Factors responsible for the education inflation rate in India?
When we talk about education inflation, most statistics focus on foreign education. Yet, with the privatization of schools in India and the competitive nature of local universities, education inflation is bourgeoning in India, too.
Education costs grew faster than the food and healthcare inflation between 2012 and 2020. While food and healthcare inflation rose at 9.62% and 8%, respectively, education inflation grew at 10% every year between the mentioned period.
This is extremely scary given the lack of awareness around education costs among parents. The scariest bit is that even the pandemic had no effect on the rising education costs. The cost of education grew both in India and abroad during and post the pandemic.
According to a survey conducted by the Indian government, education inflation rose by 4.12% in India after the pandemic.
In countries like the UK and the US, education inflation rose to 10%, touching an all-time high. This has impacted the fee structures of colleges and living costs in these countries.
According to a survey by The National Centre for Education Statistics, the average fee for a 4-year degree program in the US was around Rs.25,22,000 in 2010-2011 and it has increased to Rs. 29,91,000 for the year 2020-2021.
There is an assumption among parents that education costs can be taken care of when the child is ready for school or college. Unfortunately, that’s not the case.
Here are a few examples of the increase in college education in India and abroad:
- The tuition fees of undergraduate courses in (Indian Institute of Technology) IITs doubled (from Rs.90,000 to Rs.2 lakhs) post the hard-hitting pandemic in 2021.
- According to data from Unified District Information System for Education, approximately 39% of students aged 20-24 dropped out of college to help their families increase their household income.
- Many Australian universities increased their tuition fees for arts and humanities courses by 113% between 2020 and 2021.
- The average cost of attending a four-year college or university in the US rose by 497% between 1985-1986 and 2017-2018 academic years, which is more than twice the rate of annual inflation in the same period.
- Post the pandemic, many overseas universities hiked their college fees for 2022-2023.
- The total cost of education for an undergraduate program at Harvard University for one academic year has increased from Rs.65,38,000 in 2021-2022 to Rs.68,15,000 in 2022-2023.
What makes it worse are the many hidden charges that can push the education budget up further. Take, for instance, the cost of exam registration fees.
It has seen an approximate 6.7% hike in the last year. The hike in the cost of transport, food, and student accommodation contributes to the overall increase in education costs.
The tuition fees of colleges in India have seen a major rise in the past few years. Here is some data on how course fees of specific courses may increase in the future based on the rise in fees over the past few years.
- The cost of an MBA in 2020 was 31 lakhs; the estimated cost of an MBA in 2030 is 61 lakhs.
- The cost of an MBBS in 2020 was 50 lakhs; the estimated cost of an MBBS in 2030 is 80 lakhs.
- The cost of Engineering in 2020 was 16 lakhs; the estimated cost of Engineering in 2030 is 40 lakhs.
- The cost of Hotel Management in 2020 was 2.4 lakhs; the estimated cost of Hotel Management in 2030 is 4.78 lakhs.
Additional read: How to protect savings from inflation?
Important factors responsible for education inflation
1. The rising cost of amenities
The hike in the cost of food, accommodation, transport, and other living expenses is crucial to the cost of education.
2. Increase in the number of educators
As the number of universities and colleges grows by the day, the need for educators has increased too. This is another key factor in the rise in education costs.
3. The rise in demand for higher education
Higher education is not an option anymore but a necessity. It plays a major role in an individual’s financial success and growth.
Given the education inflation, it’s imperative for parents to plan ahead and save for their child’s education. It’s the most effective way they can support their child’s dream by sending them to a quality university.
Consult an expert advisor to get the right plan
Want to invest?
Open a Edufund account & start investing. It's fast & 100% free.GET STARTED