Understanding the Rising Cost of Education in India

As the cost of education in India is predicted to rise by about 10 – 12% on a yearly basis,. the financial burden for parents increases remarkably. 

As cited by the report by National Sample Survey Office (NSSO), the cost of education has already gone up at an alarming rate in which education has more than doubled within the past ten years in terms of costs of higher education. 

Why Education Costs Are Skyrocketing

Rising costs of education in India can be demystified for planning purposes. Below are some suggestions: 

1. Inflation: All educational costs such as tuition fees, and accommodation among other expenses are known to go up every year. As per the Reserve Bank of India data the rate of inflation in the education sector has been much higher compared to the overall rate of inflation. 

2. Technological Advancements: New technology and infrastructure are being implemented in educational institutions improving learning while at the same time introducing expenses. As for smart classes, and updated teaching aids, resources and equipment, the call for the updated comes at a cost. 

3. Global Competitiveness:  To meet global criteria, Indian universities are employing good quality staff, developing state-of-art infrastructure and developing unique courses. The desire to attract talent to the system and to ensure quality education delivery is also a major contributor to cost escalation. 

4. Privatization of Education: A change from government operated systems to private entities has seen education systems become costly, and private holders of school aim at having their institutions financially sustainable in providing quality education. 

How Much Does Education Really Cost?

The costs associated with education vary greatly depending on the level of education, location, and type of institution. Below is an overview of average costs across different educational stages in India:

The Hidden Costs of Education in India

While tuition and fees are the most visible costs, parents tend to overlook these expenses: 

• Books and Supplies: Books for students, writing materials, and everything that is associated with a learning environment increase expenses considerably. 

• Transportation: Travelling to school or college is not easy nowadays, especially for long-distance students. 

• Extracurricular Activities: Tuition for sporting activities, drawing, dancing, music, or other co-curricular activities can also contribute to the overall cost of education.  

• Living Expenses: Expenses on food, accommodation, and other personal effects raise the overall cost substantially among students who travel to distant institutions for their college education. 

Scholarship Opportunities and Financial Aid

To cope with some of these unceasing rising costs, government and private institutions offer scholarships to merit students. Such scholarships may be half or nearly full tuition-based, thereby easing the financial bugbear. However, such grants are limited and they are very competitive. 

Parents are encouraged to start researching scholarship opportunities early, as many require applications and supporting documents well in advance. Notable scholarship schemes include: 

• Central Sector Scheme of Scholarships for College and University Students: This scheme supports students from economically weaker sections. 

• State Government Scholarships: Various states offer scholarships to residents for pursuing higher education. For pursuing higher education, many states offer  

• Private Scholarships: Many private organizations and institutions provide scholarships to merit students based on a specific criterion. 

The Need for Financial Planning in Education

With the current rise in the cost of education in India, early financial planning is essential for families. By starting investments when a child is young, parents can leverage growth over time to offset future education costs.  

Early financial planning has become essential for families due to an increase in the cost of education in India. Early investment by parents can help a child grow over time and eventually assist pay for schooling.  

1. Systematic Investment Plans (SIPs): SIPs allow parents to invest a fixed amount regularly, creating a steady fund over time. By investing consistently, even small amounts can accumulate into a substantial fund through the power of compounding. 

2. Education-Focused Funds: These funds focus specifically on long-term growth aligning well with education savings goals and offering tax benefits. Parents can explore mutual funds designed for education expenses.

Long-Term Investment Growth: A Hypothetical Scenario

Let’s take a case in point. Let us say, parents invest ₹5,000 a month into an education focused fund from the time their child is five years old. If this is maintained at a moderate return rate, say 10%, they will have saved up ₹15 lakh by the time their child is ready for college. This amount can cover a significant portion of higher education costs, making the financial burden much lighter. 

Education Loans

Education Loans can be highly reliable when the cost of schooling rises over the anticipated savings, even though investments seem great.  Many parents now find education loans more reliable because they can educate their children without risking the family’s assets. 

Key features of education loans include: 

• Flexible Repayment Options: Most banks offer flexible terms, allowing parents and students to pay over an extended period of time.  

• Income Tax Benefits: Interest on education loans can be claimed as a deduction under section 80E of the Income Tax Act, making it a beneficial tax-saving option for parents. 

Conclusion

As the cost of education in India continues to rise, EduFund is here to support parents in their financial planning journey. EduFund provides expert guidance and offers investment plans that fit your goals in securing the best education loans.  

Start planning today and invest in your child’s education for a brighter tomorrow!