As tuition and associated expenses in India outpace general inflation, parents must adopt forward-looking savings strategies, targeting future education costs and adjusting asset allocations to mitigate market volatility risks.
Education costs in India are rising in ways that make simple inflation assumptions risky for parents trying to plan ahead. While overall consumer inflation has stayed relatively modest, tuition and related expenses have continued to move faster than the headline number, making today’s fee estimate a poor guide to what a child will actually need years from now. For families building a long-term savings plan, the first step is not choosing a monthly investment amount but setting a future target that reflects how much education is likely to cost when the money is needed.
Recent data underline that gap. Business Standard reported that tuition fees at higher education level rose by roughly 3.5% to 4% in the first half of this year, while primary and higher secondary fees increased by about 6% to 9% from the 2024 base. Separate inflation data from IndiaInflation.com showed higher education tuition fees were 3.63% higher year on year in August 2026, with education services overall up 3.73%. Those figures are still below the steep jumps often seen in private school pricing, but they are comfortably above general inflation and enough to materially change a child’s future education bill.
That is why a plan for a child’s education needs to start with the corpus, not the SIP. A private engineering degree today can cost roughly ₹15 lakh to ₹25 lakh, while a private medical degree, once hostel and living costs are added, can push well beyond ₹50 lakh and in some cases approach ₹1 crore. An MBA from a top Indian Institute of Management can also require a substantial outlay, with fees alone cited at about ₹24 lakh to ₹27 lakh. If those numbers are projected forward over 15 years using education inflation of 8% to 10%, a course that costs ₹20 lakh today could easily require ₹50 lakh or more by the time the child is ready to enrol.
Once the target is fixed, the monthly investment follows from the time horizon and the expected return. The Kuvera analysis shows that a ₹10,000 monthly SIP over 15 years, assuming 12% compounded annual growth, can build a corpus of more than ₹50 lakh, which may be enough for a strong engineering or medical option after inflation adjustment. For a larger target of ₹1 crore over 18 years, the monthly contribution comes out at around ₹19,400 if returns are assumed at 9% during the accumulation phase and 6% in the final three years; a round figure of ₹20,000 a month is presented as a practical starting point. The same target becomes much more expensive if the parent starts later: a 15-year window requires a higher monthly contribution than an 18-year one, and a 40-year-old parent with just 15 years to go would need roughly ₹25,000 a month to aim for a corpus of about ₹1.25 crore to ₹1.35 crore.
The return assumption matters just as much as the contribution amount. Many education-planning examples use 12% annual growth because they are built around equity funds, but that is an assumption, not a promise. A more cautious planner may prefer 9%, especially when the portfolio is gradually moved into safer assets as the goal approaches. Kuvera argues that the final three years before the money is needed are particularly important: shifting from equity towards debt or hybrid funds reduces the chance that a market fall just before admission damages the corpus beyond repair. In other words, the closer the child gets to college, the less the plan should depend on equity volatility and the more it should prioritise capital protection.
A phased portfolio can help with that balance. For a long horizon such as 18 years, the article suggests an equity-heavy mix in the early years, with a split such as 50% large-cap, 30% mid-cap and 20% small-cap funds. For a ₹20,000 monthly SIP, that would mean roughly ₹10,000 in large-cap funds, ₹6,000 in mid-cap funds and ₹4,000 in small-cap funds. Passive index funds are often considered suitable for the large-cap portion because active managers have historically struggled to beat benchmarks after fees, while the mid-cap and small-cap sleeves may be left to active management. As the goal comes closer, the mix should tilt towards debt to reduce downside risk. Adding a yearly step-up of 5% to 10% can also make a meaningful difference, since it allows the investment to rise alongside income and provides a buffer against higher-than-expected education inflation.
For parents, the practical lesson is straightforward: estimate the future fee first, not the present one; start earlier if possible; and do not leave the final stretch exposed to a market shock. Education inflation may not look dramatic in any single year, but over 15 or 18 years it compounds into a much larger obligation. A disciplined SIP can meet that cost, but only if the target is realistic, the horizon is honest and the asset mix changes before the money is needed.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
