Education is one of the most valuable investments a parent can make in their child’s future. However, the rising costs of higher education often compel families to rely on an education loan to cover expenses. While loans are a helpful financial tool, they come with long-term repayment commitments and interest rates that can burden young graduates. One way to mitigate this dependence is through the Sukanya Samriddhi Yojana (SSY), a government-backed savings scheme designed to secure a girl child’s future financially.
What is Sukanya Samriddhi Yojana?
The Sukanya Samriddhi Yojana (SSY), launched under the Beti Bachao Beti Padhao campaign, is a high-interest savings scheme for supporting a girl child’s education and marriage expenses. With tax benefits under Section 80C, parents can open an account before the child turns 10 and contribute for up to 15 years. The compounded corpus can significantly fund higher education, reducing or eliminating the need for education loans.
How SSY Reduces Dependence on Education Loans
- Early Financial Planning: Investing in an SSY account when your daughter is young allows you to build a sizeable corpus by the time she is ready for higher education. This proactive financial planning minimises last-minute reliance on an education loan.
- Compounded Growth: The power of compounding plays a significant role in SSY. The scheme ensures steady and significant savings growth with annual contributions and interest compounding yearly. When your child reaches 18, you’ll have a substantial fund ready for her education.
- Tax Benefits and Higher Returns: SSY offers tax deductions of up to ₹1.5 lakh per annum under Section 80C, further enhancing the value of your investment. Its interest rates are typically higher than those of fixed deposits or savings accounts, providing better long-term returns.
- Debt-Free Future for Your Child: Education loans, while helpful, come with the obligation of repayment and interest accumulation. By utilising funds from an SSY account, you can give your daughter a debt-free start to her career, helping her focus on her goals without financial stress.
Using an SSY Calculator for Effective Planning
Tools like the SSY calculator are invaluable for estimating how much you can save for your daughter’s education. These calculators allow you to input variables such as your annual contribution and interest rates to project the maturity amount of your SSY account. This helps you strategise contributions and plan for future education expenses effectively.
Balancing SSY and Education Loans
While an SSY account is an excellent savings tool, it may not fully cover higher education costs, especially for specialised courses or studies abroad. In such cases, education loans can bridge the gap. However, using SSY funds for a significant portion of expenses reduces the loan amount, lowering EMIs and financial strain.
The Sukanya Samriddhi Yojana helps parents secure their daughter’s education while minimising loan dependency. Early savings and tools like the SSY calculator enable better planning for a debt-free future. Start investing early with Aditya Birla Capital, your trusted partner in financial planning, to ensure your daughter’s dreams soar without financial worries.
