A recent PGIM India survey reveals that the number one priority for investors in India remains their children’s education. This is hardly surprising. For decades, the Indian ethos has placed education for the next generation at the top of the family’s financial priorities.
This cultural commitment has helped India emerge as a global hub of intellectual and professional excellence, producing some of the world’s finest universities, scholars, and innovations. Across fields ranging from science and engineering to literature and fine arts, Indians, whether at home or abroad, are associated with significant contributions to human progress.
Yet, the financial reality of funding education in today’s world is vastly different from what it was even 15-20 years ago. Rising costs, the explosion of available courses, increasing competition, and the trend toward overseas education have all made it more important than ever to plan early and strategically for education expenses, rather than rely on last-minute loans.
The Rise of FinTech in Education Planning
FinTech platforms have brought a much-needed structural shift in how parents can approach education funding. These digital tools allow parents to make accurate, mathematics-based assessments of the corpus required for education, well before the expenses arise. By providing cost-effective and intuitive solutions, these platforms enable informed parents to start systematic contributions toward an education fund early on.
This proactive approach helps families avoid taking loans later or dipping into savings earmarked for other life goals. However, despite this capability, the problem is still not understood in as comprehensive a manner as it should be.
Also Read: Refold AI emerges from stealth with $6.5M led by Eniac Ventures and Tidal Ventures
Why Systematic Funds Are Replacing Loans
In the past, career options were concentrated in a few mainstream streams like commerce, engineering, medicine, and arts. Today, the academic spectrum has expanded dramatically. Fields like aerodynamics, fine arts, history, literature, and countless niche specializations are now viable career paths.
For parents of children born between 2005 and 2010, it would have been nearly impossible to predict the breadth of courses available today, let alone plan for their costs at that time.
The selection process has also grown more complex. It’s no longer just about clearing an entrance exam. From the outset, there is an ecosystem of aptitude testing, mental ability assessments, career counseling, targeted coaching, curated university applications, and preparation for competitive interviews.
Then comes the actual course itself, followed by a post-education phase that may require internships or job search support, periods during which the graduate may still depend financially on their family. Even for domestic education, these pre- and post-course phases can be costly.
Given these expenses, it’s no surprise that many parents are choosing systematic, long-term savings over relying entirely on education loans.
A Safety Net, Not a Primary Plan
The rise in domestic competition has pushed many Indian students toward overseas education. More than 50% of foreign education expenses today are funded through education loans. Fortunately, both the Government of India and the banking sector have done commendable work in making such loans affordable.
Many loans repayment only after the course is complete; with some offering a cool-off period before repayment begins. For those who can offer collateral, rates can be as low as 8.5-9%. These are highly competitive terms in the context of global education financing.
However, while loans are a useful safety net, they still create debt obligations. Early, disciplined savings provide more freedom and flexibility in financing education.
Inflation and Currency Fluctuation
For domestic private education, inflation is a serious factor, ranging between 8.5-12% annually, depending on the course and institution. Government institutions have largely kept fees low and non-inflationary, but competition for seats is intense, and success rates in high-demand courses can be below 0.5%.
The situation is even more challenging for overseas education. In addition to the above inflation rates, families must account for currency fluctuations of 2-5% per year, depending on the time frame and currency.
These factors compound over time, making foreign education one of the most expensive goals to plan for. It is similar to lifestyle inflation: as the quality, diversity, and prestige of courses increase, so does the real cost.
Choosing the Right Investment Mix
Funding education goals requires a balanced mix of asset classes, but traditional instruments like Fixed Deposits (FDs), Public Provident Fund (PPF), and Unit Linked Insurance Plans (ULIPs) often fall short. PPF is geared toward retirement with long lock-ins, ULIPs combine insurance with limited equity exposure and higher costs, and FDs are tax-inefficient, yielding only 7-7.5%, well below the 10% education inflation rate.
Mutual funds, offering both equity and debt options, are better suited as they provide diversification, regulatory compliance, professional management, and potential post-tax, post-cost returns above 10%. For goals 8-10 years away, higher equity allocation can drive growth, while gradually moving to debt instruments as the target date nears can protect the corpus from market volatility. This strategic allocation ensures funds grow sufficiently to match rising education costs while safeguarding capital when the goal approaches.
The Road Ahead, Digital and Flexible Education Financing
Platforms like Scripbox demonstrate how technology can bring personalized financial planning to the masses. By combining proprietary algorithms with human advisory expertise, these platforms assess a family’s needs, the inflationary trends, and even currency considerations to craft tailored education funding strategies.
The advantage of digital platforms lies in their ability to deliver high-level customization at scale, reducing the traditionally high costs of personalized financial advice. This is a major shift from older models, where service providers often focused on pushing products rather than delivering comprehensive solutions.
Going forward, India’s education financing ecosystem will likely become more digital, more flexible, and more solution-driven. This means greater transparency, lower costs, and better integration of savings, scholarships, and loans into unified plans.
Education remains the top financial priority for Indian families, but the pathway to funding it is changing. The combination of rising costs, diverse career opportunities, global mobility, and extended pre- and post-education expenses makes last-minute scrambling for loans a risky strategy.
Parents must start early, understand the impact of inflation and currency trends, and choose investment vehicles that can deliver inflation-beating returns. Mutual funds, properly allocated between equity and debt, offer one of the most effective tools for this purpose.
FinTech platforms are making it easier than ever to calculate targets, track progress, and adjust plans in real time. By embracing these tools, families can avoid the stress of last-minute borrowing and give their children the freedom to focus entirely on learning and growth, without financial constraints hanging over their heads.
The earlier you start, the more you can harness compounding to work in your favour. With disciplined planning and the right strategy, funding a child’s dream education becomes not just achievable but sustainable, debt-free, and empowering.
About the Author
Sachin Jain is the Managing Partner at Scripbox, bringing over 20 years of experience in wealth management. He has worked with top financial institutions like HDFC Bank, ABN AMRO, CITI SMITH BARNEY, and Standard Chartered Private Banking. In 2015, he founded Mymoneygain Consultants, which later partnered with Scripbox. A NISM & CRISIL Certified Wealth Manager, he helps high-net-worth clients with investment planning. Beyond his work, Sachin is actively involved in BNI, JITO, and Goonj, supporting community initiatives. With a strong focus on both finance and social impact, he is dedicated to helping people grow and manage their wealth effectively.
