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Instead of paying your child’s tuition fees outright, consider taking a loan. Here’s why

Sep 27, 2019 | 10 months ago | Read Time: 3 minutes | By iKnowledge Team
Child Education Investment

As a parent, you would want to ensure that money will never be a hindrance in giving your children the quality education they deserve. As the years roll on, the fees involved, right from the primary education till the time they graduate, will shoot up even further, which could place the parents in a predicament if they don’t plan early. If we go by rough estimates, the education inflation is around 10 – 12% annually; while you cannot stop the fees from growing at exorbitant rates, you can take necessary precautions, and gift your child the promise of quality education. Check out top 5 IB board schools in India which are considered best for your child.

Education is a fundamental human right. We’re often told that there is no better teacher than experience, and when it comes to the next generation, we often go to great lengths to ensure that they don’t make the same mistakes we did. Time makes us wise, and so, when we start planning for our child’s future, we are immediately left dreading about the costs that will be involved in paying for their tuition fees. Planning for their child’s higher education is one of the biggest financial decisions every parent must make, and the sooner they start saving for their education, the easier the process gets.

Growth spurt in tuition fees

Source: Pramesh [1]                                             

Between 2008 and 2014, the average yearly private costs for general education, according to the National Sample Survey Office (NSSO), rose by 175%, while the annual expenditure of technical and professional education shot up by 96%[2].

For instance, the students of Indian Institute of Management – Ahmedabad class of 2018 pay a whopping 19.5 lakh for the two – year course. Comparing these fees, to how much IIM – A charged back in 2007, we see a 400% hike in the tuition fees. Assuming the fee keeps increasing at the same rate, which is around 20%, it would cost nearly a crore for students to study in IIM – A by 2025.

Source: Business Standard [3]

The coveted university seats in the United States

A large chunk of Indian graduates decide to go to the United States for their Masters, and nearly half of the top 100 universities in the world, and about 8 of the top 10, are American. The tuition fees for American universities are increasing every year, and it is almost a pipe dream for the students to go to the top universities, without having to fall back on scholarships.

Source: Economist [4]

When you’re saving for the future, every penny counts

When it comes to securing your child’s future, there are numerous questions you might ask yourself: where can you invest your money for financial security and to give your child a better future? How to save tax in India, so that you can funnel those into savings? When you’re saving for the future, every penny counts.

Parents cannot be prudent when it comes to their child’s future — especially their education. The rate at which education costs are going up, it is of utmost importance that due diligence is done from the very beginning, and parents think about long term investments. Paying your child’s tuition fees outright will undoubtedly be a burden, and to help ease the financial worries, you can opt for various investment plans.

You can also consider investing in child insurance plans to secure your child’s future. By making use of various online income tax calculators, you can calculate the tax exemptions you are eligible for after investing in child plans. So, call Aegon Life’s customer support today, and give your children the quality education they deserve. To know about Aegon Life’s life insurance products like term insurance and other products, visit our home page.

Citations:

[1] https://pramesh.in/why-is-the-cost-of-education-skyrocketing-in-india/

[2] https://economictimes.indiatimes.com/tdmc/your-money/how-to-plan-for-child-education-expenses/tomorrowmakersshow/52500991.cms

[3] https://www.business-standard.com/article/economy-policy/b-school-fees-gap-narrows-with-iim-a-benchmark-116041100035_1.html

[4] https://www.economist.com/united-states/2012/12/01/not-what-it-used-to-be


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