Why should I have an EduFund?

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 needs that may arise? With all these goals it might look daunting to have another fund for education too. Is it such a big deal?

Team EduFund
December 6, 2020

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 needs that may arise? With all these goals it might look daunting to have another fund for education too. Is it such a big deal?

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!

The cost of education will most likely jump (a lot!)

In India, the cost of education is increasing at rates 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/year, just for tuition fees. For e.g. Stanford’s tuition fee for its MBA program is USD 140000/year and that is more than one crore, considering the currency rates that are prevalent now.

Even if you factor in an inflation rate of just 10%, its 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 fee, will be very high.

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 education expense, you need to make sure that you and your spouse, are not dependant on any one post your retirement.

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 avoiding an education loan, by 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.

The Competition is just going to increase!

The competition to get into the best colleges, foreign or Indian, was always 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 has 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 what 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, even with just a small amount to build an education fund for your child. When you start early, you have the freedom of choice on colleges as you don’t have to worry about the costs 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.

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MUTUAL FUND COMPANIES

SBI  |  HDFC  |  ICICI Prudential  |  Aditya Birla Sun Life  |  Nippon Life India  |  Kotak Mahindra  |  Axis  |  UTI  |  IDFC   |  DSP  |  Franklin Templeton  |  L&T  |  Tata  |  Mirae  | Edelweiss | Sundaram  |  Invesco  | Motilal Oswal  |  Canara  |  LIC

EDUFUND CALCULATORS

SIP  |  Step-up SIP  |  Target Amount SIP  |  Direct V/S Regular  |  Education Goal  |  Delay  

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This website including the ‘[EduFund]’ platform is owned, operated and maintained by Helena Edtech Private Limited, a company incorporated under the laws of India. The platform and the services thereunder are provided on an "as is" basis. Use of the service and the platform is at your own risk. Company makes no warranty that the use of the service and the platform will be continuous, uninterrupted, bug-free, error-free, virus-free, free of defects, free of technical problems, nor that it will meet all of your needs. To the extent permitted by applicable law, Company expressly disclaims all other warranties, conditions, results, guarantees, or representations with respect to the service and the platform, whether express or implied, including, but not limited to, the implied warranties of merchantability, merchantable or satisfactory quality, fitness for a particular purpose, non-infringement of third party rights, or arising from the course of performance, course of dealing, or usage of trade.

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