College is years away. The fees grow every year.Child education calculator: the future cost and the SIP to meet it.

How to use the child education calculator

1. Enter your child’s age today and the age when college or the course may start.
2. Enter what the course would cost today, and the yearly rise in education costs you expect. Education costs often rise faster than other prices.
3. Pick an expected return a year and add any savings already set aside for this goal. Then see the cost when college starts, and the monthly SIP or one-time amount needed.

How to read your result

Cost when college starts is what the course may cost by then. Monthly SIP needed and one-time amount today are two ways to cover the gap left after your savings. You need one of them, not both, or a mix of the two.

For example, say your child is 5 and college starts at 18, so it’s 13 years away. A course that costs ₹10 lakh today could cost about ₹27 lakh then, at 8% education inflation. If ₹1 lakh already saved grows at an assumed 12% a year, it could be about ₹4.4 lakh by then. The rest needs a SIP of about ₹6,100 a month, or about ₹5.2 lakh invested today.

Mutual fund returns are market-linked and not guaranteed, so check the plan once a year. As college comes close, it’s common to move the money to steadier options, so a market fall in the last year or two doesn’t hurt. See how we plan for child education.

The plan also needs you. With term insurance in place, the money for your child’s studies can be there even if you aren’t.

How the child education calculator works

First it grows today’s cost by education inflation until college starts. Next it grows your existing savings at the expected return and takes that away. Then it finds the monthly SIP, or the one-time amount today, for the rest. C is today’s cost, f is education inflation, t is the years until college, S is your savings, r is the expected return a year, i is r divided by 12 and n is the number of months.

Future cost = C × (1 + f)^t; Savings then = S × (1 + r)^t; Gap = Future cost − Savings then; Monthly SIP = Gap ÷ (({[1 + i]^n − 1} ÷ i) × (1 + i)); One-time amount = Gap ÷ (1 + r)^t