Why should you have an education fund dedicated to your child’s college education?
Don’t you already have to worry about saving up for your home, your retirement, and any other emergency that may arise? With all these goals it might look daunting to have another fund for education as well.
Is it such a big deal?
Well yes, It is a very big deal!
Here are the top 4 reasons why you need to start saving up for education, as soon as you can, even if your child is just 4 years old!
1. The cost of education will most likely jump (a lot!)
In India, the cost of education is increasing at a rate far higher than the inflation rate. According to a report by the National Sample Survey Office (NSSO) – between 2008 and 2014, the average annual private expenditure for general education (primary level to post graduation and above) shot up by a staggering 175 percent while during the same period, the annual cost of professional and technical education increased by 96 percent.
The expenses typically include course fees, books, transportation, coaching, and other related costs. A recent ASSOCHAM survey also reflected this trend – parents are ending up spending almost 50% of their income on children’s education, today.
Studying abroad provides more options to students compared to the highly competitive and increasingly expensive higher education landscape in India.
However, getting admitted into a premier institute abroad requires students to shell out nothing less than a crore/per year, just for tuition fees.
For e.g. Stanford’s tuition fee for its MBA program is USD 140000/year and which is more than one crore, considering the currency rates that are prevalent now.
Even if you factor in an inflation rate of just 10%, it’s going to cost double the amount to send your child to college, say 15 years later, than what it costs today.
Whichever destination you might choose to send your child to college, the money that you are going to spend, just on tuition fees, will be very high.
2. To avoid dipping into your retirement corpus!
It is more prudent to maintain separate funds for your savings and your child’s education.
This is due to the simple reason that no one is going to give you a loan to take care of your expenses post-retirement.
While your child may get a loan that will fund his/ her education expenses, you need to make sure that you and your spouse, are not dependent on one post your retirement.
Hence, EduFund comes to the rescue!
3. Let your child be debt-free!
Education loans are easily available from banks and other financial institutions and are attractive to many students who are not able to afford higher education – especially abroad.
But then again, education loans are termed at extremely high-interest rates, not to mention the collaterals attached to them. In this scenario, having an education fund will help.
Your child will not start her career with a debt burden hanging over her choice of job. And with the growing uncertainty in jobs due to the current global economic slowdown, there is no job security that assures steady income to pay off an education loan.
4. The Competition is just going to increase!
The competition to get into the best colleges, foreign or Indian, has always been high.
We all know the importance of studying well to get into the best colleges. But the increasing population and increasing enrolment in higher education have ensured that what was possible to achieve with 80% marks in the year 2000, now requires at least 95% marks. And, there are more people competing for the same number of seats.
So, getting into one’s college of choice on merit alone or with a scholarship is going to be much more difficult than it was.
In fact, parents are now having to prepare to handle competition even for KG admissions for toddlers. Many of them start planning right at child-birth on which school their child should go to.
So, start planning now!
When you start early, you have the freedom of choice in college as you don’t have to worry about the cost of college.
Having a corpus fund for education to draw from when the time arises is imperative to ensure a good education and a good career for your child.
And even if your child’s choice of career changes as time passes, you can adapt and be ready with the funds, when required.
FAQs
What is EduFund?
EduFund is an investment app dedicated to helping Indian parents save, invest and plan for their child’s education needs.
How can EduFund help you?
EduFund can help you invest, save and plan for your child’s education needs. It allows you to customize your plan, and invest in tools like mutual funds, US stocks, ETFs, and digital gold to diversify your investments.
It sets long-term and short-term goals for parents and children to save up time and help them achieve their goals. EduFund also helps you with education loans and connects you with the best loan partners in India and USA.
How can you set up an account with EduFund?
You can download the App from Play Store or apple store and set up your account free of cost. All you need is a bank account, an Aadhar, and a pan card to open your account and start investing in mutual funds.
Conclusion
We live in a world that is marred with competition, whether it’s getting into a good college, or choosing the right investment instrument, being prepared for the future equips you to handle things better.
The stability of having a corpus and not being dependent on an education loan is a reassuring move for your child to choose his/ her dream college.
An EduFund may seem a far-off thing today, but it is a necessity for the future.
Plan, invest, and educate!
