1st June is celebrated as the Global Day of Parents. It is on this day that we appreciate parents of their selfless commitments to their children as well as their lifelong sacrifice towards nurturing this relationship. That really is true--parenting is a job that never ends. It begins with the birth of a child and stays for the entire lifetime.
And during this lifetime of a parent, probably the most important phase comes at the time of the child’s education. Quality education is very important for the upbringing and future of the child. We all know this; the importance of education is not something we need to talk about. But getting a quality education has become increasingly difficult in the past few years because of how expensive it is now. Hence, here are some ways parents can save on their child’s education.
Avail income tax benefit on tuition fees
The annual tuition fees you pay your child’s school or college is tax-deductible up to Rs 1.5 lakh under Section 80C. You can claim this deduction on the fees paid for two children. The deduction can be claimed by either of the parents to reduce their annual taxable income. Remember that only the money paid towards tuition fees can be claimed as tax-saving deductions, not the money paid as annual maintenance charges or for extracurricular activities.
Plan early for higher education
The higher education costs for your child will depend on the stream he or she pursues, but it will be expensive. The costs could go up if you wish to send your child abroad for college. The best way to stay prepared for college fees is by beginning to invest for it from an early stage. Even if your child has only just started school, you should start an SIP in an equity mutual for his or her college education. Starting now will give you ample time to build the required corpus and also allow you to benefit from the power of compounding.
Open a Sukanya Samriddhi Account for your daughter
Parents who have a girl child can open a Sukanya Samriddhi Account for her. This is a government-backed small investment scheme that offers capital protection and fixed returns. The account can be opened for a girl below the age of 10. Partial withdrawals are allowed for the girl’s education after she clears 10th standard. An added benefit of the Sukanya Samriddhi Account is that the investments can be claimed as tax-saving deductions under Section 80C.
Buy secondhand books
There are certain reference books and entrance test material that is required only for a short period of time. Such books are often expensive and it doesn’t always make sense to buy fresh copies. There are booksellers in most cities that sell secondhand study material that you can buy. If you do happen to buy a fresh reference book, then you can sell it after its purpose has been fulfilled and recover a part of the initial price you paid.
Compare before selecting an education loan
A lot of parents take an education loan or student loan for their child’s college education. If taking a loan is inevitable, you should carefully evaluate your options before you decide. Different banks offer loans at different interest rates. In case you opt for a longer loan, make sure the EMI doesn’t hike up the total cost of the loan. You can also consider taking the loan in installments before payments for each semester, instead of taking a big loan for the entire multi-year course in one go.The writer is founder & CEO ClearTax