Are you saving enough for your child’s education?

My son has got a rank of 2400 in JEE advance. He’ll get into one of the IITs. We are now deciding on the branch for Engineering,” read a WhatsApp message that I received from a friend last month.

I called up my friend to congratulate her on her son’s result. As she spoke, I could make out the sense of deep satisfaction in her tone. I could easily relate to her feeling as I myself had felt so relieved when my daughter got admission into an engineering college.  For a parent, it is a big respite when your child gets into a good college – a coveted one at that.

One of the goals that most Indian parents have for their children is that they build successful careers in their adult life. Since education is the first step towards a successful career, so when it comes to education, there are no cutting corners.

The struggle for good education begins with securing the child’s admission in a good school of choice. This is followed by the struggle to get into a good college for an undergraduate course. Engineering, medical and law aspirants start preparing for the entrance exam while they are still in school.


Coaching institutes that prepare students for these entrance exam charge between Rs 80,000 – Rs 1 Lakh a year. Cracking these entrance exams is tough and getting admission into a premier university becomes a bigger challenge. If the child manages to get into a college of repute, one has to be ready with the finances.

Education is an area that is highly affected by inflation. Between 2007 and 2017, the average annual education cost (from primary level to post graduation and above) has shot up heavily.

Higher education costs have the highest inflation rates

The decade from 2007 – 2017 has seen an eight-fold increase in the tuition fee in the IITs (India Institute of Technology). Whereas in 2007, the total tuition fee for doing a graduate course in Engineering from an IIT amounted to Rs 1 Lakh, today the same course costs a fee of Rs 8 Lakhs. With the hostel rent, mess charges etc. added, the total cost works out to be around Rs 10L or more for an Engineering course in a government college. The cost of doing engineering from a private engineering college works out to a minimum of Rs 15 – 16 Lakhs.

Private medical colleges are much more expensive. The total cost for a 5-year MBBS degree from a private medical college ranges from Rs 25 to Rs 60 Lakhs or more. The fee increases almost every year. Similarly, different law colleges carry different fee structures. Doing a five year Law course from a National Law University (NLU) costs around Rs 2 Lakhs per annum.

The post graduate courses have become expensive too. For a Postgraduate two-year management program in IIM A, the fee has risen more than 400% from Rs 4.3 Lakhs in 2007 to Rs 21Lakhs in 2017-2018. Other B-Schools have followed the suit. If the fee further continues to rise even by 15% per year, the cost of doing a two management course in 2027, will be roughly around Rs 1 crore.


Must Read:  Plan your finances in your 30s to enjoy financial freedom later 


Do you have enough money for your baby’s day out?    [<- Click to see]

Since good education is becoming increasingly expensive, one needs to plan wisely. A proper long-term investment plan is needed to tackle the problems of increasing cost of education. The heading link talks about the financial must-do’s to ensure a smooth welcome for the baby.

By investing some money regularly towards education planning, you can ensure that you are not short of funds when it’s time for your child to go to medical or business school or pursue any other line of education. Depending on the age of the child at the time when you start investing, you can select an appropriate investment option to save for your child’s education.

Needless to say that if you start investing early (say in your early thirties), the longer time horizon will have a higher compounding effect and fetch you better return that will help you to bear the expensive education cost.  The earlier you start the better equipped you will be to pay for your child’s higher education.

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  • author's avatar

    By: Somali K Chakrabarti

    Hi there! Welcome to Scribble and Scrawl! Here, I delve into themes related to positive lifestyle – from making smart-living choices, savvy financial decisions to nurturing the mind, body and soul. I share my travel experiences, explore facets of art and culture and highlight inspiring stories. Hope you enjoy reading my posts.

  • author's avatar

Somali K Chakrabarti

Hi there! Welcome to Scribble and Scrawl! Here, I delve into themes related to positive lifestyle - from making smart-living choices, savvy financial decisions to nurturing the mind, body and soul. I share my travel experiences, explore facets of art and culture and highlight inspiring stories. Hope you enjoy reading my posts.

  • Really nice and relevant post. Higher education costs a lot of money. How prevalent is the practice of student loan? I realized hostel accommodation costs more than tuition fee. Though private universities give scholarship, they remain very expensive. Good government universities are relatively less costly but competition is very tough. I still do not know why everyone wants to be a doctor or engineer? There are other professional courses that people do not talk as much.

