Planning Higher Education for your child

Last week when doing a Finsafe Counselling session, the client requested assistance on a specific aspect. How to plan funding for higher education of their son. The couple were in their late thirties & their only son was 9 years old. They required assistance on how to plan funding for their son’s graduation & post-graduation. This made me think & write this article. 

 Education is one of the most important aspects of an individual's life. Especially for Indian parents providing a good education to their children is a top priority. It helps individuals gain knowledge, develop their skills, and enhance their future prospects. In India, higher education is becoming increasingly important, as it can significantly impact an individual's career and earning potential. However, the cost of higher education in India has been rising steadily over the years, making it challenging for parents to finance their children's education. In this article, we will discuss how Indian parents should plan for financing higher education for their children.

Start planning early

Planning for your child's education is a long-term process that requires careful consideration and a lot of time. Therefore, it is essential to start planning as early as possible. The earlier you start, the more time you have to save and invest money to finance your child's education. Ideally, parents should start planning for their child's education from the moment they are born. This will give them enough time to save and invest money to meet the cost of higher education.

Estimate the cost of education

The next step is to estimate the cost of your child's education. This includes tuition fees, accommodation expenses, books, and other miscellaneous expenses. The cost of education varies depending on the course and the institution. It is therefore essential to research the different courses and institutions to get a reasonably accurate estimate of the cost. This will help you plan your finances better and ensure that you have enough money to finance your child's education.

Explore different financing options

There are several financing options available for parents to finance their child's education. Some of the common financing options include education loans, scholarships, and grants. Education loans are provided by banks and financial institutions to finance higher education. Scholarships and grants are awarded to students based on their academic performance or financial need. Parents should explore all the available financing options and choose the one that best suits their financial situation.

Save and invest regularly

One of the most important things to do when planning for your child's education is to save and invest regularly. This includes opening a separate bank account for your child's education and setting aside a fixed amount every month towards it. Investing in long-term investment options like mutual funds and stocks can also help you generate significant returns over time. However, it is essential to consult a financial advisor before investing to ensure that you make the right investment decisions.

 Consider inflation

The cost of education is increasing at a much faster rate than the general inflation rate. Therefore, it is essential to consider inflation when planning for your child's education. The cost of education is likely to increase significantly in the future. Therefore, it is important to plan your finances accordingly to ensure that you have enough money to finance your child's education when the time comes. If you are planning higher education in a foreign country, you need to factor foreign exchange inflation depending on the country where you plan to send your child for higher education.

 

Encourage your child to pursue scholarships

If your child has an aptitude for doing well in studies, encouraging them to pursue scholarships is an excellent way to reduce the cost of education. Scholarships are awarded to students based on their academic performance or financial need. Therefore, it is essential to encourage your child to perform well academically to qualify for scholarships. This will not only reduce the cost of education but also motivate your child to perform well in their studies.

Opt for a part-time job

Working part-time while studying can help your child earn money and reduce the burden of education expenses. Many students work part-time while studying to finance their education. This not only helps them earn money but also gives them valuable work experience that can help them in their future careers.

 

 

Use education loans judiciously

Education loans can be a good financing option for higher education. However, it is important to use education loans judiciously. It is essential to compare different education loan options and choose the one that offers the lowest interest rate and favorable repayment terms.

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