Educational Expense Trends

₹6.75 crore to raise one child in a metro city. That's the number a finance creator put out this week! Some said it's exaggerated. Some said it's about right for Mumbai or Bangalore. But the number ISN’T the point… Education inflation in India runs at 10-12% a year. General inflation? 5-6%. At that rate, costs double every 6-7 years. IIM Ahmedabad charged ₹4 lakh for its MBA in 2007. Today it's ₹27.5 lakh. That's a 7x increase in 18 years. A college program that costs ₹20 lakh today will cost ₹1.6 crore by the time a newborn turns 18. Schools raise fees 10-12% a year because they know you won't pull your kid out mid-term. And here's what nobody talks about!! Most child investment plans return 5-6%. Education inflation is 10-12%. You're saving into a plan that's guaranteed to fall short. Your parents paid for your education from their salary. You might need your entire corpus. The ₹6.75 crore number is debatable. But, the gap between what parents plan for and what they'll actually pay? That part is very real.

Everyone’s blaming the education system for being expensive. Let's see if that's the case. 👇 For the last 20 years, Indian parents told their kids the same thing: Study hard. Get into a good college. Everything will fall into place. That advice worked when education was straightforward, affordable, and predictable. But now things have shifted. Yes, costs have shot up. - School fees in cities like Hyderabad and Mumbai have jumped over 50% in three years. - Engineering and medical programs cost 2x more than they did a decade ago. But education costs more because education itself has changed. We’re not just paying for textbooks and exams anymore. We’re paying for access, technology, and real-world skills. - IIT Bombay now has an AI research assistant 'Co-pilot' that helps undergrads write and debug code in real time. - Universities like Amity University and Birla Institute of Technology and Science, Pilani use systems that adapt to how each student learns - faster or slower, visual or practical. - Platforms like Cuemath give instant feedback. Kids don’t wait for a teacher to check their work, they learn as they go. - Even Stanford University and Harvard University use AI grading and virtual labs to train students faster and more efficiently. A student graduating in 2030 will have access to tools, mentorship, and global connections that we couldn’t even imagine 10 years ago. So yes, tuition has gone up. But what we’re getting in return has also changed. Education today isn’t just an expense. It’s an investment that keeps growing in value and like any smart investment, it needs a plan. The real question isn’t:  “Why is education so expensive?” It’s: “How do we prepare our kids for the kind of education that’s coming?”

The nation’s best-known public universities have been on a spending spree, erecting “new skylines of snazzy academic buildings and dorms” over the past two decades, also pouring money “into big-time sports programs and hiring layers of administrators.” They passed the bill along to #students in the form of higher tuition, making the spending “inextricably tied to the nation’s $1.6 trillion federal student debt crisis. Colleges have paid for their sprees in part by raising #tuition prices, leaving many students with few options but to take on more debt.” At the median flagship #university, spending rose 38% between 2002 and 2022 (inflation adjusted) and only one school in the WSJ’s analysis, the University of Idaho, spent less. The schools paid for it in part by increasing tuition dollars. The median flagship received more than double the revenue from tuition and fees it did 20 years prior. “Even accounting for enrollment gains, that amounted to a 64% price increase for the average student, far outpacing the growth in most big household expenses.” “Public university leaders often blame stingier state funding for the need to raise tuition revenue.” But “for every $1 lost in state support at those universities over the two decades, the median school increased tuition and fee revenue by nearly $2.40, more than covering the cuts.” Behind the increase in tuition is a culture that valued unrelenting growth and raising revenue over cutting costs. “Administrators established ambitious strategic plans and tried to lure wealthy students with luxurious amenities. Influential college rankings rewarded those that spent more.” Also behind the increases was a situation where: “Many university officials struggled to understand their own budgets and simply increased spending every year. Trustees demanded little accountability and often rubber-stamped what came before them.” “These places are just devouring money,” said a former chancellor and now editor in chief at the journal Science. “Offering everything to everyone all at once is unsustainable, he said. #Universities need to focus on what their true priorities are and what they were created to do.” Much of the increase in outlays showed up in the hiring process, for administrators, faculty, coaches and finance experts. Some universities doubled the number of employees with titles of director, associate director or assistant director of communications over the last five years while also increasing the number of assistant, associate, executive and other types of deans. An economist who studies college spending and a former president at Old Dominion University found that public-university trustees approved 98% of the cost-increasing proposals they reviewed, often unanimously. In most states, he said, there hasn’t been anyone to say, “No, you can’t do that.” #technology #innovation #hype #education https://lnkd.in/gUJPwfaP

