A four-year engineering degree at a well-regarded private institution costs something like ₹25 lakh today, all in. Parents planning for a five-year-old routinely budget ₹25 lakh. Thirteen years later the bill arrives at roughly ₹77 lakh, and a plan that looked complete turns out to have covered less than a third of it.
This is the most expensive mistake we see, and it is not a mistake of discipline. These are families who saved diligently. They simply costed the goal in today's rupees.
Education inflation is its own number
Headline consumer inflation in India has averaged somewhere in the region of 5–6% over the past decade. Education costs have consistently run ahead of it — a reasonable planning assumption is 8–10% a year, and professional courses at the top end have sometimes exceeded even that.
The reason is structural. Fees are driven by faculty salaries, infrastructure, accreditation and competition for a limited number of seats, none of which behave like the price of wheat. When you add hostel, travel, equipment and coaching, the effective figure climbs further.
Two percentage points sounds like a rounding error. Over thirteen years it is not:
| Years to the goal | At 6% inflation | At 9% inflation | Difference |
|---|---|---|---|
| 5 | ₹33.5 lakh | ₹38.5 lakh | ₹5.0 lakh |
| 10 | ₹44.8 lakh | ₹59.2 lakh | ₹14.4 lakh |
| 13 | ₹53.3 lakh | ₹76.6 lakh | ₹23.3 lakh |
| 18 | ₹71.4 lakh | ₹117.9 lakh | ₹46.5 lakh |
Costing a goal in today's rupees is not optimism. It is arithmetic that has quietly been left out.
Working backwards from the real number
Once the future figure is honest, the monthly requirement follows. For ₹76.6 lakh needed in thirteen years, assuming 12% a year on the investments, the SIP works out to roughly ₹24,000 a month. Against the ₹53.3 lakh figure it would have been about ₹16,700.
That gap — ₹7,300 a month — is the entire difference between a funded education and an education loan. And it is affordable if you start now. Discovered in year ten, the same shortfall requires roughly ₹60,000 a month for the remaining three years, which almost nobody can suddenly find.
Four adjustments that make it manageable
- Start before the child starts school. Every year of delay compresses the compounding window at exactly the end where it matters most.
- Step up with income. A 10% annual increase in the SIP tracks the way education inflation actually behaves. A flat SIP is a plan that falls behind by design.
- Split the goal into stages. Undergraduate at eighteen and postgraduate at twenty-two are different goals with different horizons, and should not share one pot.
- De-risk on a glide path. From about three years out, move progressively out of equity. A 30% fall in the final year is not a market event you can wait out — the fee is due in June regardless.
The conversation nobody has early enough
There is also a non-financial part to this. Costing an overseas postgraduate degree at ₹1.2 crore and a domestic one at ₹30 lakh produces two very different plans, and the choice between them is usually made when the child is seventeen — a decade after the saving should have started.
You cannot know at five what a child will want at eighteen. You can, however, plan for the more expensive branch and be pleasantly wrong. A surplus becomes their first home or their business capital. A shortfall becomes their debt.
Run your own number
Our child education planner takes the course cost today, your child's current age and an education inflation rate, and returns the future cost and the SIP it needs. Set inflation to 9% rather than 6% and see what changes.
If the resulting figure is uncomfortable, that is useful information, and there is usually more than one way to close the gap. Get in touch and we will work through the options with you.
