The Shocking Truth Behind Skyrocketing Fees in India
Everywhere you look, the rising cost of schooling is making headlines. Curious about this, I dove into research, but what I found left me even more puzzled.
Schools in India are legally required to operate as nonprofits. Yes, nonprofits!
Schools are supposed to reinvest any surplus into their operations, ensuring no profits go to promoters or trustees as dividends.
But the why are fees climbing so high, and where is all the money going?
Many private schools have found ways to sidestep nonprofit regulations:
- Schools often procure services—like infrastructure, uniforms, or textbooks, from companies owned by their trustees. These companies charge inflated prices, siphoning profits into private hands.
- Schools lease their property from entities owned by trustees, further inflating costs.
These practices drive up expenses, which are then passed on to parents through hefty fee hikes(15-30% annually in many metros).
Schools cite post-pandemic digital infrastructure upgrades as reasons for these hikes, but for many families, this is just another excuse for arbitrary fee increases.
Education, viewed as a “recession-proof” sector, is now attracting PE investors.
For PE firms, Indian schools represent a goldmine. With a young population and high demand for quality education, the potential for profit is enormous. Firms like KKR, Morgan Stanley, and Brookfield have invested heavily in well-known school chains like:
- Orchid International Schools
- Sri Chaitanya Schools
- Narayana Schools
- Heritage Experiential Schools
PE investors focus on just one thing: the top and bottom line.
The nonprofit mission takes a back seat.