Your Child’s College Fund Is Probably Short. Here’s Why.

Ask a parent how much they’ve set aside for their child’s education, and you’ll usually get a confident number. ₹20 lakh. ₹25 lakh. Sometimes more.

Then ask the question behind the number: ₹25 lakh of what year?

Most people have never separated those two ideas. And the gap between them is where children’s education funds quietly fall short.

The mistake hiding inside the number

When you picture the cost of an MBA, an engineering degree or a medical seat, you picture today’s price. You look up the fee, add some living costs, and save toward that.

But your child won’t pay today’s price. They’ll pay the price in 12 or 15 years, and education prices don’t move like everything else.

One widely cited example: a two-year MBA at a premier Indian business school cost about ₹3 lakh in 2003. By 2023 it was about ₹24.6 lakh. That works out to roughly 11% a year, for twenty years.

Education has its own inflation

General inflation, the number in the news, runs around 5–6% in India. Education costs have been estimated to rise at roughly 10–12% a year. These are estimates from secondary studies, not an official index, but the direction is consistent.

The difference looks small. It isn’t.

Take a degree that costs ₹25 lakh today, for a child who is 5 and will start college in 13 years:

At 6% inflation, the cost grows to about ₹53 lakh.
At 11% education inflation, it grows to about ₹97 lakh.

Same degree, same child, same year. A ₹44 lakh gap, created entirely by which inflation rate you chose.

If you planned with the first number, you’re not slightly off. You’re short by nearly half.

What that does to the monthly amount

Now convert both targets into a monthly investment, assuming an illustrative 10% annual return over 13 years:

To reach ₹53 lakh: about ₹16,800 a month.
To reach ₹97 lakh: about ₹30,500 a month.

Neither number is a promise, and returns will vary. But notice that the “right” number is nearly double the comfortable one. Most parents discover this late, when they have the least room to fix it.

Figures are illustrative, based on assumed inflation and return rates, and are not predictions or return promises. Education cost inflation varies by course, institution and country. This is educational, not personalised advice.

Time is the other half of the problem

Here’s the second mistake. Education goals have a hard deadline. The fee is due when the admission letter arrives, not when your portfolio feels ready.

Start the same ₹97 lakh goal with 13 years to go, and you need about ₹30,500 a month. Start with only 8 years left, and the same goal needs about ₹66,400 a month. Five years of delay more than doubles the monthly burden.

This is why a goal with a fixed date behaves differently from a goal like retirement, where you have some flexibility. You can’t ask the university to wait.

If the plan includes studying abroad

Overseas degrees add a layer that has nothing to do with college fees. Costs are quoted in foreign currency, so the rupee’s movement against it becomes part of your cost. Estimates for a full programme abroad today run from roughly ₹75 lakh to ₹1.5 crore, and the rupee has weakened over long periods. You don’t need to predict the exchange rate. You need to know that this risk exists, and that it makes a bigger cushion sensible.

What to do this week

For each child, write down three things:

1. The goal. Which kind of education, in which country, realistically.
2. The date. The year the first big fee falls due.
3. Today’s cost. What it would cost if your child started tomorrow.

Then grow that cost at an education-inflation rate, not the general one, up to the date. That’s the real target.

Divide it into a monthly amount, and compare it with what you’re setting aside now. The difference between the two is your education gap.

Then check one more thing: how the money is invested as the deadline approaches. A fund meant for a date that’s years away can take more risk than one needed next year. Money needed in 12 months shouldn’t be sitting in assets that can fall 25% that year.

You haven’t failed by being short. You were using the number everyone uses. The goal now is to use the right one.