The Cost Of Education In India Is Skyrocketing

In 2007, the cost of a Medical Degree was `15.50 lakhs. In 2017, the cost of a Medical Degree is `41.43 lakhs. In 2027, the cost of a Medical Degree, assuming a 10% rate of inflation, will be appx. 173 lakhs.

At 5, a football player; at 10, an architect – their dreams are constantly changing as they grow older and are exposed to more of the world. As a parent, our deepest desire is to ensure they live up to their potential. A big worry due to the skyrocketing cost of education is ‘Will I be able to afford to send him or her to a good school?’.

Yes, you can – with the right plan.

The right plan isn’t a particular scheme. It isn’t investing a particular amount. It isn’t investing for a particular duration.

The right plan is unique to each parent-child and their educational dreams. The only commonality is the financial planning process.

The Financial Planning Process When Planning for Your Child’s Education

TYPE OF EDUCATIONIf your child is a toddler or pre-adolescent … you won't know whether he will want to study art or molecular chemistry. Estimating how much money you will need is difficult. Do not despair. Here are a few tricks that will ensure your child will be able to study at a premier institute:

  1. An Indian Education vs an International Education The cost of an international education is substantially higher compared to a premier education in India. If you plan to send your child abroad for higher studies, you will need to invest more to ensure you generate sufficient funds not only to pay the course tuition but also cover living expenses.
  2. Plan for an expensive field of study It is difficult to know how much you need for your child's education especially when your child is a toddler or hasn't shown an interest towards a particular field of study. This does not mean you can't plan for his future. What you need to do is plan for an expensive program like a Medical or Engineering Degree. This strategy will ensure that you will be able to pay for his education easily.

AGE OF YOUR CHILD VS AMOUNT TO INVEST The age of your child when you begin investing plays a large role in deciding the ‘Investment Amount’. The earlier you start, the lower the investment amount as it will multiply over the years, generating sufficient corpus to fund your child’s education.

Here are a few popular career paths and what they will potentially cost in the future:

If your child wants to study for an MBA

Child's Age Investment Time Before Higher Studies Appx. Cost of Course in the future Appx. Monthly Investment***
15 8 years `52.51 lakhs `33,500/Month
18 5 years `39.45 lakhs `48,650/Month
20 3 years `32.6 lakhs `75,696/Month
On the assumption of ‘0’ current savings/investment **Rate of Return: 12% ***Inflation rate: 10% # The tuition cost is based on the current tuition for Indian Institute of Management (IIM), Ahmedabad – 24.5-lakhs.

If your child dreams of being a Doctor

Child's Age Investment Time Before Higher Studies Appx. Cost of Course in the future Appx. Monthly Investment***
3 15 years `10.44 lakhs `2,200/Month
5 13 years `8.63 lakhs `2,400/Month
10 8 years `5.35 lakhs `3,400/Month
12 6 years `4.42 lakhs `4,300/Month
15 3 years `3.32 lakhs `7,800/Month
On the assumption of ‘0’ current savings/investment **Rate of Return: 12% ***Inflation rate: 10% # The tuition cost is based on the current tuition for Kasturba Medical College (KMC), Mangalore – 41.43-lakhs.

If your child dreams of being an Engineer

Child's Age Investment Time Before Higher Studies Appx. Cost of Course in the future Appx. Monthly Investment***
3 15 years `13.28 lakhs `2,800/Month
5 13 years `10.97 lakhs `3,100/Month
10 8 years `6.81 lakhs `4,400/Month
12 6 years `5.63 lakhs `5,500/Month
15 3 years `4.23 lakhs `9,900/Month
On the assumption of ‘0’ current savings/investment **Rate of Return: 12% ***Inflation rate: 10% # The tuition cost is based on the current tuition for Indian Institute of Technology - [IIT], Kharagpur– 3.18 -lakhs.

If your child dreams of being a Lawyer

Child's Age Investment Time Before Higher Studies Appx. Cost of Course in the future Appx. Monthly Investment***
3 15 years `36.34 lakhs `7,700/Month
5 13 years `30.03 lakhs `8,400/Month
10 8 years `18.64 lakhs `11,900/Month
12 6 years `15.49 lakhs `14,900/Month
15 3 years `11.58 lakhs `27,000/Month
On the assumption of ‘0’ current savings/investment **Rate of Return: 12% ***Inflation rate: 10% # The tuition cost is based on the current tuition for National Law School of India University, Bangalore – 8.7-lakhs.

As you can see, no matter the field, the longer the investment period the smaller the amount you will need to invest.

P.S. Increase the investment amount as your child and income grows. This will help you reach your goal quicker.

*References

1) *Rediff Money

2)*Economic Times