Understanding the Landscape of Global Education
As Non-Resident Indians (NRIs), we hold a deep respect for education, often viewing it as a pathway to financial independence, social mobility, and generational wealth. Educating our children is not only a priority but a moral duty, symbolizing our dedication to their future success.
The College Admissions Race: Preparing for Success
The journey to a top-tier education begins early. NRIs invest time and resources in diverse activities - from sports to science fairs - to help their children gain an edge in the highly competitive college admissions process. However, the path is challenging, with the cost of education escalating significantly over the years.
The Rising Cost of Education: A Global Phenomenon
In the USA, the average cost of tuition and fees has surged, with public and private universities requiring significant financial commitment. For instance, in 2018-2019, the average cost ranged from $9,716 for in-state public universities to $35,676 for private schools, not including additional expenses like room and board.
Similarly, in India, prestigious institutes like IIMs and IITs have witnessed a dramatic increase in tuition fees. The cost at IITs rose from INR 25,000 in 2008 to INR 2,00,000 in 2018.
Scholarships and Financial Aid: Easing the Burden
Scholarship Programme for Diaspora Children (SPDC)
One significant relief for NRI students is the SPDC, launched by the Government of India. This scheme provides tuition assistance for various fields, making higher education more accessible for children of NRIs and PIOs.
NORKA Roots Directors Scholarship Scheme
The NORKA Roots Directors Scholarship offers financial aid for higher education to children of financially backward NRIs, reflecting the NRI community's contribution to economic growth.
Educational Opportunities in Indian Universities
Indian universities also cater to NRI students. For example, Dr. Rajendra Prasad Central Agricultural University in Bihar invites applications from NRIs for various postgraduate and Ph.D. programs.
Financial Planning: A Crucial Step
Assessing the Net Cost
Determining the net cost of education is critical. This involves understanding the difference between the sticker price and what you actually pay, considering scholarships, grants, and loans. Unfortunately, many families are unprepared for these expenses, with 60% not planning adequately for college costs.
Investment Strategies for Education
For NRIs investing in their children's education, the approach should evolve as the child grows. Early on, investments might be growth-oriented, but as college approaches, a shift towards capital preservation is advisable to minimize market volatility risks.
529 Plans: A Viable Option for Some
For NRIs with permanent residency or citizenship in the US, 529 plans offer tax advantages for college savings. However, these are less suitable for H1B visa holders or those planning to study in India, due to tax implications on non-qualified expenses.
Conclusion: A Strategic Approach for NRI Families
Education for NRI children is a journey that requires careful planning, financial savvy, and awareness of available resources. By understanding the landscape of global education, exploring scholarship options, and adopting wise investment strategies, NRIs can effectively navigate this path, ensuring a bright future for their children.
Tejas is an accomplished Chartered Accountant with a passion for finance. With a decade's worth of extensive experience in the banking and credit domain, he has a deep understanding of the financial landscape across consulting and start-ups. In his time away from work, Tejas enjoys sharing his knowledge and helping others understand the intricacies of this complex domain.
