How to Plan for Your Child's Education Inflationary Costs?
- DetailsWritten by PolicyBazaar -
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Updated date : 31 December 2019
Rohan is a Manager in a Gurugram based MNC and was happy for his son to take another milestone in his life i.e. to get admission done in a school. He filled the forms of some of the best schools in the city. However, he was surprised to know that the fees of a nursery class would cost more than 1.5 lakhs. But like every parent he was not willing to compromise on his son’s education and decided to go ahead, even he had to cut down his own expenses.
Just like Rohan, there are many parents who feel gripped in the rising cost of education in India. He stretched out his budget to meet the expenses right now, but this doesn’t end here. He realized he would need to plan well in advance for this son’s higher education, and fees will be too exorbitant considering the prevalent education inflation.
Read on to know how you can plan for your child's education inflationary costs by investing in a policy that covers the education costs:
Looking at the Soaring Education Costs
The cost of education in India has been soaring to double digits in the past two decades while the government defined inflation for the past decade has been in the 4%-8% range. Even the premier institutes like IITs along with the private institutes have hiked their fees.
For example, the fee of a 2-year MBA Course at IIMs is close to Rs.19 lakhs, which is a 12% average increase from Rs. 4.5 lakhs in 2009. Even the fees of a B.tech course have increased to Rs. 10 lakhs from Rs.3.6 lakhs in 2009. And the same applied to M.B.B.S Courses, the fees have been up by 10% annually.
Increase in education cost in the last 10 years:
|Name of the Course||Fees in 2009 (in Rs.)||Current Fees (in Rs.)||Increase in the Fee Structure within a Decade (%)|
|M.B.B.S||10 L||25 L||10%|
|MBA||5 L||19 L||12%|
|B.Tech||3.6 L||10 L||10%|
Decide How Much You Need to save for Your Child’s Education?
Before you calculate how much money needs to be invested, you need to figure out how much money is required at the actual time of need.
Taking into consideration the increasing education costs, the corpus you need to build for your child’s education in the next 10 to 15 years can soar as high as Rs. 1 crore in India only.
Table with Expected fees over the next 5 to 10 years:
|Name of the Course||Fees Likely in 5 years (in Rs.)||Fees Likely in 10 years (in Rs.)|
|M.B.A||30 L||49.2 L|
|B.Tech||16.5 L||25.9 L|
|M.B.B.S||40 L||64 L|
How to Build the Required Corpus?
Undoubtedly the numbers look intimidating; after all, it is not a small amount. But there is no need to fret. You can achieve the desired amount by selecting the best education plan, investing in it regularly and the right amount to get inflation beating returns.
Planning for Your Child’s Education by Investing in One of the Best Child Education Plan
There is no better gift then securing your child’s future financially in addition to love. To help you understand better here’s how you can plan for your child’s education with a child education plan:
It Will Help Fulfill Your Child’s Dreams
You can see the trend of increasing feesthat is going to be even higher when yourr child is actually of the age to take up the course. But if you have invested in a child plan, you can let your child freely pick up the course he wants to pursue depending on his skills and interest.
This way the fees won’t be a hindrance and your child will be able to fulfill his dreams and career goals with the sum insured.
So, a wise investment today can help you build a sufficient fund to pay for the exorbitant college fees. At the end of the policy term your child will get the maturity benefits that will ensure that all his dreams are turned into reality.
Pay for College Expenses with the Maturity Amount
As you can see the education fee is rising at a rate higher than the economic inflation, it makes all the more sense to save for your child’s future. With a basic B.tech course costing up to Rs. 2 lakhs, it becomes essential to invest in a child saving plan to ensure that your child meets all his educational milestones.
Financial Security In case of Unforeseen Circumstances
Your child education investment would also ensure that your child is financially secured even after your sudden demise. Your child will get at least 100% of the insured amount. The best part is that the policy to pay off the higher education expenses, with the maturity amount being approximately 10 times the cost of the premium.
Fund Your Child's School Fees
It takes off the worry who will pay for my child’s education expenses, even if you are not around. In case of a parent’s death, the insurer will immediately pay a percentage of the insured amount, and your child will also get periodic payments till the end of the child investment plan. With this amount, the insured child can pay off the school fees even if the parents are not around.
So, this is how you can plan for your child’s future and the increasing cost of education in India. By investing in a good investment scheme, you can secure your child's future.
Well, the inflation numbers were startlingly high but you can see how you can plan it in advance. The sole purpose of a child education policy is to help the parents meet the exorbitant fee that is likely to grow in the future.
It is imperative to arrange funds for your child’s education well in advance. The investments that you will make now will help you to be financially prepared for any challenge and help your child build his career without worrying about future costs. These small investments can make you and your child future ready.
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