukreja of Amitkukreja.com and Neelabh Sanyal, COO of Kuvera.in to unlock secrets of effective planning.
Growing expense of education:
The expense of education is only growing exponentially.
Between 2012 and 2020, the expenses of education have gone up by 10-12 per cent.
The expenses are in lakhs of rupees for child’s education in a private school.
The expenses incurred on education in a professional degree college is anywhere around Rs 1 cr.
Average Expenses in private schools
Pre-school Rs 60,000 – Rs 1.5 lakh
Primary Rs 1.25- Rs 1.7 lakh
Middle Rs 1.6 – Rs 1.8 lakh
Senior Rs 1.8- Rs 2.2 लाख
Expenses of professional course
Expenses of professional courses have gone up by nearly 10 per cent
For courses like MBBS, MBA,Btech, law, the fees is in lakhs
The expenses for education in foreign countries have grown exponentially.
The expenses have grown also because of relative weakness of rupee as against the USD.
Expense of Education: How to prepare for it
Set goals and estimate the expenses of education
– Add the inflation to the factor
– Review the current expenses of education.
– Add future goals to the current expenses of education
– Add the inflation factor in the expenses
– Buy insurance plan for yourself
– Plan expenses for all other activities of the child apart from education expenses.
Planning for education – where to invest?
– Create an emergency fund
– If the goal is above 10 years, do higher equity allocation
– As the goal gets near, invest in debt instruments
– You can invest in Children funds
– Children funds are balanced, hybrid funds
– You can also spend in PPF, Sukanya Samriddhi Yojana
Is it important to have insurance for your child?
Child should be included in the health insurance plan of parents
It is not necessary to take a separate health plan for your child.
You can take a term plan for your child.
Add child’s name in mediclaim insurance plan
Planning for Education – Kuvera
Above 10 years Small and Mid cap
5-10 years large and mid cap
3-5 years large cap and liquid funds
Less than 3 years ultra short, money market fund
Investment tips – Kuvera
Invest in mutual fund direct plans
Invest in index funds
Invest with a view of education inflation
For cash flow, one can do STP, SWP in mutual funds
Education loan for studying in India and abroad
Tuition fees, hostel fees and others included in this
Loans can be taken from private or public banks
Loan for Graduation, post graduation, diploma courses
Undergraduate loan, career education loan available
Professional graduate student loan, parents’ loan available
Repayment process begins 6 months after the completion of course