What if college education costs Rs 1 crore? Sounds shocking, right? But it’s not fiction, it’s reality. According to a 2024 report by the National Statistical Office (NSO) and CRISIL Research, the average cost of higher education in India has been rising at 10–12% annually, far outpacing general inflation, which hovers around 5–6%.

For instance, a four-year engineering degree that costs around Rs 16–20 lakh today could touch Rs 60–70 lakh in 15 years. Whereas an MBA from a top Indian B-school (currently around Rs 25 lakh) could easily cost Rs 80 lakh–Rs 1 crore by 2040. An MBA degree abroad, already at Rs 70 lakh–Rs 1 crore today, might cross Rs 1.8–Rs 2 crore if inflation continues at 8–10%.

The numbers are clear: education inflation is real and it’s compounding faster than most parents’ savings plans. Waiting or delaying even a few years to start saving for your child’s higher education could drastically increase the financial burden. Starting early isn’t just smart, it’s essential.

The Education Inflation Trap

Higher education in India isn’t just getting expensive; it’s accelerating. According to ICICI Prudential data, on a premier private engineering degree costing Rs 4 lakh per year today, over 15 years at 6% education inflation, the same program could cost Rs 9.6 lakh annually, translating to Rs 38.4 lakh total for four years.

Even in case of medical education: At present, some top medical courses cost Rs 10 lakh per year; in 15 years, that could balloon to Rs 1.2 crore total for a five-year course at only 6% inflation. And if you imagine studying abroad, the stakes rise even further. US education that costs Rs 2.5 crore today could inflate to nearly Rs 10 crore in 16 years, factoring in inflation and currency depreciation.

It’s not fear-mongering, it's math. Education inflation is silently eating into tomorrow’s dreams. If you wait to save, you might find your child's future slipping out of reach.

Why Traditional Savings Won’t Cut It

Many parents rely on fixed deposits (FDs), savings accounts or pure bank schemes for education savings. But here’s the harsh truth:

• FDs and bank schemes typically earn 6–7%, often lower than inflation after taxes.
• You’re saving, but not growing wealth, which means every year, your money loses purchasing power.
• If you delay investing, compounding has less time to work its magic and a shorter runway to grow. Investing with low-return instruments means you’ll need far higher contributions later.

The Smarter Move?

You need something that beats inflation, compounds over decades and doesn’t demand constant monitoring while giving you flexibility. Parents, the panacea is investing in mutual funds through Systematic Investment Plans (SIPs). Let’s understand why SIPs are the ideal tool for child education planning.

1. Power of Compounding Over Time: Start when your child is born or even in early years; by the time they’re ready for college (15–18 years later), SIP allows returns to snowball, turning small monthly contributions into massive outcomes. With MINTIT, a top mutual fund app, you can start SIP for children at their early age for their dream university. It seamlessly calculates the fund needed for a child's education depending on the age and inflation. Subsequently, the trusted mutual funds platform recommends the best-suited mutual funds for the child’s education.
2. Beating Inflation via Equity Returns: Equity mutual funds have historically delivered 12–15% CAGR over long periods (past performance is no guarantee of future results). You’re not just preserving value, you’re growing it ahead. Mutual fund SIPs can beat inflation with average 12% CAGR; let’s see how:

1. Automation Builds Discipline: With SIPs, you don’t time the market, you build consistency. Automating the process ensures you invest first and spend later. You don’t need to guess when to invest; you just stay invested. Set up autopay via MINTIT, a mutual funds mobile app and stay committed effortlessly.
2. Step-Up SIPs Grow with You: You can increase your monthly SIP as your income grows, letting the later years produce more significant amounts with the same discipline, keeping pace with both lifestyle and inflation.
3. Flexibility & Liquidity: Life changes and your plan can too. Unlike FDs or child plans, SIPs let you adjust, pause or switch funds anytime. Plus, safe SIP plans ensure a measured risk approach without compromising growth.

How Much Should You Save? A Real-World Calculation

Let’s build a sample scenario for illustration (assumes 12% SIP returns; actual returns may vary):

Projected future cost (4-year degree): The total cost jumps to approximately Rs 66 lakh in 15 years (from Rs 16 lakh today), up ~315% due to inflation compounding on staggered annual payments. To accumulate Rs 66 lakh over 15 years at 12% CAGR, you’d need roughly a SIP of Rs 8,500 per month (calculated via SIP FV formula; you can use MINTIT for personalisation).

This is just one example. Now, if your child dreams bigger, like an MBA abroad or a medical degree in India, the projected cost could range between Rs 80 lakh–Rs 1.5 crore. For those goals, the SIP required might rise to Rs 10,000–20,000 per month, depending on destination, inflation and investment tenure.

Even if that number feels high, remember that time is your biggest ally. Starting early significantly lowers the monthly burden. Delay it by just 5 years and your SIP requirement can nearly double for the same goal.

Parent’s Lens

The best gift you can give your child isn’t a toy or gadget; it’s the freedom to choose their future without financial worry. Starting SIPs early with modest amounts can grow into large educational funds by the time your child is ready for college.

If your child is 3 years old, you still have 15 years to plan. That’s 180 SIP installments, 180 opportunities to invest in their dream. Start with Rs 5,000/month and by the time they’re ready for college, you could have Rs 20.7 lakh sitting quietly (at 12% CAGR). The earlier you start, the less you strain later.

Wait too long and education loans might become your Plan B or your child’s higher education might cost more than your entire life’s savings. You don’t need to time the market; you just need to stay committed. Because that’s not an exaggeration, it's a possibility. So, plan your child's higher education with MINTIT.

MINTIT, India’s dedicated Mutual Fund Platform which caters to your personalised goals and accompanies you to achieve your financial milestones, is eager to help you build your wealth.

Depending on your profile, it can precisely suggest tailored investing plans to achieve your goals through best-suited mutual funds. Sign up to MINTIT now and start your mutual funds investment journey under professional guidance.