Looking at the latest IPEDS data, showing net cost to students by income band at 535 public, four-year institutions. Each dot is a single institution. (Net cost is total cost of attendance, including tuition, fees, room, board, transportation, and personal expenses, minus all grant aid from any source. So it's effectively how much a family has to come up with out of its own resources, whether savings, income, student work, or loans.) The data are for state residents and only includes those who receive Title IV aid. There is a lot to unpack here, but a couple of things should be apparent once you dive in: 1) Some institutions and some states do a much better job of making college education affordable. (Florida is remarkably good; Pennsylvania is remarkably bad in that regard.) 2) Stop having retention discussions while your lowest income students and their families are expected to pay over $10K per year on an income of $30K or less (This represents the majority of institutions shown here). 3) These numbers are also too high for those with income over $110K per year. It's a fair criticism of the data to point out that this band is very wide, so even going down a notch, to the $75K to $110K band is frightening. 4) Benchmarking might make you feel good in context, but when measured against common sense, most institutions miss the mark badly.

Higher education is one of the least price-transparent markets in the American economy. As I laid out yesterday in a hearing testimony for the U.S. Senate Committee on Health, Education, Labor and Pensions, students often have no clear sense of what they will pay until after applying—and sometimes not even then. Opaque pricing hamstrings competition, drives tuition higher, and allows colleges to capture taxpayer-funded aid rather than passing savings to students. College costs far outpace inflation. Between 1990 and 2020, average net tuition rose 93% in real terms to about $9,400 annually. This is not for lack of public investment. Federal and state governments now provide over $5,000 per student in noninstitutional aid—triple the 1990 amount—but colleges have absorbed these subsidies through higher tuition. True prices are tricky to find. “Sticker prices” bear little relation to what students actually pay. Instead, “net prices” are hidden behind complex aid formulas and often-confusing financial aid offer letters. Students typically learn their actual cost only after applying and being accepted—and sometimes not even then. Most financial aid award letters do not list an accurate net price. Colleges often obscure loans by labeling them as “aid,” and prices frequently rise for returning students who face limited transfer options. Fortunately, there are solutions on the table: 📊 Better Data: Congress could authorize the federal Financial Value Transparency initiative and pass the College Transparency Act to collect and publish student-level net price data. 📜 Standardized Financial Aid Offers: Require uniform, mortgage-style disclosure forms listing grants, loans, and clear net prices. ✅ Four-Year Price Guarantees: Mandate that institutions disclose total program costs upfront and block schools from surprising students with mid-degree price hikes. 📠Binding Net Price Calculators: Require colleges to issue and honor precise net price estimates based only on data students submit through the FAFSA; this data could potentially be aggregated into a universal net price calculator. A transparent pricing system would empower students, stimulate competition, and lower costs across higher education. Congress has tools at its disposal to help students see what college really costs before they buy. Read my full testimony here: https://lnkd.in/e6c5ZpDs

Four important charts for #ukhighereducation on the new inflation data this week from our analysis at dataHE. They show a marked deterioration in an already very weak financial position as costs continue to rise, picking up pace recently. This is pushing the real unit of resource per student ever closer to 1997 low point, strengthening the case for 2024 being the financially the worst period ever faced for #universities in their core activity of teaching UK students. Using RPI to proxy university costs the index hit 385, with recent monthly increases quite high (2 to 3 index points a month). Indeed, the annualised inflation rate over the past three months is now approaching 8%. The 12-month figure is much lower, just 3.3%. But this still leaves universities facing costs 58% higher than 2012 pushing the original £9,000 funding from 2012 to just £5,867 (in 2012 £) now. Costs are now a staggering 40% higher than 2017 when they were last allowed to adjust pricing – any business would find this near impossible to absorb. If we take the the inflation loss since just 2017 (not 2012) the shortfall in funding per student faced by university has now hit around £3,700 (in current money) per student per year. Our pattern-matching averaged inflation trajectories have the real value of the current fee (in 2012 £) likely to continue to fall and pass through the previous all-time low point from the 1997 around September 2025.

