Objective
To learn how to plan higher education for your children?
1. Higher Education Planning - Factors
As a parent, you should take care of the following points while planning higher education for your children:
i. Don't Ruin All Your Life Savings
- You should not spend your entire savings on a child’s education.
- You should not think that your children after getting employed will pay you back, the amount you have spent on their education.
- You can use a specific part of saving for child education but you should never use your retirement savings.
ii. Involve Your Child
You should tell your child about your efforts and hardship you put in to finance the education.
With this, your child will understand your pain and money spent on education.
After knowing all this, the child will focus on his education to get a good opportunity so that he can repay you.
ii. Involve Your Child
You must consider the inflation rate while planning for child education.
For this, you can take the help of a finance manager to make your budget and how to achieve it in time.
After knowing all this, the child will focus on his education to get a good opportunity so that he can repay you.
2. Higher Education Planning – Ways
You can explore the following ways to effectively finance your children’s higher education:
i. Education Loan
- You can take an education loan for your child.
- You can get a document/application form for an education loan from any university at the time of your child’s admission.
- You can get an education loan from any bank after showing the document.
- The biggest benefit of an education loan is that it has a very low interest rate.
- Another benefit is that you don’t have to repay the loan, your child will repay the loan after his placement.
ii. Financial Aid
- You can get financial aid through a scholarship or grant.
- You can get detailed information about financial aid on the websites of every university or college.
- You can apply for financial aid from the websites.
- You may not get 100% financial aid (scholarship or grant) for higher education but it can reduce your expenses to an extent.
iii. Work Study Visa
You can also apply for a work-study Visa under which your child can go abroad to study as well as do a part-time job at the same time
3. Higher Education Planning - Saving Instruments
You can save money by investing money in the following instruments:
i. Public Provident Fund (PPF)
- You can save your money in PPF to finance your child’s higher education.
- For this, you have to invest at least Rs. 1 lakh annually for 15 years (lock-in period).
- You will get about 7-8% interest on the invested amount.
ii. Sukanya Samridhi Yojna
- This is a government scheme in which you can save money for your girl child.
- In this scheme, the interest rate is similar to that of the PPF (7-8%).
iii. Mutual Funds
- You can also invest in mutual funds to save money.
- Mutual funds have some associated risks.
iv. Debt Funds
- Debt funds are another option to invest if you do not want any risk.
v. Fixed Deposits (FD)
Investing in FD is not a good deal because of its continuously decreasing interest rate.
5. Write a Will for Your Child
You must write a will if you have one child or more than one child.
5. Write a Will for Your Child
- In the will, you should appoint a guardian who would take care of your children in case of your death.
- You should make sure that your property and saved money (or wealth) are equally distributed among your children.
- With this, your children will complete their education and live their lives properly.
- In India, about 90% of people miss this point and do not write a will because they do not know its importance.
4. Involve Your Child
- You must involve your children in the planning of their higher education.
- You should make your children habitual of pocket money from their school days.
- You should teach your child to save money from his pocket money to fulfill his desires.
- With this, your children will learn to manage their money when they start studying in universities.
- Higher education planning for your child is a very serious topic and you should start the planning from today itself.
Key Outcomes
- Don’t ruin your entire savings in child higher education
- Involve your child in the higher education planning
- Take inflation into count during the education planning of your child
- Apply for an education loan/scholarship/grant to reduce your expenses