We constantly keep close eyes on soaring prices of groceries, petrol & consumer inflation rates but there is another kind of inflation that has a much sharper impact on savings & go mostly unnoticed which is “Education Inflation”.

Inflation is growing at more than 10 percent every year in the education sector. It is extremely important that you plan well for your children’s higher education.

Inflation is growing at more than 10 percent every year in the education sector. It is extremely important that you plan well for your children’s higher education.

For example,

– The fees in IIT for Rs. 50000 per year in 2008. It increased to Rs. 90,000 in 2013. Currently it more than Rs. 2,00,000.

– IIM-A increased the fees from Rs. 18.5 lakh in 2017 to Rs. 19.5 lakh in 2018.

The National Sample Survey’s Office (NSSO) showed that 70 percent of students and their parents preferred private institutions to government-based ones. The gross enrolment ratio (GER) is a metric that expresses total enrolment in terms of percentage in educational institutions; it is calculated for the age group, 18-23. The GER for higher education in India is close to 26 percent; it is 44 percent in China and 86 percent in USA.

The college quantity scenario is widely out of proportion in India. There are only 6 colleges in Bihar per lakh students while small UT like Puducherry has 60 colleges/ lakhs of student. The all-India average is 25 colleges per lakh students. Secondary education Schools in India may have grown exponentially, but the higher education sector has failed to keep up the pace with it. Which has created a large gap in India’s higher education sector.

For instance, over 130 plus new IB high schools alone should have been added in the last decade to get the student/college ratio right. That figure is only for business schools, what about shortage of Engineering colleges, Medical or a basic graduation college. Out of the existing ones, how many good colleges can you think of? I will bet you can count them on your fingertips.

In the past 15 years, one of the biggest shifts that have occurred in peoples’ financial goals is the craze to send their kids abroad for higher education. It has been triggered, in recent years, by a number of factors: more international exposure, severe domestic competition for premium Universities.

Today, students from different countries travel across the world to other countries to pursue their higher studies. Making a career abroad not only helps them to improve their educational experiences but also takes their career to new heights.

When it comes to study abroad it seems a costly affair for parents to finance their children’s higher education. These could be tuition fees, traveling expenses, hostel accommodation, book materials fees, health issues and much more.


Cost is important. Given our country’s relative inflation, interest rates and current account balance, it is unlikely that the Indian rupee will strengthen to a level that the exchange rate (against the US dollar and the pound) becomes favorable for us, at least in the foreseeable future. Overseas education is going to remain expensive for rupee owners and earners for some time to come.

Some parents mostly invest in land or property, hoping to sell when a need arises. However, these immovable assets at the time of need might not fetch the amount of money one hopes for. It is risky to depend solely on this mode of investment alone.

As with any savings goal, it’s best to start investing early. First, set your goal: Figure out how much you may need to save for each child based on his/her age

One must evaluate children’s future needs, and then start working on them. Begin the process of saving and investing early. This enables to create adequate resources for the fulfillment of kids desires and ambitions.


By Sameer Rastogi

18 years of experience, PG in Finance and has delivered Wealth Management lectures at IIM Lucknow, IBS Gurgaon and IIPM Delhi. Contributed to various newspapers. Strength – Application of Economic fundamentals to Investment

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