Why plan for your child’s education?
As a parent, one thing that matters the most is giving your child a strong foundation, especially in terms of their education. However, with costs rising sharply across the country in all aspects, simply saving up is not enough.
If you look at the expense of pursuing an average engineering degree, it can cost up to Rs. 2 lakhs to Rs. 15 lakhs a, or more, depending on the institution. Studying overseas is even more expensive as Indian students spend approximately Rs. 10 lakhs to Rs. 60 lakhs b annually to study in the US.
You need to start investing in a long-term investment plan in a disciplined manner to take advantage of the power of compounding and create a corpus for your children’s education.
What is Child Education Planning Calculator and how to use it?
The child plan calculator is a very easy to use online tool that helps you estimate how much money you will need to invest per month to meet your child’s future education cost. You need to enter a few details, such as -
Your child’s age
Enter your child’s current age so that it can be used to calculate the investment tenure.
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Age at which your child will require the funds
Enter the age of your child when the funds will be needed for his/her education. This also helps in determining the investment tenure. For example, suppose your child is 7 years old and he/she will need the funds for engineering at 18 years then the investment tenure will be 11 years (18-7 years).
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Rate of inflation
Enter the rate of education inflation in India, which is currently 4.13% as of April 2025 c.
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Current cost of education
This is the current cost of the education that your child wants to pursue. For example, if your child wants to pursue engineering in India then enter an average cost of Rs. 8 lakh.
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Expected rate of return
This is the rate of return that you expect on your investment every year. You can choose a child education plan as per your risk appetite. For example, if you want to invest in a no-risk fixed return financial product then you can enter 6-7% or if you want to invest in a high-risk market-linked financial product then you can enter 10-12%.
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Once you provide the above information the calculator helps you with the inflation-adjusted future cost of education and the required monthly investment to reach your goal.
Let’s understand the calculations for child education planning with the help of an example:
Virat's 8-year-old daughter will pursue engineering at age 18. Tuition today is Rs. 10 lakh, and he expects a return of 8% per annum.
Results:
Monthly investment (to meet the goal in 10 years): Rs. 14,084.
Cost of education after 10 years: Rs. 10 lakh x (1.10)^10 = Rs. 25,93,742.
Thus, Virat needs to invest Rs. 14,084/month for 10 years to cover the educational cost of Rs. 25,93,742.
What are the factors to consider while planning for your child’s education expenses?
Child education planning involves the consideration of multiple factors such as academic expenses, living cost and other financial factors. Starting early and staying disciplined in your investment journey can help achieve your financial goals with ease. Here are some of the key factors to be considered:
1. Defining education objective
Level and stream of education :
The level and stream of education play an important role in determining the cost. For example, an undergraduate degree usually costs more than post-graduation and engineering is usually more expensive than humanities as a stream of education.
Government or private education :
Disparity in course fees between government and private institutes can be significant. For example, engineering from a state owned Government College will be cheaper than engineering from a private engineering college.
Education in aboard :
Higher tuition, living cost, and travel expenses make studying in aboard really expensive. So if you plan to send your child abroad for education then you need to consider the same.
2. Estimating future cost of education
Current education cost :
Estimate the current cost of education including tuition fees, living expenses, and other associated expenses for the type of education you have planned for.
Education inflation :
This is a crucial factor that determines the future cost of education. The year-on-year education inflation in India stood at 4.13% as of April 2025 which is higher than the year-on-year retail inflation.d For example, an engineering course of Rs. 10 lakh would cost around ~Rs. 18 lakh in 10 years at an inflation rate of 6%.
Tenure of course :
Duration of education will depend on how long the course is. For example, an engineering course lasts for 4-5 years whereas an MBA will last for 2 years.
Other associated costs :
Costs other than the tuition fees will account for a significant portion of the total cost of education. Expenses like accommodation, books, transportation, health insurance, and miscellaneous need to be taken into consideration.
Use calculators :
You can use online calculators to easily calculate the future cost of education by considering education inflation, duration of investment, and expected rate of return on your investment.
3. Evaluation of current financial situation
Before planning for the expenses and investment please asses your current financial conditions.
Current income and expenses :
Get an understanding of your daily expenses so that you can assess how much you can set aside as investments.
Existing savings and investment :
Asses the value of your ongoing savings and investments so that you can determine how much more you need to invest for your child’s education.
Other financial goals :
Along with your child’s education you might have other major financial goals such as buying your dream home or building a retirement corpus. You should avoid putting your retirement corpus at risk as you cannot borrow for retirement.
