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Rising Cost of Education in India

The best education for their children is the primary objective of every parent. Several parents cannot afford quality education for their children owing to the rising cost of education. The inflation rate is one of the reasons for the rising cost of education in India.

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Rising Cost of Education in India

Understand the Rising Cost of Education in India

Understand the Rising Cost of Education in India
September 19, 2024

Table of Content

 

Though parents understand and appreciate the need for a good school and college education, they give up on the goal, considering their economic condition. This can affect their child’s career prospects in a competitive scenario where qualification is important. 

Yet, as a parent, if you wish to provide standard education for your child you may need a substantial amount considering the education rising cost in India. Pursuing professional courses like engineering, medicine, law, etc., in premier educational institutions is as expensive as date and can be even more exorbitant after 10 to 15 years. Read on to understand the different levels of education, premier institute fees, factors to consider while calculating education costs, etc. 

Things to Think About When Calculating Your Child's Education Expenses

Child education planning is a prudent step to fulfil your objective of providing the best education for your child. Factoring several metrics to understand the extent of investment required is crucial. You have to consider the following aspects to arrive at the education expenses.

  • Tuition fee

Tuition fees are the primary metric to evaluate the education expenses. The cost varies with the level of education you are planning for and the school/university you have in mind. If you are planning you must consider the rising education cost in India vis-a-vis the inflation rate. 

  • Accommodation

If your child is enrolled at a college or university far from your residence, he/she will need accommodation close to the college/university to avoid the strain of commuting to and fro. 

  • Other expenses

Apart from the tuition and accommodation expenses, other additional educational expenses have to be considered. The costs of books and stationery, transportation, food, utilities, etc are some of them.  

Reasons for the increase in cost

Several reasons contribute to the rising cost of education in India. The key factor is the inflation rate. In addition, technological advancements, infrastructure development, choice of university and country of study, etc., also impact education rising cost in India.

How can a child plan assist you in this situation?

The best way to fulfil long-term financial goals is to set aside a part of your income during your career days. Child insurance plans are ideal investment tools to be financially equipped to fund your child’s education needs. 

A child education plan is an excellent means of education funding. It helps you save money for your child’s education and also offers life cover. Flexibility in premium payment is another advantage. You can choose to pay the premium monthly, quarterly, half-yearly, or yearly as per your convenience. On maturity, you receive a lump sum payout, which can be used to fulfil your child’s needs.

Also, if anything untoward happens to the policyholder during the policy term, the insurer will provide a lump sum amount to your child. The insurance company makes further premium payments to keep the policy active so your child can receive the benefits. In brief, your child’s future is secured under any circumstance.

Features of Child Plan

A child saving plan is the best way to beat the inflation impact on education. Given below are the features of a child plan:

  • Life cover

Generally, a child plan is considered a resource to meet the cost of higher education. However, the plan also offers life cover for education wherein your child receives a lump sum in case of an eventuality during the policy term.

  • Waiver of premium benefit

If the untoward happens during the policy term, the company not only gives a lump sum payout to your child but also offers the waiver of premium benefit. This option waives further premium payments, and the policy is kept active till maturity.

  • Partial withdrawals

Funding may be required for different education stages. To facilitate this, the child plan has the provision of partial withdrawals for education to fulfil your child’s education needs at various levels. 

  • Tax benefits

The tax benefits for education savings via a child plan include benefits under Section 80C and Section 10(10D) of the Income Tax Act 1961#. The premiums paid towards the child plan are eligible for tax benefits under Section 80C of the Income Tax Act 1961#. The payouts received from the plan also qualify for tax benefits under Section 10(10D)#.

Education System in India

Education was a privilege accessible to only a section of society a few centuries ago when few educators and saints delivered education. Elements like Vedic mathematics, warfare, Indian religions, and Ayurveda were among the subjects taught in earlier years. Back then, Nalanda and Takshashila were renowned education centres.

Colonisation transformed the education system in India. The approach to higher education faced several challenges during the early 21st century. Parents prioritised children’s education and would not compromise on that at any cost. 

Private and Government sectors are two types of education sectors in India. The quality of education is better in the private sector but for a higher cost. The tuition fees are much higher in comparison to government schools and colleges, and so is the quality. 

The rising education cost in India poses a great challenge to parents who seek admission to private schools for their children so that they can get quality education and secure their careers. 

Current Education Plan in India

Several amendments and upgrades have been instrumental in bringing forth the current education plan in India. The first education plan in India was introduced in 1968, which underwent reforms in 1986, 1992, and 2020. The current plan is based on the 1992 model. The present education plan in India is given below:

  • Kindergarten/preschool: 3 years

  • Primary School: 8 years (Class I to IIX) 

  • High School: 2 years (Class IX and X)

  • Higher Secondary School: 2 years (Class XI and XII)

  • Graduation: 3 to 4 years, depending on the subject

  • Post Graduation: Generally two years but may vary with the subject chosen

The preschool curriculum in India consists of a foundation for higher studies and behavioural development. Grades 1 onwards constitute different boards. The objective of these boards is to equip the students for the 10th-grade exam. These boards examine the 10th grade. The outcome of the 10th grade decides the fate of further education. The syllabus, education schemes and reference books for grades 1 to 9 are stipulated by the board. The various education boards in India are:

  • CBSE: Central Board of Secondary Education

  • ICSE: Indian Certificate of Secondary Education

  • NIOS: National Institute of Open Schooling

  • IB: International Baccalaureate

  • State Education Boards of all Indian States

Post the 10th grade students can choose subjects to suit their aptitude. The subjects available in the 11th and 12th grades are science, arts, and commerce. Students can choose diploma courses after passing the 10th grade. The marks scored in the 12th-grade direct examination also have an impact on college education. 

