Education costs, be it primary, secondary or graduation, are rising at a soaring pace when compared to the costs of other services across the globe. In India too, the consumer price inflation or the general price rise in the economy is estimated at around 3.5%-4% annually, however, the cost of education rises at a much higher pace. It’s not uncommon to find pre-schools or nursery education in cities prices at Rs 1-1.5 lakhs a year for a 2.5-year-old child.
International Board secondary education can be priced anywhere between Rs 15-20 lakhs for grade 11th and 12th together. Some estimates talk about a doubling of education costs worldwide over the last 15-20 years, others estimate it at 4 times increase over 30 years. Whatever the accurate number, its undeniable that the cost of education is moving up very sharply.
Why is it so?
While there are differences seen across countries, the basic trend remains the same world over.
Some studies show it might have been the American education system which was one of the earlier ones to witness a sharp rise in tuition fees. Presence of easily accessible education loans, discounted pricing to lure some students and lower public funding are some reasons sighted for steady and sharp increase in fees. Ultimately there seems to have been a cascading impact on education costs globally.
In India too, there may be different reasons; prima facie, there is a supply demand mismatch when it comes to quality education, be it at a primary or higher level. Along with growing population and demand, the proportion of public or Government funding per capita towards education also needs to increase. As a result, we see the arrival of private institutions and with that a focus on profitability. This has changed the fee equation compared to a few decades ago.
Indian students too face this dilemma
For Indian students and parents, the enhanced curriculum choices come at a higher cost. While State and Central Board related curriculums are still affordable, many parents in metro cities, tier I and tier 2 towns are now looking at private institutions for basic schooling. Fees for such institutions routinely increase at 8%-10% a year depending on the certification board. If you decide to go for an international board, then be prepared to spend a lot more.
Some specialised courses in fields like music, arts, technology and culinary studies are available only overseas. Not being able to afford the costs would mean denying your child the education they desire.
Then there is the dilemma of higher education. With the availability of specialised courses, private institutions have made domestic higher education expensive. At a 10% annual rise, a basic college degree course priced at say Rs 3-5 lakh can go up to Rs 8-12 lakhs.
The second impediment is the shortage of seats. Indian colleges which are part of Government universities often have very high cut off marks requirement for admissions. Students who don’t make it, go either to private institutions or abroad. In which case, the cost can be much higher than anticipated. Some specialised courses in fields like music, arts, technology and culinary studies are available only overseas. Not being able to afford the costs would mean denying your child the education they desire.
Education loans are an option, however, if repayment doesn’t happen as planned or jobs are scarce in times of slow economic growth, then what you are left with is just a lot of interest payments and stress.
The prudent way out is planning and investing as early as possible for your child’s education.