Dreams or financial goals of a middle class Indian family : 1) Buying a house. 2) Overseas travel 3) Child’s education 4) Child’s marriage 5) Retirement savings. Books and various financial planning makeover in magazines/books/websites suggest so. Unlike other financial goals, retirement planning is a different kind of goal as in the other financial goals once the goal is met, the goal is unlikely to recur. But retirement depends of the corpus collected during the earning years. These days, due to advancement in medical science and general health awareness, people are living longer. 60/62 is no longer end of life- Look at Amitabh Bachchan who is rocking at 70 or Hema Malini or Shobha De. The idea of  “My son will take care of me” also seems to be getting outdated. Most of the people are not relying on their children to take care of them. But should parents dip into their retirement savings to cover the expenses for their child’s education when the costs have gone up so much?

Private medical colleges charge Rs 20 lakh for the five year course while engineering courses could cost you Rs 15 lakh for the four year course.  IIM Ahmedabad charges around 14 lakh rupees for its two year flagship PGP course, a year at ISB Hyderabad sets one back by more than 20 lakh. If you looking to send your kid overseas, the cost increases manifold. Rising higher education costs can make child’s higher education fall short. To bridge any such unwanted gap between your kid and his higher education should you dip into the retirement savings or ask your child to take an education loan?

One needs to remember that when one reaches the retirement age, time has run out to save money. You CAN borrow for college but you CAN’T borrow for retirement: Once savings are used they are gone forever.

Would kids value your sacrifice or would say “It was your duty!” When you pay for something yourself, you value that much more than when someone else pays for you, college education is no different. When one pays for college education oneself, he would tend to take that education much more seriously.

Employability and its duration are also to be thought about. Research conducted on higher education in

India estimates that only 5% of college graduates in India are employable. Various survey have shown that though employers were mostly satisfied with the graduates’ ability to communicate in English but found them lacking skills necessary to formulate, analyze and solve real life problems. And even if one lands a job the fear of “pink slips” is always there. Gone are the days when people would work throughout their life in same organization and jobs were secure.

Your child taking an education loan is not a failure of your parental duties or being selfish on your part. These days one’s financial life is paved with loans- car loan, home loan or mortgage, personal loan etc. By taking education loan your child would learn how to repay and build a better credit rating for future.

Parents should take heed. Before you use your retirement savings for child education think logically, long term and beyond emotion.

[ The article has been written by Kirti S Desai. A software engineer by profession, she started her website to increase awareness about money. ]

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