AICTE (All India Council for Technical Education) and UGC (University Grants Commission) govern all the colleges in India. The rising cost of education in India is one of the main reasons why some people choose government colleges that collect nominal fees. Some of the renowned colleges in India are IIMs, IITs, AIIMs, NLUs, IISERs, NITs, and many more. The rising cost of education in India has made preferring these colleges for higher education a challenge for parents who are not affluent. However, the scholarship schemes in these institutions have made it affordable for merit students. The international acclaim is what attracts students from every corner of the country to these institutions.

Education Costs for Children in India at Different Levels

The stage of education and the location of the educational institution are the parameters for the cost of education. Financial planning for education becomes easier if you are aware of the costs involved at different levels. 

Preschools: You have abundant choices with so many private preschools and government-backed Anganwadis. Anganwadis are for children who cannot afford premium tuition fees. The average cost of preschool education can be between Rs. 5000/- to Rs. 50000/- a year.

Primary Schools: Primary schools constitute classes 1 to 8. The fee range for primary schools can be Rs. 20000/- to Rs. 1.00 lakh annually. 

High School: The rising cost of education in India begins with high school. The fees increase gradually from the 9th grade onwards. The fee range for the 9th and 10th standard is Rs. 80000/- to Rs. 1.50 lakhs per annum. For the 11th and the 12th standard, the fee range is between Rs. 20000/- to Rs. 3.00 lakhs depending on the subjects chosen.

Tips for Managing Child Education Costs in India Efficiently

To cope with the rising cost of education in India, you should be well-equipped financially. If you intend to enrol your child in premier education institutions, you should diligently plan your finances to fund your child’s future education costs.  Here are some tips that will help manage your child's education cost-efficiently. 

You have two investment options. Market and non-market linked schemes. Market-linked schemes offer higher returns and are ideal for long-term investments. The risk factors in these schemes are high, whereas the non-market linked schemes offer guaranteed returns (though lower) and are devoid of risk. 

Investing in low-risk schemes is recommended as you are saving for your child’s education to beat the rising cost of education in India. The most preferred saving option is the fixed deposit. Though the returns are not as high as market-linked investment plans, the returns are guaranteed, and your capital is secure. 

Another lucrative investment plan is an insurance policy. Insurance policies offer both life cover and maturity benefits. Unit-linked insurance plans have both insurance and investment components. A part of the premium is invested in bonds and the remaining will provide life cover. With so many players in the market, you can choose the one that suits your financial goals.

Several government-backed child-specific schemes are also available. They offer better returns compared to other saving schemes like fixed deposits, recurring deposits, etc. You can also reduce your tax outgoings substantially with these schemes.

FAQs on Rising Cost of Education in India

Q. How much does higher education cost in India?

The higher education cost in India depends on the school/college you choose and the location of the school/college. The cost of government schools/colleges will be much lower in comparison to private schools/colleges. A four-year degree cost could cost Rs. 16/- lakhs a year. With the rising cost of education in India considering a 6% inflation rate, the cost could mount up to Rs. 40/- lakhs in the next 15 years.

Q. What is the rising cost of education in India?

The rising cost of education in India is commensurate with the inflation rate. Assuming the inflation rate is 6%, the cost of education, which is at present approximately Rs. 16/- lakhs for a four-year degree course, could be Rs. 40/- lakhs in the next 15 years. 

Q. How can we reduce the cost of education in India?

To reduce the cost of education in India we can use several strategies to mitigate the financial impact of the rising cost of education in India. You can look for scholarship opportunities, seek financial aid, or have arrangements with mentors or professionals in your chosen career field. , 

Q. What is India doing to improve education?

To improve education in India, a scheme called Samagra Shiksha was launched in 2019. The objective of the scheme was to promote quality education, bridge the gender and social gaps, strengthen teacher training institutions, and universalise secondary education.

Q. How much education is free in India?

Education for children between 6 to 14 is compulsory for children in India. The Rights to Education Act 2010 guarantees free education in primary and middle schools. Private schools must reserve 25% of the seats for children from weak economic backgrounds. Some states provide additional benefits like free uniforms, bus passes, laptops, bicycles, etc. 

Summary

The rising cost of education in India poses a challenge to parents aspiring for quality education for their children. Compromising on lifestyle and budget is not the only option to fulfil the goal. Understand the rising education cost in India and calculate the funds required for your child’s education. Set aside a sum accordingly and invest in safe schemes like insurance policies, fixed deposits, etc. and build a corpus to meet your child’s education needs.

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Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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