Dont Plan for Higher Education Financial Goal

Who said you need long-term education planning? Gone are those days of higher studies planning. Now it is time to plan how to pay from kindergarten to class 12 fees. The current education is business, which needs no explanation, but one needs to plan for the same from right now, before the child comes into the mother's womb. The commercialisation of education, coupled with declining government funding, risks making quality education inaccessible to many, challenging the spirit of the Right to Education Act, 2009, which mandates free education up to age 14.

As India strides forward economically and socially, education remains one of the most vital investments for families, particularly in urban areas. For many parents, securing a seat in a reputable private school is viewed as a pathway to opportunity and social mobility. However, as the cost of private education continues to soar, families are increasingly finding themselves under financial pressure. Private school fees have been increasing at a rate of 10-30% annually in many metropolitan cities like Bengaluru, Delhi, and Mumbai, far outpacing the general inflation rate of 5-5.6%. For instance, fees for a Class 1 student in a reputed school can exceed ₹4 lakh per year, including tuition, registration, transport, and other charges.

The scene of change in fees:

Between 2014 and 2018, primary education costs rose by 30.7%, while graduate and postgraduate courses saw hikes of 5.8% and 13.19%, respectively. From 2008 to 2018, average annual expenditure per student in urban areas surged from ₹12,000 to ₹28,000. In Bengaluru, some schools have doubled fees over five years, with third-grade fees reaching ₹2.1 lakh (excluding transport). In Hyderabad, lower kindergarten fees at top-tier schools jumped from ₹2.3 lakh to ₹3.7 lakh annually. After the COVID-19 pandemic, schools increased fees to recover losses, with some hiking fees by over 20% for the 2021-22 academic year, despite reduced operational costs from online classes.

Where from the high cost come?

Education inflation, estimated at 10-11% annually, outpaces general inflation due to rising costs for faculty salaries (60% of school expenses), infrastructure development, and technology integration (e.g., smart classrooms, AI, and skill labs). Beyond tuition, parents face expenses for books, uniforms, transportation, and extracurricular activities, which can add ₹50,000 to ₹1 lakh annually

Middle Class Pain & Impact

Parents spend 20-30% of household income on education, pushing some to take loans or forgo other essentials. Middle-class families, even those earning ₹20 lakh annually, find fees unaffordable after taxes and other expenses. High costs exacerbate the urban-rural divide, with rural households spending only 3.3% of their income on education compared to 5.78% in urban areas. Low-income families often opt for government schools, which may lack quality.  Parents face stress and anxiety, with some sacrificing personal goals (e.g., buying a car) to afford fees, while others feel education is becoming a luxury for the affluent.

In 2010, a private engineering college charged ~₹1 lakh/year; by 2022, this rose to ₹3 lakh/year, a 200% increase

Urban school fees jumped from ₹30,000/year in 2013 to ₹2.6 lakh/year in 2024 in some cases, though this may reflect outliers like premium international schools.

Primary education expenditure rose by 30.7% from 2008–2018, implying ~10% annual growth.

 Solutions

For parents seeking to navigate these costs, financial planning through child education plans or platforms like EduFund is recommended. Plan right after marriage and make it a priority more than retirement planning or any other goal planning. Do remember that education inflation is more than the pulses inflation. Over the past 20 years, education inflation has consistently been 1.5–2 times higher than general CPI inflation. For example, while CPI inflation averaged 5–6%, education inflation ranged from 8–12%, driven by rising tuition, infrastructure costs, and demand for private education.