Hirannya

Category: Education

  • The Benefits of Education Loan

    Education Loan

    The Benefits of Education Loan

    Every child needs education as they are the future of the world. Every child is entitled to the education of every kind and anywhere in the world, irrespective of the class, status, caste or creed. The demands of the modern world are different from the past, and every child should be prepared to face the world in the true sense. There are a whole lot of benefits when a child gets his education. He educates not only himself to lead a healthy and wealthy life, but also helps to protect the environment, the society as a whole, help to make and also create the world that is beautiful and peaceful.

    Here I am giving some useful information about the Education Loan for the child education and its significance

    Education loan

    Yes, education is not cheap, and there are different education levels that can be seen, such as the primary, secondary, higher and post graduation. The higher you go, the more expensive education becomes. Parents today find it increasingly difficult to pay for the children’s education. However, with so many private and government banks providing loans for education, it has become quite easy and manageable for students to avail them and also repay them.

    Details about child education loan

    In India the limit for education loan is Rs. 10 to Rs. 20 lakhs. The interest rates on loan vary according to the bank, which ranges from 10 to 14 %. The total 15% of education should be funded by parents, and the balance will be in the form of the loan if the costs cross Rs. 4 lakhs. A third party guarantee is also needed in some cases or additional collateral. Such loans are generally for those who want to study abroad where the tuition fees, hostel accommodations, books, food, etc. are quite expensive. The payments are made directly to the college by the banks. Good performance in academics also provides plus points during the loan process and even the continuation of loans.

    Courses for availing loans

    There are several college courses within the country and abroad where you can get loans. Some of the courses are medical course, engineering, MBA, etc. These days the banks are unable to get the repayment of the loans and turns into non-performing assets. The scenario is very grave as there is unemployment in most of the sectors. That is why parents are considered for the repayment of the loan rather than the children.

    Considerations

    Parents should openly discuss the future plans for the children and also the loan and repayment. Most banks provide a pause period where the student can finish education and look out for a job during that pause period. The repayments of loans begin after securing a job or six months after completing the course. If during this period the student is unable to find a job, the parents have to start repaying the loan. Therefore, parents should also be ready for such circumstances.

    Benefits of loan for education

    There are several benefits if you get a loan for education Firstly, you can educate your child, even when you are in a financial crunch. Your child will get the best education and have a bright future as well. Secondly, you also get tax benefits on an education loan. Under section 80E, the interest paid on the loan is eligible for the deduction of tax on the income. The savings in tax can also decrease the cost of the loan. So the higher is the income, the bigger are the tax benefits. You also have to note that the tax benefits are only applied to you or spouse or children and not for interest paid on loans taken for relatives or even siblings.

  • Education Planning

    Education Planning

    GIVE YOUR CHILD A PROMISING DREAM FUTURE:

    You as a parents dream of fulfilling all the requirements and drams of your kids. You want to give the best to your child. Best of education, best of toys, best of health, best of everything!. The only problem of these best things is that these have the best price tags too. These days Child education is one of the biggest goals of any parents because of the high cost of education and tough competition. It is very important to start saving for your child education. To plan your child’s education check out this ‘education planner’ which will give you an insight on how much you need to save today, to provide for your child’s education at a future date.Cost of education is increasing yearly than inflation. Now a day’s college education is an expensive – but not an impossible one. With the right strategies, you can go a long way to meeting this challenge whether your child is still in preschool or already in high school.

    Step No.1: Generally children’s goes to college for under graduation at the age of 19 yrs and post graduation from 22 yrs of age. You can fix your term depending on your child current age and when you want the funds. Now you know the years left for your child higher education..

    Step No.2: Every parent has different dreams when it comes to child education. The courses like MBBS, MD, MBA, ENGINGEERING, Technology courses are very expensive one. First assume your child is   going to join the college from today then in that case what is the cost of education in today’s value.

    Step No.3: Now you know the cost of education in today’s value. But remember the cost of education is going to increase year on year because of inflation. In that case when your child goes to college after some years then find the cost of education will be that time. This is the amount you actually need at that time.

