Saving for a Child's Education: The Cost Then and Now

By Team Savingy

Published: 1 Nov 2026

A comprehensive guide on understanding soaring education inflation in India, historical cost jumps, and how to plan finances for your child's schooling and higher studies.

What it is

Saving for a child's education in India involves setting aside and investing money regularly to meet future schooling, undergraduate, postgraduate, or overseas study expenses. Education costs in India are rising at approximately 10% to 12% annually, which is more than double the rate of general economic inflation. General degree courses have an annual rise commonly used for planning of about 8% to 10%, while private, professional, and premier institutions experience an annual increase of about 10% to 12%. Overseas education, which factors in rupee depreciation, sees an annual increase of about 12% to 14%. Preschool education in private institutions typically costs ₹60,000 to ₹2 lakh per year. Primary education in private schools costs parents ₹1 lakh to ₹3 lakh annually on tuition fees and other charges, while high school fees generally range between ₹1.5 lakh and ₹5 lakh per year. For higher levels, a private undergraduate degree in India has a typical duration of 3 to 4 years and a current cost range of ₹8 lakh to ₹20 lakh. Professional courses in engineering, medicine, and management have a typical duration of 4 to 5 plus years and a current cost range of ₹15 lakh to ₹60 lakh. Private postgraduate degrees have a typical duration of 1 to 2 years and a current cost range of ₹6 lakh to ₹25 lakh. For those looking abroad, overseas undergraduate degrees have a typical duration of 3 to 4 years and a current cost range of ₹60 lakh to ₹1.2 crore, whereas overseas postgraduate degrees span 1 to 2 years and cost ₹35 lakh to ₹80 lakh. PhD programs in India may cost ₹5 lakh to ₹20 lakh depending on the field and institution.

What it costs

When planning educational investments, various options present different cost structures, lock-ins, and return profiles as accessed on March 13, 2026 and November 1, 2026. Fixed deposits offer 6% to 7% returns with a low risk level. Public Provident Fund (PPF) offers 7.1% returns with a low risk level and a 15-year lock-in. Sukanya Samriddhi Yojana offers 8.2% returns with a low risk level and lasts until the girl turns 21. Equity mutual funds offer 10% to 12% long-term returns with a high risk level and no lock-in. Child ULIPs offer 6% to 10% returns with a moderate risk level and a 5-year lock-in. Investments in instruments such as ELSS mutual funds, Public Provident Fund (PPF), and Sukanya Samriddhi Yojana qualify for tax deductions of up to ₹1.5 lakh per year under Section 80C as accessed on March 13, 2026. Historical comparisons illustrate how dramatically expenses have shifted. B.Tech fees around 2014-15 were ₹4 lakh to ₹5 lakh compared to ₹12 lakh to ₹18 lakh in 2024-25, marking an average annual increase of 11%. MBA fees in top institutes around 2014-15 were ₹8 lakh to ₹10 lakh compared to ₹25 lakh to ₹30 lakh in 2024-25, showing an average annual increase of 12%. MBBS fees in private colleges around 2014-15 were ₹20 lakh to ₹30 lakh compared to ₹70 lakh to ₹1 crore in 2024-25, reflecting an average annual increase of 10% to 12%. IIT fees have jumped from ₹50,000 per year to ₹2.5 lakh per year over a 15-year period, representing a 5x increase. Medical education at private colleges now costs ₹10 lakh to ₹25 lakh per year.

When it is right

This path of structured long-term investing is right when you have a clear timeline of 10 to 15 years or more before your child enters higher education, allowing compounding to work effectively. It fits households where monthly cash flows can consistently support regular contributions—such as saving ₹10,000 per month—without disrupting essential living expenses or creating high-interest debt. Starting early makes a substantial difference: saving ₹10,000 per month for 15 years at a 10% return will grow to ₹41 lakh. It is also right when your income stability matches the lock-in periods of chosen instruments, ensuring you do not need to prematurely break long-term commitments like the 15-year PPF or fixed-term options.

When it is not

This approach is not right if your investment horizon is short—such as under 3 to 5 years—before admission fees are due, because market-linked instruments require time to weather volatility. It is not suitable if your current monthly surplus is too thin to sustain regular contributions, as starting savings 5 years later means you will only have ₹22 lakh from a monthly investment of ₹10,000 for 10 years at 10% returns, losing out on critical growth. It is also not right if you rely on high-risk allocations while needing absolute capital preservation over a rigid, short-term timeline, or if committing funds to long lock-ins would force you to borrow for immediate family emergencies.

The one check to run

Run this single check using your own records: take the current estimated cost of the specific degree or school program your child plans to pursue, and apply an education inflation rate of 10% to project what that same program will cost by the time your child reaches college age. For instance, at 10% education inflation, a course costing ₹20 lakh today would cost about ₹52 lakh in 10 years and about ₹84 lakh in 15 years. Once you have that future target figure, enter your current savings, monthly contribution capacity, and time horizon into the education-cost calculator provided by Savingy below to see whether your trajectory meets the projected future expense.