In recent years, Education expenses in India have been inflating at a higher than average rate. The average 5-year annualized inflation for the tuition fees for an MBA course stands at 10%, Engineering courses at 9%, and MBBS at 12%. And what’s more, tuition fees are not the only expenses one needs to save for – there’s also rent for hostel or PG accommodation, books, study materials and what not!
To make matters worse, most of us are clueless about the right way to save for our children’s education. We continue to blindly put away money into “Child Plans” that are essentially Life Insurance policies. Many of these plans provide poor returns that do not even outpace inflation!
What’s the “right way” to save for your child’s education?
The class of 2018 at IIM-Ahmedabad will pay Rs 19.5 lakhs for the two-year course. This is 400% higher than what the B school charged in 2007. If the fees for the management course continue to rise by 20% each year, it could cost Rs. 95 lakhs in 2025!
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