    Step No. 4: Once you know the target cost of education then you can start preparing for that. Here you have to take an important step before investing either systematically every month or one time investment. You have to find out whether you can achieve your target with the expected rate of return after adjusting inflation. Everybody has a different investment knowledge and risk appetite. Based on these factors you can choose different investment products to achieve your goal. If you are not comfortable in taking risk then just avoid that investment. Having said that generally equity investments gives better return over long period say 10 yrs and more. You have to satisfy yourself with suitable returns which will be able to achieve your target amount. More importantly if you have more years for your child higher education then you can invest monthly which will reduce your monthly outflow significantly.

    Important Decision: Your dream of giving best possible education to your child will be in dream only unless you insure yourself. It is always advisable to take the term insurance plan equal to your target amount. This will take care of your child dream education in case unfortunately if you are not here. Now for more details if you want to start planning for your child dream education planning.

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  • Education is a 9 letter word

    Education is a 9 letter word

    You can do the planning for your child’s higher education all by yourself. Education is a 9 letter word and here is a 9 step guide for you to make sure that you miss nothing while planning for your child –

    • Set the target – Think first that the money is required now. If that is the case, then with what amount you would feel comfortable? Say, the amount is Rs. 10 lakhs i.e. the cost as of today.
    • Consider inflation – Butthe fact is that you will be requiring the money later, say after 10 years. Then the actual amount which you should have then would surely differ. Blame it on inflation. Again this inflation may not be the same as for other household items. Normally inflation of education cost is always higher. Let us assume it to be 10%. Using simple FV formula in Excel, now you can find out the actual amount which is to be targeted, say Rs. 25 lakhs.
    • Allocate assets – If you have already made certain investments keeping this goal in mind, allocate those assets to this goal. How to do that? Say, the asset which you have already made investments in, is Fixed Deposit of Rs. 5 lakhs. Now assume that this deposit is to be renewed for next 10 years till your child becomes 18. You also have to assume the net return (post tax) that can be earned from fixed deposit year on year. So now it can be found out that what amount will be contributed by this asset, say Rs. 10 lakhs.
    • Find the Deficit – After allocation of existing assets if there is still a deficit that has to be taken care of. In our above case, there is a deficit of Rs. 15 lakhs (25 – 10). So now you know the task in hand – to accumulate Rs. 15 lakhs in 10 years.
    • Know the Options – What are the options that you have now? Before coming to that, make sure that you have listed all your current assets and outstanding liabilities somewhere. Also list your income and expenses in details. Deficit can be met either by making lump sum investment or through regular monthly investment. Looking at your networth and surplus figures, you should take a call here.
    • Decide on Asset Class – When you know the deficit and the available time period to accumulate the target corpus, you can easily calculate the required return that your investment portfolio must generate. If it is anything equal to or more than 12% (post tax) return, then your investments have to be market linked – either in direct equities or in mutual or both. But ULIP (Unit Linked Insurance Plan) and Child Policies are strictly no no. If required return is between 8 to 12%, then real estate or high yield bond/debenture could be an option. But such asset class does not allow accumulation through regular monthly investments. If required return is less than 8%, fixed deposit and investment in similar fixed income instruments should be ok.
    • Finalize the Right Product – Now when you have already zeroed in on appropriate asset class, finding right product should not be a big problem. There are various websites which can help you to find out top performing mutual funds. But make sure that such list is based on long term (minimum 5 year) performance only. One mutual fund scheme should be ok here. Do not distribute your investments into too many schemes. If total required monthly investment is of significant amount, you can consider more schemes, but make sure that the underlying portfolios do not overlap each other. While finalizing fixed income instrument, credit rating and rate of interest should be looked into above anything else.
    • Monitor the Investments – Yes, monitoring the investments is necessary, but not too often. Quarterly taking a stock of all the investments in your portfolio should be fine. Even if some investments are giving sub-optimal returns, it does not mean that you come out of it. Give time to grow your investments. If less return is due to negative market sentiment or for adverse macroeconomic factors, you need not worry actually. If some investments are performing badly for a long stretch while its peers are performing well, you need to take a call then and rejig your portfolio.
    • Review the Strategy – Monitoring investments and reviewing strategy are not same. A strategy needs to be reviewed when you realize some of the assumptions gone wrong. It could be expected return from a particular asset class or could be inflation in general. Goal amount itself can change also depending on child’s knack and opportunities available. In such situations you need to recalculate the whole thing and make necessary changes.