Education Spending Rises Sharply With Household Income, NSO Data Shows

For Indian families, education is no longer simply another household expense. As incomes rise, spending on children’s schooling rises even faster, with the biggest jump coming from school fees, according to data from the latest Comprehensive Modular Survey on Education conducted by the National Statistical Office (NSO) between April and June 2025.

The findings suggest that a household that is 10% richer spends roughly 14% more on its children’s education. Economists describe this as an expenditure elasticity of 1.42. Since a figure above 1 indicates that spending grows faster than income, education, taken as a whole, behaves like what economists call a “luxury good.”

But the numbers reveal a more complicated picture.

Across the estimated 137.9 million Indian households with at least one school-going child, the average annual spending on school education, private coaching and hostel fees is around ₹26,615. That amounts to approximately 13% of the household’s overall annual consumption.

The burden, however, varies considerably across income groups.

Households in the poorest 10% spend around ₹11,700 a year on education, compared with total consumption of roughly ₹1.03 lakh. For them, education accounts for about 12% of household consumption.

At the other end, families in the richest 10% spend approximately ₹67,200 a year, against consumption of around ₹3.55 lakh. Education therefore takes up nearly 20% of their consumption expenditure. For roughly one in five such households, more than a fifth of household consumption goes towards educating children.

School fees drive the divide

Education spending covers several expenses — school fees, transport, uniforms, books and stationery, coaching and hostel charges. But not all of these respond to rising incomes in the same way.

School fees show the strongest income sensitivity, with an expenditure elasticity of 3.34. School fees account for nearly 47 paise of every rupee spent on education.

Transport follows with an elasticity of 2.83, while uniforms stand at 2.08. In contrast, textbooks and stationery have an elasticity of 0.86, meaning spending on them rises more slowly than household consumption.

Hostel spending has a negative elasticity of -0.21, reflecting the role of residential schools in serving children from remote and tribal communities.

Private coaching, which accounts for around 16 paise of every education rupee, has an elasticity of 0.90. In statistical terms, it is close to proportional spending.

Coaching cuts across income groups

Private coaching also challenges the assumption that tuition is primarily a middle- or upper-class expense.

Among students in the poorest 10% of households, around 19% receive private coaching. The proportion rises to about 34% among students in the richest 10%.

Yet coaching represents a larger share of education spending among poorer families. It accounts for nearly 18 paise of every education rupee for the bottom income group, compared with less than 13 paise for the richest.

The sharper divide appears in school choice. Private-school attendance rises from about 18% among the poorest students to around 61% among the richest.

Overall, the richest tenth spends about ₹55,553 more per year on education than the poorest tenth. School fees alone account for ₹35,120, or about 63% of that difference. Transport contributes around 13% and coaching 12%.

The school system matters

The overall elasticity of 1.42 also hides an important shift in the type of education families purchase.

Among households whose children are all enrolled in government schools, education spending has an elasticity of 0.74. Among households with at least one child in a private school, it is 0.89.

Both figures are below 1.

This suggests that education does not necessarily become dramatically more expensive simply because a family’s income rises. Rather, higher-income families are more likely to shift from government schools to private schools, bringing substantially higher fees into the household budget.

The pattern also differs across States. Elasticity is particularly high in Uttarakhand at 2.63, followed by Telangana at 2.08 and Jharkhand at 2.03. Punjab records 2.01 and Odisha 1.82. In Kerala and Tamil Nadu, the figures are around 1.03, while Bihar records 1.01 — all broadly indicating spending that rises in proportion to household consumption.

The data therefore points to an important distinction: poor and rich families both spend on additional learning, but they differ sharply in the school their children attend.

For poorer households, coaching can be a relatively flexible expense. School fees, by contrast, represent a recurring commitment that is harder to reduce without changing the child’s schooling arrangement.

The larger question raised by the data is therefore not simply how much Indian families spend on education, but why rising incomes so often coincide with a move away from government schools.

For policymakers, that distinction puts the quality and attractiveness of government schooling at the centre of the education-spending debate.