Most parents depend on debt to fund their children's education
HSBC's latest survey Value of Education Foundations for the Future found that a vast majority (71%) of parents in India are willing to take on debt to fund their child's university or college education. This rose to 76% among those parents considering a university education abroad for their child.
The study found that fathers (78%) and younger parents aged 34 or under (77%) were more likely to consider getting into debt to fund their child's university or college education, than mothers (64%) and parents aged 35 or over (68%).
HSBC India's Mr. Ramakrishnan said, the financial sacrifices that parents are willing to make to fund their children's education are a 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 wellbeing.?
Of the parents surveyed in India, 41% felt that funding their child's education was more important than contributing to their own retirement savings. The study found that mothers (45%) were more likely than fathers (37%) to believe that contributing to their own retirement savings was less important than funding their child's education.
Many parents (65%) 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 or college were spending around Rs. 2.05 lakh a year on average on their child's education. However, nearly one in 10 (9%) parents did not know how much they spent each year on their child's university or college education.
Mr. Ramakrishnan added that, 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, added HSBC India.
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%) 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 university or college education. In India, a vast majority of parents (86%) fund their child's education.
Over one in eight (13%) expected their child to contribute to funding their own university costs. However, only 1% of children currently at university help to fund their own education.
The survey also found that over two in five (44%) parents were concerned about funding their child's education (e.g. from day-to-day income, loans or savings) and 41% were concerned about how much it will cost them. Other concerns parents had about funding their child's education included what to fund (39%) and how it would affect their households other financial commitments (37%). Parents considering a university education abroad for their child were the most concerned about how much it will cost them (44%).
The study was conducted online in June 2016 and represents the views of 6,241 parents in 15 countries.
References: HSBC India, http://www.about.hsbc.co.in/~/media/india/en/news-and-media/hsbc-values-of-education.pdf