Child education planning with SIPs
Education is one of the few goals where the standard "one target, one date" model genuinely doesn't fit well. Here's what's different about it, and how to plan around that difference instead of against it.
Why education inflation runs hotter
Education costs in India — school fees, coaching, undergraduate and postgraduate tuition, hostel costs — have generally risen faster than headline consumer inflation over the long run. A target sized using a general inflation assumption of 5-6% will likely undershoot what the same degree actually costs by the time it's needed. Most planners use a noticeably higher rate for education specifically — commonly in the 7-10% range — rather than reusing whatever number they used for a house or a car.
The bill doesn't arrive once
Unlike a house down payment, education spending is rarely a single lump sum on a single date. School fees recur annually for years, a big jump often hits at undergraduate admission, and another jump can hit again at postgraduate level. Treating the whole thing as one target on one future date tends to either overstate the SIP needed (by lumping everything into the furthest date) or understate near-term needs (by only sizing for the final, largest figure).
A more accurate approach splits education into stages — school-level costs, an undergraduate milestone, and a postgraduate milestone if relevant — each with its own target amount and date, rather than a single blended number.
Sizing each stage
Once a stage is isolated with its own cost-today estimate and timeline, it's the same backwards calculation used for any goal: inflate the cost to the target date, then solve for the monthly SIP required to reach it. The goal-based SIP calculator handles this directly — run it once per stage with that stage's own inflation assumption, rather than forcing every stage through a single shared number. The child education calculator is built around this same logic with education-specific defaults already set.
Allocation should still de-risk as each stage nears
A postgraduate goal fifteen years out can run equity-heavy the same way any long horizon goal can. But the school-fee portion, recurring every year, has effectively no horizon at all — that portion behaves more like an ongoing expense to be funded from current cash flow or a short-term debt allocation than a long-term investment.
The general principle — shifting a goal from equity toward debt as its date approaches — is covered fully in asset allocation by goal horizon. For education specifically, apply it per stage: the near-term stage should already be conservative, while a stage a decade or more away still has room for growth.
Common questions about education planning
Keep exploring
See what your own mutual funds are actually funding.
Earmark reads your CAS and maps every fund you already own to a goal — free to start.
Get started free