Many people see education as a cost, and not an investment. But things are changing for the better as mindsets are changing. If the cost of education is to be a worthy investment, it's imperative to plan for the same. Here we offer you a few pointers to keep in mind while planning for your funds for your course.
Payback period
From an investment perspective, you would definitely give preference to a stream that leads to a commercially rewarding career. For instance if you aspire for an MSc Advanced Computing course from a UK University, one of the guiding factors would be the return on your initial investment, i.e. the cost of education at the University. Say your one-year stay there costs Rs 10 lakh. A look at the average salaries offered if a student is successful in getting a job in the UK reveals that the payback period for your most critical investment would be less than three years or at the maximum, five years. However this does not hold true for all the courses, as for some courses the payback period is not as short as it is for the computing career.
Same course different institutions
If the pedigree of institutions is similar, opt for the one with the lowest cost structure. So while the inflows after your course will roughly be the same, you could improve on the return on investment by minimising your initial outflow.
Loans
One of the best options is educational loans, which have several benefits like:
Banks can now lend up to Rs 15 lakh to a single borrower. An initial moratorium period till you finish your course and get a job; so there is less pressure to repay. When you move into a job or, for that matter, the highest income bracket, you can deduct the interest cost you incur for this loan from your taxable income.
Say, you want to finance your MBA in the UK by taking a loan for Rs 13 lakh from a bank at 12 per cent per annum for 7 years. The repayment would begin after one and a half years out of the campus or when you get into your first job.