Education costs in India are rising at 10-12% annually, meaning a ₹15 Lakh degree today could cost over ₹50 Lakhs in 15 years. Don’t rely on guesswork. Use our Child Education Cost Estimator to calculate the inflation-adjusted future cost of higher education and determine the exact monthly SIP needed today to secure your child’s dreams debt-free.
Education Cost Estimator
Plan today for your child’s brighter tomorrow.
Child Education Planning: How to Estimate Future Costs in India
Every parent dreams of providing the best possible education for their child. Whether it’s an engineering degree from a top private university, a medical seat, or an MBA from a premier institute, quality education is the gateway to a secure future.
However, there is a silent financial challenge that many Indian parents overlook until it’s too late: Education Inflation.
While general household inflation in India typically hovers around 5-6%, the cost of higher education is rising at a much steeper rate—estimated at 10% to 12% annually. This means the cost of a degree effectively doubles every six to seven years.
Our Child Education Cost Estimator is designed to help you look past today's prices and prepare for the financial reality of tomorrow.
The Reality Check: Why ₹15 Lakhs Today is Not Enough
Many parents make the mistake of saving for the current cost of education. For example, if a 4-year B.Tech degree costs ₹15 Lakhs today, you might aim to save exactly that amount.
Here is why that strategy fails: If your child is currently 5 years old, they will start college in 13 years. At a conservative education inflation rate of 10%, that same ₹15 Lakh degree will cost approximately ₹51 Lakhs by the time they are ready to enroll.
Without accounting for this massive jump, your savings could fall short by nearly 70%, forcing you to rely on expensive education loans or dip into your retirement funds.
How to Use the Child Education Cost Estimator
This tool simplifies complex financial math into three easy steps to give you a clear target corpus and a monthly investment plan.
1. Enter the Basics
- Child’s Age: The younger the child, the more time you have to let compound interest work for you.
- College Start Age: Typically 18 for undergraduate courses and 21+ for post-graduate degrees.
2. Estimate the Cost
- Current Cost: Enter what the degree costs today.
- Engineering (Pvt): ~₹15–20 Lakhs
- Medical (Pvt): ~₹50–80 Lakhs
- MBA (Top Tier): ~₹25–30 Lakhs
- Overseas Education: ~₹50 Lakhs+ (starting)
- Inflation Rate: We recommend setting this between 8% and 10% to be safe.
3. Calculate the Shortfall
The tool calculates the Future Value of the degree. If you have existing savings (like a PPF or Sukanya Samriddhi Yojana account), enter that amount. The tool will deduct the future value of your current savings from the target amount to show you the "Net Shortfall."
Where Should You Invest?
Once you know your monthly SIP requirement, choosing the right asset class is crucial.
- For Goals > 10 Years Away:
- Equity Mutual Funds: Historically, equity has delivered 12-15% returns over the long term, which is essential to beat 10% education inflation.
- Sukanya Samriddhi Yojana (SSY): A great debt-free, tax-free option for the girl child, offering returns higher than standard FDs.
- For Goals 5–8 Years Away:
- Hybrid Funds: A mix of equity and debt provides stability while offering moderate growth.
- For Goals < 3 Years Away:
- Debt Funds / FDs: Protect your capital. Do not expose money needed in the short term to stock market volatility.
Frequently Asked Questions (FAQs)
What is the average education inflation rate in India?
While official CPI inflation is lower, education inflation in India is widely observed to be between 10% and 12%. This is driven by rising faculty salaries, infrastructure costs, and global accreditation standards.
When should I start saving for my child's education?
The best time to start is when the child is born. Starting early allows you to invest smaller amounts. For example, to reach a target of ₹50 Lakhs in 15 years, you might need to invest ₹10,000/month. If you wait until the child is 10 (only 8 years left), that requirement could jump to ₹35,000/month.
Is ₹1 Crore enough for a child’s education?
It depends on the timeline and the course. For a child born today, ₹1 Crore might be sufficient for a domestic engineering degree 18 years from now, but it may not suffice for a medical degree or overseas education, which could cost upwards of ₹2-3 Crores by 2040.
Should I prioritize my retirement or my child's education?
Financial planners universally advise prioritizing retirement. You can get a loan for your child's education, but you cannot get a loan for your retirement. Aim to fund education without compromising your retirement corpus; if funds are tight, consider a mix of partial savings and an education loan.
Is PPF enough for my child's education goal?
While Public Provident Fund (PPF) is a safe, tax-free instrument, its current interest rate (approx. 7.1%) often fails to beat education inflation (10-12%). Relying solely on PPF may leave you with a shortfall. A combination of PPF for stability and Equity Mutual Funds for growth is usually the best strategy.
Should I rely on an education loan instead of saving?
Education loans are useful tools, but they shouldn't be Plan A. Interest rates on education loans can be high (9-12%), and starting a career with heavy debt can be stressful for your child. It is better to save as much as possible to minimize the loan amount required.
What if my child changes their career path later?
Flexibility is key. Since you cannot predict exactly what your child will study 15 years from now, aim for a "General Education Corpus" based on a reasonably expensive degree (like Private Engineering or MBA). If they choose a cheaper course, the surplus money can be gifted for their marriage or down payment on a home.
Disclaimer: This tool provides estimates based on assumed rates of return and inflation. Market returns are not guaranteed. Please consult a SEBI-registered investment advisor before making financial decisions.
