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Financial Planning
From ABCs to EMIs: Preparing for tomorrow’s education costs
Worried about school fees in 2035? Learn how SIPs, smart loans, and early planning can help you stay ahead of rising education costs and financially prepare for your child’s future - without panic.
Key takeaways
- With education inflation at 11-12% annually, today’s ₹2 lakhs school fee could balloon to ₹5.6 lakhs in just 10 years. They best way to prepare is to start early.
- A simple monthly SIP paid consistently can help grow your money and smart use of education loans can ease shortfalls.
- Explore scholarships, education-focused funds, to plan, pace, and protect your child’s future.
Do you remember when a ₹10 ice cream felt like a splurge? Now, even a pencil box costs a mini fortune. Now, think about what school fees might look like in 2035. Education inflation in India is around 11-12% per year. That means if a school costs ₹2 lakh/year today, in 10 years it could be ₹5.6 lakh.
Saving for school fees is like training for a marathon – start early, pace yourself, and don’t wait till the last lap. By the time your toddler reaches middle school, you will need an amount that might make your current salary look like a pocket change.
School fees in 2035 might cost more than your first car.
The big question: How do I even prepare for this?
A lot of times, planning for education gets on the back-burner, with all the present-day expenses and retirement planning. But trying to arrange for money when the first fee notice arrives is like studying the night before finals – could be possible but extremely stressful. You need to be smart about your money and breaking it down into simple steps makes this mountain climbable:
- Start early: Even small savings now has the potential to grow into a considerable amount later on! A monthly SIP of just ₹5,000 started when your child is born could grow to over ₹15 lakhs by high school.
- Education loans: friend or foe? Loans are a tool that can help you make up for the lack of timely investment. Used wisely, they can be a bridge, not a burden. Many parents view loans as a last resort, but strategic borrowing can actually preserve your other financial goals.
The loan lowdown: What you need to know?
| Loan type | Interest rate range | Collateral required | Benefits | Considerations |
|---|---|---|---|---|
| Secured | 8-10% | Yes (property/gold) | Lower interest rates | Asset risk |
| Unsecured | 11-15% | No | No asset pledge | Higher monthly payments |
| Govt-backed | 7-9% | Varies | Special rates, flexible terms | Income criteria apply |
Note: The interest rate ranges mentioned are for illustrative purposes only. Actual rates may vary based on lender policies, borrower profile, and prevailing market conditions. Please check with individual banks or financial institutions for the latest terms and conditions.
Taking an education loan doesn’t mean you are bad at saving. It means you are smart at planning. Some banks give a “grace period” till your kid graduates. Use that time to get financially stronger. Pay a little extra EMI when you can.
Pro tip: A loan you plan for is better than a loan you panic-take. You have to pay lower interest rates if you borrow early (some banks offer better rates for pre-approved loans). Government schemes like Vidya Lakshmi can help streamline your application process and connect you with multiple lenders.
Something many parents miss: borrowing part of the amount rather than the full fees can significantly reduce your interest burden while still giving you financial breathing room.
Beyond loans: Other ways to stay ahead
Invest early in SIPs/Mutual Funds
A small SIP today can grow into a school-fee cushion for tomorrow. Education-focused mutual funds can give you the discipline and structure needed for long-term goals.
Here’s a sample calculation, you can change the amount based on your goal and budget.
| Monthly Investment | ₹3000 |
|---|---|
| Expected ROI | 12% |
| Tenure | 10 years |
| Total ROI | ₹6,72,108 |
Education-specific investment plans
Several financial institutions offer education plans that combine investment with insurance benefits. These typically lock in money for 10-15 years with potentially higher returns than regular accounts.
Scholarships and merit-based fee waivers
Research schools with robust scholarship programs early. Some institutions offer up to 50% fee waivers for academically gifted students. Keep track of these opportunities from middle school onwards.
Side hustle for school funds
That hobby you monetise now could pay for school supplies later. Consider allocating any annual bonuses, tax refunds, or unexpected windfalls directly to education savings instead of splurging.
Besides these measures, consider creating a shared family education fund where grandparents and extended family can contribute on birthdays and special occasions instead of gifts. This can become a substantial resource over time.
Conclusion
You don’t need to have it all figured out today. Just start somewhere – open a savings account, research loans, or talk to your bank. Having a plan – even an imperfect one – beats hoping for a miracle. Thinking ahead is key to creating a comfortable life in the future!
Disclaimer: This article is for information purposes only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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