The cost of higher education in India has witnessed a surge in recent years, encompassing tuition fees, hostel, books, and miscellaneous expenses. As parents seek to provide quality education to their children, it’s essential to assess the potential financial need and plan accordingly.

Meticulous financial planning is the key to transforming these dreams into reality. Here are the key tips to help you overcome financial challenges and create a way out to save enough to give your children the best education available by top institutions of India and abroad.

SIPs: Sowing Seeds for Future Growth

Embarking on the journey of saving for your child’s education necessitates a nuanced approach. Systematic Investment Plans (SIPs) emerge as stalwart allies, providing a disciplined and customisable investment avenue. For instance, consider investing in equity mutual funds through SIPs. Historically, they have demonstrated the potential for robust returns over the long term, aligning with the extended horizon typically associated with saving for higher education.

Also Read: Senior citizen fixed deposits offering up to 9.1% interest rates

Sukanya Samriddhi Yojana

For parents envisioning a brighter future for their daughters, the Sukanya Samriddhi Yojana (SSY) stands as an important investment option. This government-backed scheme fosters financial discipline and help you grow your investment as your child grows.

Adhil Shetty, CEO, Bankbazaar.com, says, “Opening an SSY account not only ensures a dedicated corpus for higher education but also provides tax benefits. The investment in SSY not only nurtures a girl child’s education but also empowers her financial independence.”

Education Loans

While diligent saving is crucial, it’s essential to be realistic about the potential shortfall. Education loans in India offer a viable solution. If your child secures admission in reputed institutions, you must not let financials to create a hindrance. This is the time when education loan comes into picture. You must compare the interest rates, repayment terms and conditions, and other details before applying for the loan.

Public Provident Fund (PPF)

While not exclusively designed for education, PPF serves as a reliable long-term investment option. With its attractive interest rates and tax benefits, PPF allows parents to create a financial cushion for their children’s higher education. Shetty adds, “The flexibility of PPF, coupled with the power of compounding, makes it a versatile instrument that aligns with the extended horizon associated with saving for academic pursuits.”

Long-Term Fixed Deposits (FDs)

FDs are considered a safe investment option as they are backed by the government or banks. This security is especially crucial when saving for long-term goals like education, where preserving the capital is a priority. With long-term FDs, the interest rate is locked in at the time of investment. This fixed rate shields your investment from fluctuations in the market, providing predictability for future planning.

National Savings Certificate (NSC)

The NSC provides assured interest and full capital protection, mirroring the features of certain other fixed-income options such as the Public Provident Fund and Post Office Fixed Deposits. Nevertheless, it falls short of delivering returns that outpace inflation, unlike tax-saving Mutual Funds and National Pension Systems.

Functioning as a government-backed tax-saving initiative, the principal amount invested in NSC qualifies for tax benefits under Section 80C of the Income Tax Act, allowing annual savings of up to Rs 1.5 lakh. Furthermore, NSC certificates are acknowledged as valid collateral or security for secured loans in both Banks and Non-Banking Financial Companies (NBFCs).

By strategically opting for investment instruments like SIPs, Sukanya Samriddhi Yojana, and education loans, parents can ensure their children achieve a goal of quality education in the best institutions anywhere in the world.