    • Thank you very much, sir. The rate of interest on student loans in India is not as low as they are in the west (say in the UK). However, student loans are an option worth considering for professional courses like MBA or law, where students can start repaying back the loan after they pass out and start earning enough to repay back the loan. Placement is a key criterion for repaying back the loan. In some cases, it might be good to consider taking a loan jointly between the student and the parent. I guess it is still the perceived prestige associated with medicine, engineering or law and the thinking that after 4-5 years the child will be self-dependent that makes people encourage their children to be a doctor or an engineer.

  • Your lovely daughter also has brains — engineering school! Wow!! She’s brilliant like her wise mom. ????

  • ???? Yes! I absolutely agree.

  • bhudeb chakrabarti

    July 23, 2017 at 7:20 am

    A very enlightening post for parents to plan and save for the child’s higher education in the context of higher education costs.

  • Actually these days schools are charging 1 lakh rupees for junior classes. So I am not sure how much we can save for the college.

  • A very good question.. University education is becoming so expensive with many leaving in so much debt..
    Its something we think about for our granddaughter.. Only 6 right now, but as bright as button.. It is something we are putting to one side some savings for her future education should she desire to go down that route.. But from the age of four she has said she want to be a Dr.. To help heal the sick.. ( her other grandma died two weeks after she was born ) And he Mum has suffered ill health on and off, And still when asked she still says I want to be a Dr.. She may well make it too, as her photographic mind retains all knowledge its amazing to see..

    Again I feel in the UK we are so very fortunate in many areas of both education and in our National Health System..
    An enlightening post Somali.
    Sending Love and Blessings your way xxx
    Sue <3

  • Thank you, Sue. Always wonderful to hear from you. I have seen your little granddaughter’s picture on your blog. What a lovely child she is! Though many children want to be doctor but its really heartening to know of a little child saying that she wants to be a doctor to help in healing the sick. May all her wishes come true when she grows up.
    Higher education in UK is less expensive than in the US (I know about engineering and management streams not about medical though). I had taken loan from HSBC UK to partially fund my management education. The interest rates were quite low and it still is low.
    In India, though the cost of education is less as compared with the west, however looking at the living costs and earnings the relative cost becomes quite high. So, we need to plan for finances to fund the education of children.
    Thank you once again for sharing your story and perspective, and also for your good wishes. Love & Regards, Somali

  • This is a perfect post for those who want their children to go into universities! Who doesn’t? This is the dream of each Indian parent! Money is the major challenge for parents besides grooming their teenagers towards choosing a professional course. Not all are lucky and student loans are still considered to be a burden in India. So saving a little for a child’s future education is the best advice and you have written it so well. :)

    Congratulations Somali, you must be proud of your daughter! All my best wishes to her. Stay blessed!
    Both my doctor daughters went to U.S. universities but we were lucky as they earned handsome scholarships and stipends to support themselves, while we watched their growth with pride!

  • Thank you so much for your kind wishes, Balroop. It is a moment of pride for the parents to see their children do well, so I can understand how happy you must have been when both your daughters did so well in studies.
    I can still understand that professional courses are getting expensive as institutes have to keep up with the world standards. Yet, somehow I find it difficult to fathom why primary education has become so expensive. So, by all means it is better to start investing for such essentials.
    Wish you a nice start to the week. :-)

  • Relevant post, Somali. The expense of education is increasing thick and fast, more so when it’s a prestigious institution. the income of the parents is not directly proportional to that increase in expense. So, one needs to save enough ( the great Q is, how much is enough!) for the child’s education. However, a proper planning and regular saving can make things easier to deal with…

    • Thank you Maniparna. How much is enough is difficult to forecast, as you never know what your child’s aspirations will later be, but yes it is always better to keep provision as much as is possible and do it in the best possible manner. :-)

  • Thanks for sharing! As an MBA student at Georgetown University, I have many classmates from India that have taken large loans with very high interest rates. I know it was a very difficult decision for them to choose to study here in the US (away from their families, and in some cases away from their wives/husbands).

    I was interested if you were familiar with some of the loan refinancing options. For instance, in the US we have companies like Sofi, Commonbond and Prodigy Finance that are reinventing student loan rates, giving customers with greater ‘earning potential’ the option to refinance their loans at a significantly lower rate. In other words, future doctors, lawyers, etc can obtain much lower rates because they have much higher potential.

    • Hi James, Thanks for stopping by. Student loan refinancing options are available in India. Some may offer a top up or a lower EMI than others but most of these loans require a collateral like a house, land or Fixed Deposit, which is a key consideration from a feasibility point of view.

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