Section 1: Education Cost Estimation Tool

Planning for your child's education begins with understanding future costs. Education inflation runs at 8–12% annually, significantly higher than general inflation.

Types of Education Costs

Education Cost Calculator

Step 1: Define Your Child's Education Path

• Child's current age: _____ years
• Years until higher education: _____ years
• Planned education level: _______________
• Location preference: India / Abroad

Step 2: Current Cost Estimation

Research current costs for your target education path:

• Tuition fees (per year): ₹ _____________
• Hostel / accommodation: ₹ _____________
• Books & materials: ₹ _____________
• Living expenses: ₹ _____________
• Travel & other costs: ₹ _____________
• Total annual cost (today): ₹ _____________

Step 3: Apply Education Inflation

Use this formula to calculate future cost:

Your Calculation:

• Current annual cost: ₹ _____________
• Education inflation rate: ______ % (assume 8–12%)
• Years to higher education: _____ years
• Inflation multiplier: (1 + 0.10)^years = _______
• Future annual cost: ₹ _____________

Step 4: Total Education Corpus Required

Section 2: Savings Timeline & Strategy

Once you know the target corpus, create a systematic savings plan to achieve it.

Monthly SIP Calculation

Use this formula to calculate required monthly savings (SIP):

Your Monthly SIP Requirement

• Total education corpus needed: ₹ _____________
• Years available to save: _____ years
• Expected annual return: ______ % (assume 10–12% for equity)
• Monthly return rate: ______ % (annual / 12)
• Monthly SIP required: ₹ _____________

Phased Savings Strategy

Consider increasing your SIP over time as income grows:

Goal-Based Investment Timeline

When Child is 0–5 Years Old (15+ years to college)

• Allocation: 80% equity, 20% debt
• Instruments: Equity mutual funds, index funds, Sukanya Samriddhi (for girl child)
• Strategy: Maximum growth potential, time to recover from volatility

When Child is 6–10 Years Old (8–12 years to college)

• Allocation: 70% equity, 30% debt
• Instruments: Balanced funds, ELSS, PPF, child plans
• Strategy: Continue growth focus, start building stability

When Child is 11–15 Years Old (3–7 years to college)

• Allocation: 50% equity, 50% debt
• Instruments: Debt funds, FDs, conservative hybrid funds
• Strategy: Reduce risk, preserve capital

When Child is 16+ Years Old (0–2 years to college)

• Allocation: 20% equity, 80% debt/liquid
• Instruments: Liquid funds, short-term FDs, sweep accounts
• Strategy: Full capital preservation, easy liquidity

Section 3: Education Loan Guide

Education loans can bridge the funding gap or preserve family savings. Understand the options, costs, and tax benefits.

Types of Education Loans

Eligibility Criteria

• Student: Indian resident with admission to recognized institution
• Age: Typically no upper age limit
• Course: UG, PG, diploma, or vocational courses in approved colleges
• Co-applicant: Parent, guardian, or spouse required
• Academic record: Consistent performance preferred

What Education Loans Cover

• [ ] Tuition fees (full coverage)
• [ ] Hostel / accommodation charges
• [ ] Examination / library / lab fees
• [ ] Books, equipment, instruments
• [ ] Study tour / project expenses
• [ ] Travel expenses (for abroad study)
• [ ] Purchase of computers / laptops
• [ ] Two-wheeler (in some cases)
• [ ] Caution deposit, refundable deposits

Repayment Timeline

• Moratorium period: Course duration + 6 months (or 1 year for some banks)
• Repayment tenure: 5–15 years after moratorium
• EMI start: After getting a job or end of moratorium
• Prepayment: Allowed without penalty (check bank policy)

Sample Loan Repayment

Top Education Loan Providers

• SBI Education Loan
• HDFC Credila Education Loan
• ICICI Bank Education Loan
• Axis Bank Education Loan
• Bank of Baroda Education Loan
• Avanse Financial Services
• IDFC First Bank

Section 4: Investment Options for Education Goals

Choose the right mix of investments based on your time horizon and risk appetite.

Long-Term Investments (10+ Years Away)

Equity Mutual Funds

• Type: Large cap, flexi-cap, index funds
• Expected return: 12–15% annually
• Risk: High (short-term volatility)
• Best for: Children aged 0–8 years
• Example funds: Parag Parikh Flexi Cap, HDFC Index Fund Nifty 50

Sukanya Samriddhi Yojana (SSY) - For Girl Child Only

• Eligibility: Girl child under 10 years
• Maximum contribution: ₹ 1.5 lakh/year
• Interest rate: 7.6% (quarterly revised)
• Maturity: 21 years from opening
• Tax benefit: Triple tax exemption (EEE)
• Partial withdrawal: Allowed after 18 years for education

Public Provident Fund (PPF)

• Maximum contribution: ₹ 1.5 lakh/year
• Interest rate: 7.1% (quarterly revised)
• Lock-in: 15 years (extendable in 5-year blocks)
• Tax benefit: Full deduction under 80C, tax-free returns
• Partial withdrawal: Allowed from 7th year

