Financial experts in India are urging parents to rethink savings strategies as education costs outpace general inflation [1].
This trend creates a significant funding gap for families, as traditional savings may not keep pace with the actual cost of higher education degrees [2].
Abhishek Kumar, a SEBI-registered investment advisor, said education inflation is running at 10-12% annually [1]. This rate is more than double the general Consumer Price Index (CPI) inflation, which sits at approximately five% per annum [2].
Vinnii Motiwala highlighted the long-term impact of these figures. He said a course that costs ₹40 lakh today could cost about ₹1.46 crore in 15 years if inflation stays at 10% [1].
To address these costs, experts compared several investment vehicles: the Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), NPS Vatsalya, and mutual funds. While PPF provides a guaranteed return, Sonal Bhutra said the lock-in period makes it less flexible for education needs [3]. She said mutual funds can deliver higher growth for those who can tolerate market risk [3].
For parents of girls, the Sukanya Samriddhi Yojana is often cited as a stronger alternative to PPF due to higher interest rates, and specific tax benefits [3]. However, the choice between these instruments often depends on the parent's risk appetite and the specific timeline for the child's education.
Experts suggest that a diversified approach—combining guaranteed returns from government schemes with the growth potential of equity-linked instruments—may be the most effective way to build a sufficient corpus [3].
“Education inflation is running at 10-12% annually, more than double the general CPI.”
The disparity between general inflation and education inflation means that traditional 'safe' savings accounts may actually lose purchasing power over time. Parents must shift from a mindset of simple saving to strategic investing to ensure that the future cost of degrees does not exceed their available capital.