On-going liabilities :
On-going loans like home loans, car loans and other personal loans impact your ability to save for your child’s education.
Emergency funds :
You should make provision for an emergency fund of around 4-6 months of your monthly income to cope with any unforeseen events and continue to save for your child’s education.
4. Choosing suitable investment options
You can choose your investment options based on the following factors:
Duration of investment :
For effective child education planning, It is recommended to have a longer investment horizon (8-10 years), so that you are able to invest in market-linked assets and have ample time to gather the funds.
Risk appetite :
Depending on your risk appetite you can choose the investment options. If your child is very young (6-8 years old) and the funds are needed for the child’s graduation then you will have 10-12 years. This will give you the opportunity to invest in high-risk options (equities, mutual funds, or ULIPs). In case you don’t have enough time then it is recommended to invest in low-risk options (fixed deposit, PPF, or endowment plan).
Tax benefits :
Investment in instruments that can help you save tax under the various sections of the Income Tax Act, 1961 like life insurance, ELSS, PPF etc.
Diversification of portfolio :
In order to balance the risk of your invest for such a crucial goal of a child’s education you should diversify your investment across different asset classes such as equity, debt, and fixed returns.
Liquidity :
Choose financial instruments that allow partial withdrawal to cope with any financial emergency.
5. Financial protection
Life insurance :
The purpose of a life insurance plan is to provide financial security to your family in case of your demise. The sum assured of a term life insurance secures your child’s education even in your absence.
Health insurance :
A comprehensive health insurance ensures that you are covered for any medical emergency and your savings for your child’s education aren’t impacted.
6. Proactive adjustments
Regular monitoring :
In case you are investing in a market-lined asset for your child’s education planning then you should review the performance of your funds regularly so that you can make necessary changes.
Adjustments to investments :
Adapting your investment strategies to increasing inflation, market volatility, income changes, and changing career aspirations of your child is crucial to reaching your goal.
Benefits of using a Child Education Planner
Helps You Stay on Track with Your Savings Goal
A child plan calculator helps you set a clear monthly savings target according to your child’s age and educational goals. Instead of guessing a certain amount, you get specific figures, say Rs. 14,084 per month, to reach a future cost of Rs. 25.94 lakhs (as discussed in the example above). Knowing the monthly investment amount also helps you invest in a disciplined manner in your preferred child investment plan.
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Gives You a Clear Financial Plan
The child education plan calculator asks for details like education timeline, current savings, and inflation assumptions. This helps to break a larger goal into a realistic one, which looks achievable by taking small steps. It mostly outlines how you need to contribute each month in a savings plan, at what return, and for how long.
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Estimates the Future Cost of Education
Inflation in the Indian education sector is not static. The education inflation rate in India is 8% to 12%, which is above the general inflation rate of 5% to 6% e. This calculator factors in this riding trend and adjusts the projection of costs accordingly.
For instance, Rs. 10 lakh can be required for your college course in the present day, but that can increase up to Rs. 25 lakhs by the next 10 years. Parents are able to avoid underestimating any future expenses with this realistic forecast. It further prevents any unwanted debt or financial stress in the coming days.
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Let’s You Compare Different Saving Scenarios
One of the key advantages of using an education calculator is the ability to experiment with different savings strategies. You can adjust variables such as the savings amount, investment timeline, or expected rate of return and instantly see how these changes impact your final goal.
Whether you want to test a longer timeline or a 10% return, this tool clarifies the necessary trade-offs. It helps you choose the best investment plan, and most efficient and comfortable strategy for your family and their future.
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Guides you with a step-by-step savings path
Apart from providing a savings goal, the child education plan calculator outlines clear guidance towards your savings journey. It specifies how much to save when to start, and what return rate is essential to reach the goal.
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Why Planning for Your Child’s Education Early Matters?
The biggest ally for securing your child’s future is time. When you start financial planning for your child early, especially related to their education, it can make a difference between stressful compromises and seamless progress.
Following are a few reasons why the early plan is not just smart, but an essential move:
1. Education Costs are rising faster than you think
Higher education costs in India have doubled over the previous decade f. For instance:
If you plan to send your child to study abroad, the total cost, including tuition and living expenses, can go up to Rs. 60 lakhs in the USA g.
Now add 10% inflation in education expenses to that, and this dream can easily feel unachievable if not properly planned.
Remember, the earlier you plan, the more prepared you will be to beat rising costs and inflation.
