Education inflation in India has become a growing concern for parents and students. While the rising costs of tuition fees, books, and other academic expenses are well-known, the education inflation rate in India is often higher than expected.
These hidden costs, coupled with increasing demand for quality education, have led to a significant financial burden on families, particularly those from middle-class backgrounds.
Understanding the education inflation rate in India and its impact on both domestic and international education is crucial for better financial planning and ensuring a bright future for students.
And if you are a financially unprepared parent, the risks of education inflation can be more serious for you.
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Education Inflation Rate in India (Year-wise)
| Year | Education Inflation Rate (%) |
|---|---|
| 2020 | 3.0% |
| 2021 | 3.34% |
| 2022 | 5.68% |
| 2023 | 6.5% (Estimated) |
| 2024 | 7.2% (Projected) |
What is the Education Inflation Rate in India?
The education inflation rate in India refers to the rising cost of schools and colleges. Unlike general inflation, which averages around 5–6% annually, education inflation often ranges between 8% to 12% per year.
According to the Ministry of Statistics, the education inflation rate rose from 6.65% in 2023 to 7.2% in September 2024. This spike highlights a growing challenge for Indian families trying to afford quality education.
Why is Education Inflation Rising Faster Than General Inflation?
Education costs are influenced by multiple factors including:
- Infrastructure and technology upgrades in schools
- Increased demand for private education
- Teacher salary hikes
- Import of educational tools and books
Hidden Costs Contributing to Education Inflation
| Cost Category | Description | Estimated Annual Increase (%) |
|---|---|---|
| Tuition Fees | Rise in private school/college tuition fees | 8-12% |
| Transportation Costs | Rising fuel prices and metro/train fares | 5-7% |
| Uniforms and Accessories | Increased cost of uniforms, shoes, and other required clothing | 4-6% |
| Books and Study Materials | School-specific books and materials, often with a monopoly on pricing | 6-8% |
| Hostel and Accommodation | Rising living expenses and hostels fees in higher education institutes | 10-15% |
Impact of education inflation on hidden costs of education
1. Increasing tuition fees in educational institutes
Tuition fees in Indian colleges and schools have seen an enormous rise over the last few years. Do you know that inflation in the education sector of India is one of the major reasons why many students drop out of college midway?
It is becoming increasingly obvious that the education sector in India needs proper planning. Many middle-class families usually struggle to meet ends after enrolling their children in higher education institutes.
Guide to Education Inflation
2. Transportation is becoming expensive
With the drastic increase in fuel prices, the cost of transportation is worrying students. Nowadays, a majority of students travel to school by bus. The rising transportation cost is a hidden cost in education inflation.
Unless parents become aware of the transportation costs, it can severely affect them, financially. Apart from fuel-driven vehicles, the overall fares of trains and subway metros have witnessed a rapid surge.
Note that this rise in fares is here to stay. Hence, planning your finances properly is the best way to manage your child’s education.
Also read: Private school vs government school
3. School uniforms are becoming expensive
For the parents of school-going children, it’s these simple things that are making them anxious. Uniforms are an integral part of schools. Furthermore, many schools have strict regulations on how their students will wear uniforms.
And almost every year, you have to replace the school uniforms, which include shoes, socks, and other accessories.
It is also important to mention the rising cost of school supplies like bags and notebooks. School supplies are not a one-time investment. You have to buy them every year which makes the situation complicated.
4. A surge in the cost of books
Nowadays, most schools and educational institutes have fixed rules for buying books from them only. But, even if you purchase books from outside, you’ll have to pay more compared to earlier times.
The failure of the authorities to control the prices of the books depicts the sordid state of affairs. Like school supplies, you have to procure books for your child every year while they are in school.
5. The rising cost of education in foreign countries
If you envision foreign education for your child, be prepared to spend a huge amount on your child’s entry into the best universities.
The average cost of pursuing a degree in the US rose by 497 percent between 1986 and 2018. Even after the pandemic, most colleges overseas have increased their tuition fees. Note that foreign universities charge additional fees for international students.
