Sending your child abroad for studies? Here’s how can fund their education

Being a parent means many things. Friend, mentor, life-coach - you don several hats for your child's happiness and ensure you're able to support all of their dreams. Whether it was scouting for the best pre-school or encouraging them to study at a top-notch foreign university, you stop at nothing when it comes to fuelling their talent. However, this dream materialises at a lofty price. One of the biggest parental worries looming on the horizon is if they will be able to fund their child's education. Shaving off your retirement corpus can be a precarious move. Fortunately, several funding options can be used to cover the costs of overseas education: 

1. Savings & Investments

The first step at funding your child's higher education is planning it prudently and opening a Savings Account is an ideal way to do so. Starting early will allow you to aggregate a substantial corpus that climbs the inclines of inflation as long-term investments have room to weather risks and optimise returns. You can pillar your child's dream by opening a Minor's Savings Account with IDFC FIRST Bank that doesn’t burden you with an average monthly balance requirement.

You can boost your returns by investing in Systematic Investment Plans (SIPs) instead of conventional Fixed Deposits (FD). Next comes a plethora of Mutual Funds, out of which Debt Funds and Equity Funds are primary. Always remember that high-risk yields high rewards, so mobilise your wealth based on your risk tolerance. Since Equity Funds aim to offer higher returns with a risk, you should only opt for it when investing for a long term. If you are eyeing a shorter timeline, Debt Funds can help you reap moderate but comparably stable returns. You can also invest in balanced funds (Hybrid funds) that diversify between Debt and Equity segments to facilitate the best risk-reward balance to augment the return on investment (ROI).

It is also advised to invest a portion of your money in secure options like PPF, bank deposits, and tax-free bonds to divide your risks. You can invest in a comprehensive child insurance plan that offers an array of benefits, or you can also look into separate term plans that equip you to realise each milestone separately. ULIPs are a viable option in this category that allow you to invest in equity and debt investments while providing life insurance protection to your child. 

Do not forget to keep reviewing and revising your investments vis-à-vis the current developments. Audit and balance your portfolio once every year without fail to ensure that the cumulative returns are in tandem with the goal in sight.

2. Educational Loans

After home loan, education loan is the largest loan type sought by consumers. To equalise access to education, the Government of India has formulated an easily attainable Educational loan scheme that covers a plethora of courses in India and abroad. You can also check whether the preferred educational institute has an affiliation with banks that offer financing facilities. Many Indian banks will sanction students a loan for studying abroad, even before departure. Compare rates of interest offered by different institutes and check the repayment options that suit your needs. Some banks offer loans that allow repayment from six months after securing a job, and some provide repayment options post six months of the course completion. It would be best if you choose wisely between long-term repayment and short-term repayment facilities. 

It is imperative to read the fine print before finalising a loan and ensure that it covers all necessary expenses and prevents any unprecedented surprises in the longer run. You can also seek professional help before applying for a loan if you are not well-versed in financial jargon.

3. Financial Aid

Scholarships, bursaries, allowances, and grants play a crucial role in bearing a part of the financial burden when applying to a university abroad. Provided by the Government and private institutions, these scholarships can be of different types- merit-based scholarships, need-based scholarships, country-specific scholarships, college-specific scholarships, and student-specific scholarships. Several portals offer this information at the click of a button, making it easier to keep abreast with the criteria to avail the facilities.

We understand that nothing makes you happier than seeing your child be the best version of themselves. And, with your support, their dream can soar high! Apply for an education loan online with our mobile banking app. 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank 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 mentioned. Please consult your financial advisor before making any financial decision.