Medium-Term Investments (5–10 Years Away)

Balanced / Hybrid Mutual Funds

• Type: 50–70% equity, 30–50% debt mix
• Expected return: 9–12% annually
• Risk: Moderate
• Best for: Children aged 8–13 years

Child Insurance Plans (ULIP / Traditional)

• Type: Insurance + investment combo
• Expected return: 6–10% (varies by plan)
• Lock-in: 5+ years (ULIPs), 10–15 years (traditional)
• Death benefit: Premiums waived if parent passes away
• Tax benefit: Premium deduction under 80C

Short-Term Investments (0–5 Years Away)

Debt Mutual Funds

• Type: Short-duration, corporate bond funds
• Expected return: 6–8% annually
• Risk: Low
• Best for: Children aged 14–17 years

Fixed Deposits (Bank / Post Office)

• Interest rate: 6–7.5%
• Risk: Very low (capital guaranteed)
• Liquidity: Moderate (penalty on early withdrawal)
• Tax: Interest taxable as per slab

Liquid / Overnight Funds

• Expected return: 4–5%
• Risk: Very low
• Liquidity: Instant withdrawal
• Best for: Parking funds 6–12 months before college starts

Sample Portfolio Allocation

Section 5: Tax Benefits Overview

Education planning offers multiple tax-saving opportunities. Use them to maximize savings and reduce tax liability.

Section 80C - Education-Related Deductions

Tuition Fees Deduction (Section 80C)

• Limit: Included in overall ₹ 1.5 lakh 80C limit
• Eligible: Tuition fees paid to school, college, university (India only)
• Coverage: Maximum 2 children
• Excluded: Development fees, transport, hostel, donations
• Documents needed: Fee receipt from institution

Life Insurance / Child Plans (Section 80C)

• Limit: Part of ₹ 1.5 lakh 80C limit
• Deduction: Annual premium paid
• Tax on maturity: Exempt if premium ≤ 10% of sum assured

Other 80C Investments for Education Goal

• PPF contributions (₹ 1.5 lakh max)
• Sukanya Samriddhi Yojana (₹ 1.5 lakh max)
• ELSS mutual funds (₹ 1.5 lakh max, 3-year lock-in)
• 5-year bank/post office FDs

Section 80E - Education Loan Interest Deduction

• Deduction: Full interest amount (no upper limit)
• Duration: Up to 8 years from start of repayment
• Eligible: Loan for self, spouse, children, or student (if repaying own loan)
• Course: Any full-time higher education (UG, PG, vocational)
• Institution: India or abroad, recognized by govt/approved body
• Documents needed: Interest certificate from lender

Sample Tax Savings on Education Loan

Triple Tax Exemption (EEE) Schemes

These schemes offer tax benefits on contribution, accumulation, and withdrawal:

• Sukanya Samriddhi Yojana: Contribution (80C), growth, and withdrawal all tax-free
• PPF: Contribution (80C), interest, and maturity all tax-free

Section 6: Implementation Timeline

Follow this step-by-step timeline to execute your education plan successfully.

When Child is Born to Age 5

• [ ] Open Sukanya Samriddhi account (if girl child)
• [ ] Start PPF account in parent's name for education goal
• [ ] Begin small SIP in equity mutual funds (₹ 5,000–10,000/month)
• [ ] Create education goal calculator spreadsheet
• [ ] Decide target education path (tentative)

Age 6–10 Years

• [ ] Increase SIP by 10–15% annually with income growth
• [ ] Add balanced/hybrid funds to portfolio
• [ ] Review child's academic interests and strengths
• [ ] Research education costs for target courses
• [ ] Update education corpus estimate

Age 11–14 Years (Pre-High School / Early High School)

• [ ] Finalize target education path (engineering, medical, commerce, etc.)
• [ ] Calculate exact corpus needed with inflation
• [ ] Check if current savings on track (50–70% of target)
• [ ] Start shifting 20–30% from equity to debt funds
• [ ] Research target colleges and entrance exams

Age 15–17 Years (Final School Years)

• [ ] Accelerate savings if shortfall exists (top-up SIP)
• [ ] Shift majority to debt/liquid funds (preserve capital)
• [ ] Research education loan options (backup plan)
• [ ] Prepare for entrance exams (coaching fees budgeted)
• [ ] Shortlist 5–10 target colleges with fee structures

Age 18 (Admission Year)

• [ ] Admission secured in target college
• [ ] Final education cost confirmed
• [ ] Liquidate investments as per fee schedule
• [ ] Apply for education loan if required
• [ ] Pay first-year fees from accumulated corpus
• [ ] Plan year-wise fund allocation (Year 2–4)

During College Years (Age 18–22)

• [ ] Withdraw funds as per annual fee requirement
• [ ] Keep remaining corpus in debt/liquid funds
• [ ] Ensure education loan EMI (if any) planned
• [ ] Monitor child's academic performance
• [ ] Encourage part-time work / internships (if feasible)