In the past two decades, the cost of higher education in India has risen at an alarming rate, outpacing general inflation by a significant margin. A recent analysis by Bank Bazaar, an organization specializing in financial services, has shed light on this growing concern. The study reveals that while the average inflation rate in the country has been around 6%, the cost of education has surged at an annual rate of 11%. This substantial rise in educational expenses has significant implications for families saving for their children's higher education, making it imperative for them to reassess their financial planning strategies.
Escalating Costs of Higher Education
The report highlights the staggering increase in the cost of pursuing higher education, particularly professional courses like MBA. Back in 2003, the average expenditure for an MBA from a private college in India was a modest Rs. 3 lakhs. However, in the present day, the same degree demands a hefty Rs. 24.6 lakhs, representing an eightfold surge in just two decades. If the current trend continues, experts predict that the cost of professional courses may nearly double in the next five years, creating a financial burden for aspiring students and their families.
Implications for Future Education Planning
The exponential rise in educational expenses calls for a critical reevaluation of how families save for higher education. Traditionally, many families relied on general inflation rates to plan their savings, but with education inflation running at double the rate, this approach may no longer be viable. As the cost of education continues to soar, it is essential for parents to factor in the specific inflation rate of education while setting aside funds for their children's future academic pursuits.
Projected Costs of Professional Courses
To put future expenses into perspective, the report reveals that the average cost of a 4-year B.Tech course presently stands at Rs. 10 lakhs. Similarly, the average cost of an MBBS degree in private colleges is a staggering Rs. 50 lakhs. However, if this upward trend persists, the same MBBS course could cost a staggering Rs. 1 crore within the next five years. This projection is a wake-up call for parents, urging them to act promptly and strategically to secure their children's educational aspirations.
Savings Goals and Priorities
The study also sheds light on the savings goals and priorities of Indian households. Surprisingly, until class 12, most families do not set specific savings goals for their children's education. However, once higher education becomes imminent, it becomes the primary savings goal for 37.9% of households. In fact, a substantial 49% of Indian households include saving for higher education among their top five life goals, underscoring the increasing awareness of the importance of financial preparedness for education.
The rising cost of higher education at a rate double that of general inflation has emerged as a significant concern for Indian families. As educational expenses continue to skyrocket, parents must adapt their savings strategies to account for the specific inflation rate of education. Early and diligent financial planning can help mitigate the burden of educational costs and provide the necessary resources for students to pursue their academic dreams without compromising on quality. As the demographic of savers primarily lies in the age group of 35 to 45 years, it is crucial for families to act promptly to secure their children's educational future and create a solid foundation for their success.