The Rising Cost of Education in India

A peek at the scene
 

So, how about some data ^[1]on the increasing cost of education?

Let’s start from the preschool level. A recent post on X (formerly Twitter) handle by an angry parent stated that a lower kindergarten school in Hyderabad had hiked its annual fees from Rs. 2.3 lakhs to Rs 3.7 lakhs. Meanwhile the cost of primary education in this country has recorded a 30.7% hike in just four years between 2014 and 2018. The National Sample Survey Office 2020 report claims average spending on education has almost doubled over the past decade, while according to the All India Survey on Higher Education 20-21, a surge of 50% has been noted in tuition fees of private engineering colleges over the same time frame. And going by the education inflation rates, it was at 4.12% in 2022, which has now taken a steep leap to 11-12% in recent times.

Studies show^[2] tuition fees are on a steady hike in government and private educational institutions alike, resulting from various factors like^[1] infrastructure and technology development or increase in salary of the faculty.

So how is this grim picture of increasing costs of education affecting parents?
 

Glimpse from the flipside
 

The rising cost of education in India has made it difficult for parents to fund their children's dreams,^[2] with mere savings, parents across all regions and income groups are opting for educational loans or even selling properties. According to a report^[2] by Credit Rating Information Services of India Ltd. in 2024, non-banking finance company (NBFC) loan assets are likely to increase by 40% in the FY25 (Financial year 2025). Meanwhile, RBI data^[2] records outstanding educational loan balance figures at Rs.1,29,116 crores in the April-September quarter in 2024, which was Rs.65,336 crores over the same period in 2020.
 

Search of a Respite
 

Quality education for children still being a priority, parents eventually have to shell out the exorbitant amount. However, to beat the heat of the rising cost of higher education, strategic financial planning can help. The idea is to identify the exact educational goals that need to be funded, analyse the financial situation, and plan savings and investments to accumulate the corpus required. Besides traditional savings and PPFs, growing wealth through child education plans, child based unit linked insurance plans (ULIPs) and SIPs can be attempted. However, starting early in this journey may be beneficial, as a longer time horizon will let you gain more from compounding while being easy on pockets.
 

Conclusion
 

The way the rising cost of education in India is financially straining parents, it’s wise to start investing for the child’s education as early as possible. Since it involves funding of future goals, do remember to pick investment options that are designed to beat the inflation. 

 

FAQs
 

1. What is the inflation rate of education costs in India?

   Currently, the inflation rate of education in India has surged to 11-12%³.

2. How to beat education inflation?

   Strategic financial planning for the child’s education can be helpful. Set specific goals, start early, and pick investment choices that can beat the inflation rates with projected returns.

3. Why is educational fees rising in India?

   The rising cost of education in India can be linked to infrastructural developments, technology advances, and salary hikes of the faculty, especially in the private institutions[^1].

4. What can the investment choices for child education be?

   Creating a corpus for a child’s education involves future goals. Hence, investments should be made keeping inflation in mind. After a throrough research you should be able to identify the products that help you meet your financial goals such as child based ULIPs, systematic investment plan (SIP) etc.

5. Should education be free of cost?

   As the International Human Rights Law^[4] states, primary education should be compulsory and free of cost, whereas secondary education should be progressively made free.