The Silent Threat: Education Inflation
Most parents make a critical mathematical error when planning for their child's future: they look at what a degree costs today and try to save that exact amount.
While normal Consumer Price Index (CPI) inflation in India hovers around 5% to 6%, Education Inflation is historically much higher, averaging between 10% to 12% annually. This means the cost of a premium degree doubles roughly every 6 to 7 years.
The Reality Check:
If a premium engineering or medical degree costs ₹15 Lakhs today, at a 10% inflation rate, that exact same degree will cost a staggering ₹62.6 Lakhs in 15 years. If you don't account for this aggressive inflation rate, your child's education fund will fall drastically short.
How to Use This Calculator
- 1. Estimate Current Cost: Research what your desired degree or college costs today, including tuition, boarding, and living expenses.
- 2. Set the Time Horizon: Input your child's current age. College entry is typically at 18. This gives you your compounding runway.
- 3. Input Existing Assets: If you've already started a dedicated FD or Mutual Fund for this goal, add it to "Current Savings".
- 4. Get Your SIP Target: The calculator will project the massive future cost and tell you exactly how much you must invest monthly to hit that target.
Investment Strategy
Because education goals typically have a 10 to 15-year horizon, relying purely on safe assets like FDs (returning ~7%) will make it mathematically impossible to beat 10% education inflation.
The Playbook: For the first 8-10 years, invest aggressively in equity mutual funds via SIPs (targeting 12-14% returns). As your child turns 15 or 16, start systematically transferring that accumulated wealth out of volatile equities and into safe debt instruments (like FDs or Liquid Funds) to ensure a market crash doesn't wipe out the college fund right before admission day.