Why spending too much on education in India is not always the best investment?
On this blog you will learn why spending too much on higher education, especially in a country like India, is not always the best financial decision.
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Harsh Garg
9/4/20263 min read
Education is usually considered the safest investment a family can make in India. However, overpaying on education can turn into a risky rather than a safe financial choice when fees, loans, and opportunity costs increase more quickly than job opportunities and salaries.
Very low retunrs
In India, the cost of professional education and private schools has skyrocketed, but the number of good jobs has not continued to go up. Nearly 40% of college graduates under 25 are unemployed, according to reports, and many of those who do find employment have low starting incomes relative to the total cost of the degree. The return on investment (ROI) is low, and the payback period gets longer when a family spends ₹15–20 lakh (or more) on a degree but the graduate only makes ₹3–4 lakh annually.
High dependency on loans or family savings
To cover expensive tuition, many students take out significant college loans, or families deplete long-term savings and retirement funds. Education expenditures in India increase at a rate of 10-12% each year, exceeding average inflation. A degree that costs ₹15 lakh today can cost ₹60 lakh within 15 years. At the same time, a considerable portion of this expenditure is financed by debt, trapping young people in years of repayments even if their income is uncertain. When parents utilise retirement funds to support college, they miss the benefit of compounding and may suffer financial difficulties later in life.
Not all degrees provide job ready skills
A huge number of graduates lack market-relevant abilities, and the "average" graduate's employability is considered to be under 20% in various sectors. As a result, many students graduate but do not find work that pays for their expensive education. In such a case, investing extensively in a well-known college or a costly course does not assure a comparable gain in income or career progression.
The hidden cost of overspending
Money spent on costly college education may have been invested in assets such as equities, mutual funds, real estate, or a small business, which may provide superior long-term returns. Furthermore, time spent on a lengthy, expensive degree might be used for skill-based courses, internships, or starting work earlier, which can boost real-world experience and earnings without incurring significant debt. For many middle-class families, their child’s education is the most significant investment they finance through borrowing. If that investment becomes financially uncertain, it can disrupt the entire family’s financial plan.
A smart way to spend on education
This doesn't mean that education is a bad investment. It means how much and where you spend is important. A more balanced financial decision may include:
Choosing courses and universities with proven placement rates and realistic wage information.
Avoiding excessive fees unless the predicted income clearly supports them.
Using scholarships, government schemes, and low-cost public institutions of decent quality.
Planning education funds apart from retirement savings ensures that one goal doesn't compromise the other.
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