Must-knows about education loans

HELLO FRIENDS PROBLEM IN EDUCATION LOAN READ THIS
You can use ULIPs and Mutual Funds, PPF and gold as investment tools for your child’s education. But let's not look at education loans as a means of funding the same. There is fierce competition to finance just about every activity of your life – be it buying a house, planning a vacation, lifestyle related expenses, insurance or your child’s education.

Though these options may seem viable, you should not lose sight of the fact that these are all a part of the ‘Great Indian Debt Trap’ where you end up committing your future earning towards your expenses every month.

The good part is that it helps you in funding your child’s education expenses because you did not plan saving for their education appropriately at the right time. Nevertheless the bottom-line is good education for your child.

Here are some options:

Unit Linked Insurance Plans: Almost all insurance companies in India offer one or more options to plan your child’s education. The question is: what should you buy and what should you be careful of, while selecting the plan.

a. Administrative charges: These are charges deducted from your contribution towards sales/ advisors/ agent commissions, administrative and other fixed costs to be covered to serve the policy throughout the policy term.
The best way to find the total charges on a policy is to calculate a future value. If you invest over a period of time, use the projected rate of per cent and deduct the maturity amount given in the illustration provided by the company from it.
The difference is the total charges deducted by the company for the policy. Make sure your rate of calculation and the company's projected rate of growth are the same.

b. Annual fund management charges: Every company offers a basket of funds. Based on this, the fund management fees will vary. Remember, a lower fee does not mean a better product; a higher fee guarantee also does not guarantee a better performance. Typically, a fund that requires active management will have higher fees, while funds that are predominantly bond or liquid funds will have lower charges.

c. Switching cost: The basic rule of investment: book your profit from time to time. When markets are bullish, you need to book your profit by switching returns on your investment to funds, which are primarily for capital conservation.