Tackle the Skyrocketing Costs of Education in India with a Child Plan
The costs of education in our country has been
constantly on the rise. According to various studies and
rough estimates, the cost of education in India has been
increasing at a Compound Annual Growth Rate (CAGR) of 10
percent1 since the last 10 years. In fact,
the cost of availing quality education in private
institutions is around 11 times than that in government
schools.
For parents, these figures can be horrifying. Each one
of us want to provide the best possible education to our
children but only few of us can afford to do us,
considering the enormous costs associated with it.
Therefore, it’s very important for all the parents or
would-be parents to start investing in a child plan to
secure the future of their child.
How much amount you should invest for your child’s
education?
It can be a bit tough to estimate the amount that you
will require for your child’s higher education. This is
because at this time, you don’t know whether your son or
daughter would want to undertake an economics course,
engineering course, or a medical degree. However, you
can consider the following factors:
01Education in India or abroad
The corpus that you’ll need for your child’s higher education depends upon whether you want him/her to study in India or abroad. Of course, studying abroad would incur more expenses since university fees and living expenses in a country like USA or Australia is comparatively higher than India. Therefore, make sure that you’re investing sufficient funds to create a large corpus.
02Plan for the most expensive course
Today, you might not know if your child will pursue his/her higher education in science field, or commerce, or arts. The corpus that you will need for your child’s education will depend upon the field he/she will choose in future. A good idea is to plan for an expensive education program such as engineering, MBA, medical etc. so that you will not face shortage of funds in any case.
03Age of your child
Now, let’s understand this with the help of an example. Suppose your child wants to study for an MBA degree in future which presently costs Rs. 24.5 lakhs2 in tier 1 college of India. Assuming that the inflation rate in education sector will continue to be 10%1 and the returns provided by a child plan to be 12%, here is a demonstration of how much money you should invest every month on the basis of your child’s current age:
| Current age of your child | Investment time before higher studies | Approximate cost of MBA course in future | Monthly Investment you should make |
|---|---|---|---|
| 3 | 20 years | Rs. 1.64 crores | Rs. 16,500 |
| 5 | 18 years | Rs. 1.36 crores | Rs. 17,800 |
| 10 | 13 years | Rs. 84.58 lakhs | Rs. 22,500 |
| 15 | 8 years | Rs. 52.51 lakhs | Rs. 32,600 |
| 18 | 5 years | Rs. 39.45 lakhs | Rs. 47,900 |
| 20 | 3 years | Rs. 32.60 lakhs | Rs. 75,000 |
Aditya Birla Sun Life Insurance Child’s Future Assured Plan (UIN 109N124V01)
ABSLI Child’s Future Assured Plan can help you to create
a substantial corpus to support your child’s education,
wedding, or both. With this plan, you will have the
flexibility to receive the plan benefits in form of
either a lump sum or assured annual pay-outs. Moreover,
you will get 20% loyalty additions on payment of full
premiums and an inbuilt waiver of premium benefit upon
death of life insured.
Conclusion:
Thus, with the increasing education
inflation rate, it is important for you to plan for the
finances so that insufficient funds don’t ever come in
way of your child’s dreams.
1Source:
economictimes
2Source: mbauniverse
For our readers, a few articles
Here are a few guides that try to simplify planning.