2. More time means smaller monthly savings
Early planning your child's educational future stretches your timeline and makes the goal seem light in your pocket. For example:
If you start saving when your child is 5 years old, you may only have to save Rs. 10,000/ month to reach your target.
However, in case you start saving when your child is 12 years old, you may have to save almost Rs. 20,000/ month.
3. Power of compounding
The earlier you invest, the longer your money has to grow due to the process of compounding. Such as:
Rs. 5,000/ month invested over 15 years at 8% return grows to nearly Rs. 17 lakhs.
Nonetheless, the same Rs. 5,000/ month for just 5 years might barely touch Rs. 3.7 lakhs in total.
Early planning brings financial peace of mind
Knowing that the future of your child is secure gives you:
Confidence supports their dreams to get an education from wherever they want.
Flexibility to explore study-abroad options without financial anxiety.
Freedom from disrupting your own financial stability.
4. Avoid last-minute stress and loans
If you start planning your child’s educational future late, it may lead to:
High-interest education loans
Borrowing from savings meant for other goals (retirement, emergencies)
Emotional stress during crucial academic milestones
Early planning removes panic from the equation. Instead, you will have a steady, pre-built fund ready when the need arises.
FAQ on Child Education Plan Calculator
What is Child Education Planning?
Child education planning involves a combination of savings, investment, and insurance to secure your child’s academic future. You can evaluate the investment required for a chosen course using the child education plan calculator. A systematic savings plan will help create a corpus to fulfil this long-term financial goal.
As parents, we want the best for our children and their future which includes their education and other future opportunities. With life being uncertain, increasing inflation and the cost of education in reputed institutions you need to build an adequate financial corpus to meet the needs of your child.
Hence plan your child's education early on and invest in the best child plans to build funds that meet their future financial requirements.
Here are 4 pointers to help you decide: * Be clear about your goals: As parents, we want to give our children the best education and this dream can be achieved only by planning ahead. First, it is important to understand their goals. Once you understand the goals you are aiming for, planning automatically becomes easy with questions like the period of investment, the amount required, and other parameters. This will help you lay a roadmap ahead to meet and understand the future education requirements for your child.
- Understanding Inflation: Inflation has a major impact on the value of investment required. Education only gets more expensive hence it is important to consider future value and amount required to meet the goals set. If you do not calculate your inflation wisely it will cost additional expenses and efforts when required.
- Choose your plan carefully: You need to consider good investment options and this decision needs to be done wisely. Your plan will depend on your risk appetite, volatility of the market and tenure. Do your research well before choosing the financial instrument that meets your goals.
- Protect your goals: In your absence, your appointee, a person that you choose will invest and will use the sum assured. Make sure the appointee is chosen wisely to protect the goal so your child can fulfil their dreams.
Why should I use a child education plan calculator?
Accounting for inflation and evaluating the future education cost can be complicated if done manually. Estimate savings required to accumulate funds to provide for the course fees, accommodation, and other related needs at a future date in a simple way using a child education plan calculator. With the input provided, the calculator estimates the future education cost and shows how much savings are required to have the necessary amount on maturity.
Can I use the calculator for goals other than education, like marriage?
Yes. You can use the calculator for goals other than education. The calculator works on the principle of future cost. It means they help you evaluate the savings required to attain a specific financial goal in the future.
How accurate is the child education plan calculator?
The accuracy of the child education plan calculator depends on the inputs provided and the assumptions. They provide estimates and not the exact cost.
Is the child education plan calculator free to use?
Yes. The child education plan calculator is free to use. You can easily use it to calculate and plan for your child’s future.
How much should I save monthly for my child’s education?
The monthly savings required for your child’s education depend on the course chosen, investment frequency, inflation, and the timeline set to reach the goal.
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a.https://www.shiksha.com/engineering-chp
b.https://www.upgrad.com/study-abroad/articles/cost-of-bachelor-degree-in-usa/
c.https://www.mospi.gov.in/sites/default/files/press_release/CPI_PR_13May25.pdf
d.https://www.mospi.gov.in/sites/default/files/press_release/CPI_PR_13May25.pdf
e.https://www.edufund.in/blog/impact-of-education-inflation-on-hidden-costs-of-education/
f.https://www.newindianexpress.com/opinions/2024/Aug/27/rising-education-costs-turn-aspirations-into-burdens
g.https://www.upgrad.com/study-abroad/articles/cost-of-bachelor-degree-in-usa/
ARN - ED/06/25/25028