How to Plan your Child’s Higher Education Course


The Indian education sector has seen a rapid rise in the last decade. Experts estimate that an MBA degree might require around Rs. 50 to 60 Lakh, and an engineering degree around Rs. 25 to 30 Lakh by 2020. Even top-tier colleges like IIT’s have increased their annual tuition fees from Rs. 90,000 to 2 Lakh.

An average middle-class family spends around 60% of their total household earning behind their children’s higher education. These figures also include the cost of various associated expenses like transport fees, boarding fees, etc. However, careful planning can decrease the burden of your child’s higher education expenses. There are various schemes that you can invest in for future returns that will help you accumulate the funds when you need them. You can also apply for a personal loan for higher education to meet the financial requirements.

Planning for a Higher Education Course

Experts suggest investing in high-yield, long-term policies to get the best returns when your children are about to go for higher education. Personal loan for higher education is also a good idea, provided their collateral free nature, large loan amount, and flexible repayment tenor. An early start is equally essential. If you start investing when your child is 3-4 years old, you will have 14 to 15 years to save for his/her higher studies. Also, remember to consider inflation and the rising cost of different services like boarding fee, travel expenses, etc. when you start investing.

There are various financial options you can avail. Here are some of the best investment options that you should consider for your child’s education.

1.Personal loan for higher education – You can use funds from a personal loan to finance your child’s education. There are various benefits of these types of advances. For example, you get quick approval, generally within 5 minutes after submitting your loan application online. Also, most lenders will disburse the loan amount within 24 hours after document verification.

Financial institutions offer up to Rs. 25 Lakh as loans, ideal for engineering degrees and similar other specialised courses. Affordable interest rates on personal loans and flexible tenors facilitate easy repayment.

2.Monthly Income Plans – A long term saving plan is the monthly income plan (MIP) from mutual funds. These funds have a lower risk factor than balanced funds as they put only 15% to 20% of their total investment in equities. For the last five years, MIPs have given annual returns of around 8.85%, which is an excellent return for a low-risk policy.

3.Sukanya Samriddhi Scheme – Sukanya Samriddhi Scheme is an initiative backed by the government of India. It was marketed as an incentive to encourage girl child’s education. You can open an account before the child turns 10, and invest in it until the child turns 18. You can also claim tax deductions under Section 80(C) if your annual investment stays within Rs. 1.5 Lakh. Sukanya Samriddhi Scheme offers 8.3% interest, higher than most other secure investment options available.

4.Fixed Deposit – It is the safest investment option guaranteeing a fixed return. FD also offers the flexibility to withdraw the funds against a minimum penalty fee. However, you will need to invest a considerable amount to cover rising expenses like higher education courses.
Thanks to various saving schemes, Government awareness programs, low interest rates personal loans for higher education, etc. planning for your child’s higher education have become relatively easier.

Any extra cost can be met with an advance from a financial institution. Various lenders offer loans for higher education at affordable interest rates, easy to meet personal loan eligibility criteria, and flexible tenor. You can even negotiate the rate of interest if you have a decent CIBIL score.

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