As an increasing number of Indian students set their sights on prestigious institutions in the United States, Canada, the UK, and even Europe, the allure of an international education grows. After all, who doesn’t want their child to sport an Ivy League credential on their resume or Linkedin Profile?

Such a degree, especially from the best colleges in the world, can significantly enhance career prospects, providing a gateway to global opportunities. However, it raises a crucial question for parents: Should you consider securing a loan to fund your child’s overseas education?

After all, it can cost as much as buying a 2 or 3BHK apartment in Bangalore or NCR. 

Let’s dive deeper and understand what you should keep in mind.

The costs of a post-grad vs under-grad education

Education abroad is a significant investment, with a two-year Master’s degree in the US, for example, costing an average of $125,000 according to This translates to around a crore in rupees, and that’s just for postgraduate studies.

If your child is pursuing an undergraduate degree, typically a four-year course, the cost can be substantially higher, even exceeding Rs 2 crore when accounting for all expenses.

The cost of education at a private college can be 20-30% higher compared to state universities. The addition of hostel, books, and living expenses further increases the total expenditure. 


If you plan to take an education loan, be prepared for the challenging journey of repayment, especially if it’s for an undergraduate degree. Until your child secures employment, you, as a parent, might need to shoulder expenses that could range from Rs 2-4 crore.

College reputation matters

The vast majority of those going abroad for their higher studies are going there to secure better employment prospects than they would have access to in India. The reality today is that many fresh graduates struggle to secure their preferred job especially if you look at the past few months. 

Employment prospects depend heavily on the reputation of the university, the chosen course, and the local job market’s conditions. Ivy League institutions such as Columbia University and Brown University might charge nearly double the average, but they offer enhanced job prospects compared to average state universities.

Should you consider going into debt if your child has a high chance of acceptance into these esteemed institutes, given their talent? And if overseas education is the only path they wish or even have for their specific talent?

Securing your future

Firstly, it’s worth emphasising that parents never compromise their retirement plans. In India, parents often prioritize their children’s needs, sometimes making emotional decisions when it comes to education. After all, It’s been the most reliable path towards upward economic mobility, as you the reader can probably attest to.

It’s crucial to assess your financial situation realistically and avoid overextending your resources. While banks offer education loans with repayment periods of up to 15 years, you must consider your life stage and how this debt might impact your retirement plans.

Equally important, avoid mortgaging properties to secure a loan. Any unforeseen event could put your property, and potential financial security, at risk. Remember that your child, even if they study abroad, will likely need some minimum financial support till they graduate and secure a job.

Should your child start a career with debt?

Starting a career with a significant debt burden is another crucial factor to consider. 

Education loan repayment is a considerable challenge, especially in the US, where students take, on average, 19 years to repay a loan for a Master’s degree, according to 

The situation in India, with education loans featuring high-interest rates of around 11%, isn’t much better. This can make repayment a daunting task, even for students who secure well-paying jobs after graduation.

Consider a student who takes a 15-year loan for $150,000 (Rs 1.2 crore) at 11% p.a. and lands a job paying $80,000 annually. Even with an 8% annual salary increase, she would be dedicating over 20% of her income to loan repayments for the initial seven years. Any career breaks can destabilize her finances and potentially lead her towards a debt trap.

Therefore, exploring scholarships or grants that cover some or all course costs is a safer alternative and something to be prioritised during the application process. These funds do not need to be repaid, and you only need to qualify through an application process. 

Alternatively, students can consider on-campus jobs or other side hustles to supplement their income and offset costs. If tuition costs remain unaffordable, it might be more practical to gain work experience first in India, and later enrol in postgraduate courses such as an MBA.

Planning for the Future

If your child is still young (say, they are in pre-school), you have the opportunity to start saving for their education early. For example, if you anticipate needing Rs 5 crore in 15 years, a Systematic Investment Plan (SIP) of Rs 67,000 with an annual step-up of 10% would be required. You can check out these case studies to understand what a potential investment journey can look like.

This long-term investment approach could allow you to invest more in equities, potentially improving portfolio returns and helping you reach your goal faster. 

If you own any excess property, you could consider selling it and investing the proceeds in liquid assets to fund your child’s education. 

But why so much? Let’s come to that now.

Battling Inflation and Currency Depreciation

The financial considerations don’t stop at the cost of tuition. Over the last 15 years, the rupee has depreciated by 43% against the dollar, 14% against the pound, and 31% against the euro. 

On average, the rupee depreciates 3.6% per year against the dollar and 2.5% against the euro. This currency depreciation, coupled with the inflation of education costs in these foreign economies, compounds the financial burden. 

If both these factors are taken into account, the cost of studying in the US has grown at a compound annual growth rate (CAGR) of 8.4% over the last decade.

This means that the annual cost of tuition and fees at private US universities has increased to more than double its previous cost. For those earning in rupees, repaying these loans can feel like a double blow.


Carefully assess your financial standing and affordability. If time is on your side, consider building a robust investment portfolio. This is often the most realistic and feasible way to fund an overseas education. 

Under no circumstances should you compromise your retirement goal or risk your financial stability to fund your child’s higher education abroad.

Remember, while you want to provide the best opportunities for your child, it’s equally important to secure your own financial future. Only you can fund your own post-employment years.