“Children’s education is one of the biggest cash outflows that families must plan for” – Rohin Pagdiwala
A private college education in India costs anywhere between ₹8-20 lakh for the entire 4 year graduation course. Similarly a 2 year post-graduation can cost anywhere upwards of ₹25-70 lakh. And if you plan to send your child abroad for a foreign college education, tuition fees at Ivy League colleges in the USA are upwards of $70,000 per year. With the cost of boarding, books, and other overheads, the total cost would be more than $100,000 today.
How does a family plan for such large cash outflows? What should be the investment strategy for kids’ education?
Well, you can start by safely assuming a cost escalation of 10% per year. Unfortunately education costs have been rising at a much faster rate than standard inflation, making it all the more tricky to plan for it. One of the big advantages however of planning for kids’ education is that you will know the exact time period by when you will need the money.