In 1980’s and till sometime in 1990’s, education was still important but had not assumed the importance it has today. The admission to Indian Universities was difficult then slowly became tough and today it’s near to impossible.
The definition of brilliant students changed from people who got 75%+, then to 85% and today even 95% is sometimes less. The competition has now reached immense heights and the stress is greater than it ever was.
I remember in 1980’s when one of my friends, who was in class 11th spoke to his father about getting into a business college in Bangalore after college, his father replied “ho jayega, you just keep studying hard”. The fee was around 3-5 Lakhs and was not a big problem for him. In today’s times not many parents can easily say “ho jayega”, as the sum in the backdrop is not 3.5 Lakhs, it may be 20 times more.
I think we need to accept the fact that “ho jayega” has to move towards “Karna padega”. There is a huge importance of planning for kid’s education, not only in terms of Child’s likes and dislikes, but also in terms of finances.
I see a lot of parents taking hefty education loans, loan against properties of liquidating assets for kid’s education. Can this be better planned? The answer is ‘YES’. So when do you start planning for kid’s education?
I would say the day the child is born, the savings should start and by the time the Child is 10, you need to figure out where the Child wants to head and start having a serious financial plan for the same.
Consult a professional. The ‘Do it yourself’ formula cannot work for all and don’t try to be someone who buys a medicine without a prescription. The repercussions could be damaging.
i. The first rule is to not to assume that a Child Insurance Policy can do the trick, because it won’t. It’s like saying I will grow carrot with apple seeds.
ii. One needs to also assume two scenarios, one where the bread earner is there and the other where he/she isn’t.
iii. Get control over the portfolio, not the product.
iv. Make sensible assumptions, not over/under realistic ones.
I would say, if parents can plan well in time and plan well, teach the importance of savings to their kids, then why do you even want a loan. However, if nothing seems to be working, the best scenario is to analyze the reality of whether the loan is available, whether the loan is sufficient, how it will be paid back, etc. One can have a combination of self funding and the loan. All loan means you weren’t planned enough.
We understand that finance is an important aspect of kid’s education, and therefore we have dedicated team, which can provide consultancy on goal planning. You can contact Anil Budhraja at +91 9811 07 8787 or at firstname.lastname@example.org