Work out education cost inflation instantly with clear inputs, formula shown and shareable results.
Education inflation typically runs several points above general inflation, so a course costing 600,000 a year today can cost more than 1.4 million a year in a decade. Compounding across the course duration as well as the years until enrolment is what produces the full figure to save towards.
Future first-year cost
First year = Current annual cost x (1 + Education inflation)^Years until enrolment
Total future cost
Sum over course years of Current cost x (1 + Inflation)^(Years to enrolment + Year index)
Because it is labour-intensive with limited productivity growth, and demand for prestigious institutions is inelastic. Historic rates of 8-11% are common.
At least the education inflation rate to hold purchasing power. Anything below it means the shortfall grows every year despite saving.