Parents always dream of seeing their children succeed professionally and personally with the proper education qualifications with the right job at the right time. To make this dream a reality, parents pave a hurdle-free educational pathway for their children.

Understanding Education Inflation:

In today’s era, the educational path is not a journey on the highway but a road full of potholes draining more than half of the parent’s income.Education has become a financial marathon rather than merely being an expenditure.

Traditional fixed deposits may yield a moderate return of 6–7%, but the expense of schooling is rising by 10–12% a year.

The Impact of Education Inflation :

Parents are working day and night to ensure their children have a completely smooth ride throughout school and settle into life in the best possible way.

Now is the time to grapple with rising costs and consider these eye-openers:

• Tuition fees at top engineering colleges have risen nearly 200% during the last decade.
• Medical education costs have increased even more sharply, with some courses doubling in price every five years.
• International education costs have risen exponentially with more layers of currency fluctuation and living expenses.

Middle-Class Financial Squeeze

The relentless rise in education costs, often termed ‘education inflation’, is turning the beautiful dream of parents into a nightmare.This inflation presents a formidable challenge:

Aspect	Details	Key Insight
Rising Costs	A professional course costing ₹10 lakhs today may require ₹25 lakhs in 8 years.	Education costs are growing at an alarming rate, demanding proactive planning.

Annual Increase in Costs	Professional degrees like engineering or management have seen a 15% annual increase.	Inflation in education costs outpaces most traditional investment returns.
Savings vs. Expenses Gap	The gap between traditional saving methods and inflation-adjusted education costs continues to widen.	Reliance solely on traditional savings is inadequate to meet future needs.

Hidden Costs Beyond Tuition: Parents often fail to consider extra costs:

• Instruction and training sessions
• necessary technologies and materials.
• Living expenses and lodging
• Programs for Extracurricular Development
• Opportunities for abroad exposure.

Smart Investment Choices for Education Planning :

Education planning requires more than saving; it demands smart investments that grow with time. Strategic planning can make all the difference from mutual funds to education-specific products.Here a few strategies are listed:

1. Start Early: If you begin investing early, the force of compounding can significantly increase your savings.
2. Make Your Investments Diverse:
   • Mutual funds: Returns from Systematic Investment Plans (SIPs) designed with educational objectives might be favourable.
   • Equity Investments: Although they carry a higher risk, they can yield significant returns for long-term educational requirements.
   • Debt instruments: Stable returns and safer choices for short-term goals.
   • Gold and real estate can be considered as auxiliary assets to provide further security.
3. Education-Specific Financial Products:

Explore options such as educational savings plans and investment products linked to insurance to fund educational expenditures.

Appreciate the Power of Technology:

Thanks to technological advancements, the process of planning for education has reached new heights of innovation and efficiency which ensures the financial plans are meticulously aligned with the long-term educational goals.

• Fintech Resources and AI-Powered Platforms: Education Planning platforms can aid in the planning by offering individualised investing guidance and

monitoring advancement.

• Financial Calculators and Robo-Advisors: These can be used to make planning for future education expenses easier by helping with goal-setting and cost estimation.

The significance of maintaining tax efficiency

Reducing financial liabilities is an important aspect and significant component of education planning.With the tax exemption techniques families can optimise their resources and make their assets more effective in covering educational costs.

• Section 80C and 80D Deductions: Investment in Education-related products can bring income tax relief under these two sections, thereby reducing the overall tax liability.
• Tax-exempt Education Loans and Scholarships: Explore these options and reduce the burden of the monetary cost of education.

International Education and Changes in Currency

If you are planning to study abroad, you must consider currency fluctuations. Foreign mutual funds or other global assets can be one means of protection against currency risk.

• Cost of studying abroad: Consider the influence of currency fluctuations on the cost of studying abroad.
• Invest in global assets and international mutual funds: Invest in assets that yield returns in foreign currencies to protect yourself against currency risk.
• Use forward contracts and forex accounts: Lock in exchange rates to reduce the risk of currency fluctuations.
• Regular Monitoring: Monitor exchange rates and adjust your holdings to meet your school’s funding objectives.

Innovative investment Steps for wise Parents :

This problem of inflation is challenging. Right planning, mindful decision-making, and forward action could help parents lay a strong foundation for their children’s financial needs to pursue higher education.

• Plan for at least five to seven years of the event that one plans to attend school.
• Invest in many asset classes.
• Evaluate and fine-tune your portfolio frequently.
• Consider other streams of income or part-time work
• Explore loan options as well as scholarship options.

Providing the best education to the children is the precious gift any parent can give to their children to make them stand out and survive in the world of competition.

As the saying goes, “Learning is a treasure that will follow its owner everywhere.” So, remember that every rupee you invest today is a step forward to giving your child a better future tomorrow.

The author, Tushar Bopche, is Co-Founder , Invest4Edu