A vast majority of parents in India (71 per cent) are willing to go into debt to fund their children’s university or college education, according to HSBC’s latest edition of the ‘Value of Education — foundations for the future’ study.
This rose to 76 per cent among parents considering a university education abroad for their child.
The study found that fathers (78 per cent) and younger parents aged 34 or under (77 per cent) were more likely to consider getting into debt to fund their child’s university/college education, than mothers (64 per cent) and parents aged 35 or over (68 per cent).
Of the total number of parents surveyed in India, 41 per cent felt that funding their child’s education was more important than contributing to their own retirement savings.
The study found that mothers (45 per cent) were more likely than fathers (37 per cent) to believe that contributing to their own retirement savings was less important than funding their child’s education.
Many parents (65 per cent) said that paying for their child’s education made it more difficult to keep up with other financial commitments.
Parents with a child at university/college were spending ₹2.05 lakh a year on average on their child’s education. However, nearly one in 10 (9 per cent) parents did not know how much they spend each year on their child’s university or college education.
HSBC’s study found that parents shoulder most of the financial responsibility when it comes to paying for their child’s education, and while the majority (70 per cent) fund it from their day-to-day income, many have saved towards it or would be willing to get into debt to fund their child’s education. In India, most of the parents (86 per cent) fund their children’s education.
While nearly all (97 per cent) parents surveyed in India expect to be the main contributor of funding should their child go to university, over one in eight (13 per cent) expected their child to contribute to funding their own university costs. However, only 1 per cent of children currently at university help fund their own education.
The survey also found that over two in five (44 per cent) parents were concerned about how to fund their child’s education (from day-to-day income, loans or savings) and a similar proportion (41 per cent) were concerned about how much it will cost them.
Other concerns parents had about funding their child’s education included, what to fund (39 per cent) and how it would affect the other financial commitments of the household (37 per cent). Parents considering a university education abroad for their child were the most concerned about how much it would cost them (44 per cent).
Full support S Ramakrishnan, Head of Retail Banking and Wealth Management, HSBC India, said: “The financial sacrifices that parents are willing to make to fund their children’s education are proof of the unquestioning support they will give to help them achieve their ambitions. However, parents need to make sure that this financial investment is not made to the detriment of their own future well-being.
“By having a financial plan to meet their family’s overall needs and reviewing it regularly, parents will be better placed to support their children’s studies without compromising on their own long-term financial goals.”