Money Guru: Expensive education! How to effectively manage expenses – experts decode

Education is becoming expensive by the day and it is increasing becoming difficult for many parents to afford their child’s education. In this edition of Money Guru, Zee Business’ Swati Raina takes a deep dive to explain what parents must do to manage the expenses. She speaks to experts Amit Kukreja of Amitkukreja.com and Neelabh Sanyal, COO of Kuvera.in to unlock secrets of effective planning.

Growing expense of education:

The expense of education is only growing exponentially.

Between 2012 and 2020, the expenses of education have gone up by 10-12 per cent.

The expenses are in lakhs of rupees for child’s education in a private school.

The expenses incurred on education in a professional degree college is anywhere around Rs 1 cr.

 Average Expenses in private schools

Grade                                                             fees

Pre-school                                                  Rs 60,000 – Rs 1.5 lakh

Primary                                                        Rs 1.25- Rs 1.7 lakh

Middle                                                        Rs 1.6 - Rs 1.8 lakh

Senior                                                         Rs 1.8- Rs 2.2 लाख

                                                                      Tuition Fees                                   

Expenses of professional course

Expenses of professional courses have gone up by nearly 10 per cent

For courses like MBBS, MBA,Btech, law, the fees is in lakhs

The expenses for education in foreign countries have grown exponentially.

The expenses have grown also because of relative weakness of rupee as against the USD.

Expense of Education: How to prepare for it

Set goals and estimate the expenses of education

- Add the inflation to the factor

- Review the current expenses of education.

- Add future goals to the current expenses of education

- Add the inflation factor in the expenses

- Buy insurance plan for yourself

- Plan expenses for all other activities of the child apart from education expenses.

Planning for education – where to invest?

- Create an emergency fund

- If the goal is above 10 years, do higher equity allocation

- As the goal gets near, invest in debt instruments

- You can invest in Children funds

- Children funds are balanced, hybrid funds

- You can also spend in PPF, Sukanya Samriddhi Yojana

Is it important to have insurance for your child?

Child should be included in the health insurance plan of parents

It is not necessary to take a separate health plan for your child.

You can take a term plan for your child.

Add child’s name in mediclaim insurance plan

Planning for Education - Kuvera

Goal                                                          Category

Above 10 years                                      Small and Mid cap

5-10 years                                              large and mid cap

3-5 years                                                large cap and liquid funds

Less than 3 years                                 ultra short, money market fund

Investment tips - Kuvera

Invest in mutual fund direct plans

Invest in index funds

Invest with a view of education inflation

For cash flow, one can do STP, SWP in mutual funds

Watch Full Video Here:

Education Loan

Education loan for studying in India and abroad

Tuition fees, hostel fees and others included in this

Loans can be taken from private or public banks

Loan for Graduation, post graduation, diploma courses

Undergraduate loan, career education loan available

Professional graduate student loan, parents’ loan available

Repayment process begins 6 months after the completion of course