In 2001, I earned a stipend of INR 4,000 per month. Adjusted for inflation at 7% per year, that would be approximately INR 18,962 per month in 2024. (About INR 2.2 lakhs per annum) But let’s dig deeper. Back then, the average cost of college education in India was significantly lower. For instance, in 2001, annual tuition fees for an engineering degree at a government college could be as low as INR 10,000-15,000. By 2024, the same degree at a comparable institution can cost upwards of INR 1-2 lakhs per year—an increase of over 10-15 times! According to the NSSO, the average cost of education in India has risen by over 175% between 2008 and 2020. In urban areas, private school fees have increased even more—over 200% in the last decade. Compare that to typical salary growth in entry-level jobs, which has averaged around 8-10% annually. The math doesn’t quite add up, does it? Today, the cost of higher education can easily run into lakhs of rupees, becoming a major financial burden for families. The average engineering degree at a private college in India now costs between INR 8-20 lakhs. That’s nearly 50-100 times the annual stipend I earned in 2001! While salaries have increased, the cost of education, housing, and healthcare has risen exponentially. Education inflation alone has hovered around 10-12% annually over the last decade—outpacing general inflation at 6-7%. This highlights the importance of strategic financial planning and career decisions. The financial landscape has changed drastically. The question is, are we ready for it? It’s not just about earning more. It’s about outpacing the rising costs, planning wisely, and making informed decisions that secure your future. Because if we don’t adapt, we risk being left behind in a world where the cost of standing still is higher than ever. Agree? 🙂 🔥 💯 ❤️

Public school spending in the United States has more than doubled since 1970, yet student performance has barely improved. Where has the money gone? In a new article for Politics & Policy, Corey DeAngelis and I examine how unionization affects how schools allocate resources. Using nearly two decades of data from the National Center for Education Statistics and the Current Population Survey, we find that higher union density is consistently linked with higher staff-to-student ratios, driven largely by growth in administrative and support roles, not teaching positions. States with right-to-work laws show leaner staffing patterns and greater stability over time. Districts with larger administrative teams tend to have lower math and reading scores, particularly among 8th graders. While unions can bring benefits, such as improved teacher pay and retention, our results suggest that unchecked bargaining power can also divert resources away from the classroom. Policy reforms could help realign incentives: • Tie funding increases to measurable student outcomes rather than overall headcount. • Increase transparency in staffing and spending at the district level. • Expand family choice and competition, which naturally constrain administrative growth. • Encourage collective bargaining that prioritizes instructional quality and teacher development over bureaucratic expansion. Rebalancing how we spend on education is not about cutting teachers, but rather ensuring that resources flow to where they matter most: students and learning. Read the full article below. #EducationPolicy #PublicFinance #LaborEconomics #SchoolReform #Unionization

Since 1980, the average cost of college tuition has climbed over 300%, even after inflation (The College Board). Confidence in higher education has dropped from 57% to 36% (Gallup). A new The Chronicle of Higher Education–CollegeVine study shows that while most university leaders still view higher ed as a social and economic engine, they also see a widening gap between what families pay, what students learn, and what the workforce demands. The good news? Innovation is already happening. The The College-in-3 Exchange now unites nearly 60 institutions designing three-year degrees that reduce cost and time to completion. Nexford University offers a $250-per-course, AI-integrated BBA built around real-world projects with companies like Red Bull and Bloomberg. In my latest Forbes article, I explore how cost, confidence, and AI are converging to redefine higher education’s value—and how the institutions leading this change are designing degrees worthy of renewed public trust. 🔗 https://lnkd.in/exe2Th_U #HigherEd #AIinEducation #Leadership #CollegeCosts #WorkforceDevelopment #CollegeIn3 #Forbes