Also read: Factors responsible for education inflation in India
6. The constant rise in the price of flight tickets
Flight tickets are becoming costlier day by day. The Oil Marketing Companies, also abbreviated as OMCs, have raised ATF (Aviation Turbine Fuel) prices by 16.3 percent in all major cities of India.
This latest hike in ATF prices along with the depreciation of the rupee has made airliners increase their fares.
7. Student visas cost more than you may think
Nowadays, student visas cost more than you can imagine. There are various categories of student visas and you should be aware of each of them to make it easy for your child
8. Living expenses
With the rise in the prices of essential commodities worldwide, living expenses are touching record figures. The impact of education inflation on hidden costs of education can be ascertained with the rise in living expenses.
If you are sending your child abroad, it is crucial to be prepared financially. This is because living expenses abroad can severely affect your child’s educational prospects.
Unfortunately, inflation in the education sector of India is here to stay. Unless you prepare sensibly and start saving, you may have to compromise on the quality of education.
You can avoid financial stress by saving and investing early. Investing in mutual funds and other financial instruments is the most ideal way to counter education inflation.
How To Beat Education Inflation?
| Investment Option | Average Annual Return (%) | Risk Level | Best for |
|---|---|---|---|
| Mutual Funds | 10-12% | Medium to High | Long-term education savings |
| Fixed Deposits (FDs) | 6-7% | Low | Conservative investors seeking security |
| Digital Gold | 8-10% | Medium | Hedging against inflation & diversification |
| Public Provident Fund (PPF) | 7.1% | Low | Long-term investment & tax saving |
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Combatting Education Inflation: How EduFund Can Help
EduFund can significantly help parents combat education inflation through various investment options, including mutual funds, fixed deposits (FDs), and digital gold. Here’s how each of these options plays a role:
1. Mutual Funds
- Higher Returns: Mutual funds historically provide returns of around 10-12%, which can keep pace with or exceed the average education inflation rate. This makes them an effective tool for long-term educational savings.
- Diversification: Investing in mutual funds allows parents to spread their risk across various assets, reducing the impact of poor performance in any single investment. This diversification is crucial for maintaining a stable growth trajectory for education funds.
- Professional Management: Fund managers handle the investments, making it easier for parents to invest without needing extensive market knowledge. This professional oversight helps ensure that investments are optimized for growth.
2. Fixed Deposits (FDs)
- Stable Returns: While FDs typically offer lower returns compared to mutual funds, they provide guaranteed interest rates and capital protection, making them a low-risk option for conservative investors. However, given the current inflation rates, FDs may not keep pace with rising education costs alone.
- Liquidity: FDs can be liquidated when needed, providing parents with access to funds during critical times, such as when tuition fees are due.
3. Digital Gold
- Inflation Hedge: Digital gold serves as a hedge against inflation and can appreciate in value over time. It allows parents to invest in gold without the hassle of physical storage, providing a flexible investment option.
- Accessibility: Investing in digital gold is straightforward and can be done through various platforms, making it accessible for parents looking to diversify their investment portfolio.
FAQs
How does education inflation impact parents and students?
Rising education inflation increases the financial burden on families, especially those in middle- and lower-income brackets. It can lead to higher dropout rates, reduced access to quality education, and the need for families to take on loans or reduce other essential expenses.
How can parents beat education inflation in India?
Parents can combat education inflation by starting early financial planning. Investing in mutual funds, SIPs, FDs, or digital gold through platforms like EduFund can help accumulate a strong education corpus that keeps pace with inflation.
Is education inflation the same as general inflation?
No. Education inflation is often higher than general inflation. While general inflation affects a wide range of goods and services, education inflation specifically impacts academic-related costs, which have been rising at a much faster rate.
What are some hidden costs affected by education inflation?
Hidden costs include school uniforms, books and stationery, transportation, school events, digital learning tools, and application or exam fees. These often go unaccounted for but significantly impact the total education budget.
