Child Education Planner

Education inflation in India has consistently been 8-12% per year, much higher than CPI inflation of 5-6%. This is because of rising teacher salaries, infrastructure costs, digital learning expenses, increased competition, and demand-supply gaps in quality institutions. International education also adds currency depreciation risk (2-3% annually).

For 10+ years: Equity mutual funds (index funds or large-cap) — expect 12-14% returns. For 5-10 years: Balanced advantage or hybrid funds — 10-12% returns. For <5 years: Debt funds, FDs, or Sukanya Samriddhi (for girls, 8.2% tax-free). Start equity-heavy and shift to debt as the goal approaches. Avoid child insurance plans — they give only 5-6% returns.

IIT B.Tech (4 years): ₹8-10 lakhs total (tuition + hostel). NIT: ₹6-8 lakhs. AIIMS MBBS: ₹5-6 lakhs. Private Medical: ₹25-75 lakhs. Private Engineering: ₹8-15 lakhs. These will roughly double every 6-7 years at 10% education inflation. Plan for hostel, books, and living expenses separately.

Ideally, fund 70-80% from savings/investments and let the child take a small education loan for the rest. This teaches financial responsibility. Education loan interest (8-12%) gets tax deduction under Section 80E for up to 8 years. For abroad, loans are often necessary — start building a corpus early to minimize the loan amount.

Yes, for girl children. SSY offers 8.2% tax-free returns with ₹1.5L annual limit. It's EEE (exempt-exempt-exempt) under Section 80C. Partial withdrawal of 50% is allowed after the girl turns 18 for education. However, don't put ALL education money in SSY — the return is lower than equity MFs for long horizons. Use SSY as the debt portion of your education portfolio.