Who Pays The Cost of School Education in India?

How is school education financed in India? Do families bear the costs themselves, or do students rely on public aid and private support to stay in school? Behind every enrolment number lies a quiet network of financial support that determines how education is sustained. From family contributions to scholarships and loans, the landscape of school educational funding reveals how learning is financed across different social and institutional settings. The Comprehensive Modular Survey on Education (CMS-E), conducted by the Ministry of Statistics and Programme Implementation (MoSPI) as part of the 80th Round of the National Sample Survey (April–June 2025), provides a nationally representative picture of how school education in India is financed.

The article maps this financing landscape in three steps: it begins by outlining where students are enrolled, then examines how much different types of schools cost, and finally analyses the primary and secondary sources households use to meet these expenses. By comparing these patterns across sector and school types, the article aims to build a layered view of how educational financing takes shape across school types in the country.

Government schools anchor rural enrolment, while private schools lead in urban areas

CMS-E classifies schools into five types based on its  management. Government schools are fully funded and run by central, state, or local authorities. Government-aided schools are privately managed but supported by public funds for salaries and basic operations. Private unaided (recognised) schools operate independently without government funding but are formally approved under state or central regulations. Unrecognised schools function without official approval and often fall short of Right to Education (RTE) norms on infrastructure and quality. The remaining institutions are grouped under ‘others’.

Figure 1 shows, in rural areas, nearly seven in ten students (66.1 percent) attend government schools, whereas in urban areas the share drops to three in ten (30.1 percent). In contrast, private (unaided) schools account for over half of all urban enrolment (51.4 percent), more than twice their rural share (24.3 percent). Government-aided schools enrol roughly one in five students in urban areas (17.6 percent), but their share in enrolment in rural areas is nearly halved (8.9 percent). Meanwhile, unrecognised and ‘other’ schools remain marginal, together accounting for under 1 percent of enrolment in both sectors.

India’s schooling cost ladder: Lowest in government school, highest in private

Figure 2 shows that average annual school expenditure per student (covering course fees, transport, uniforms, textbooks and stationery, and other incidental costs) forms a clear cost gradient, with government schools at the lowest end and private (unaided) schools at the highest in both rural and urban areas. Government schools remain the least expensive option (annual expenses per student amounting to ₹2,801 in rural areas and ₹4,374 in urban areas) ,while “other”, government-aided and unrecognised schools occupy the middle rung, each costlier in urban areas. Private schools form the top of the cost spectrum, with annual expenditure per student amounting to ₹22,919 and ₹35,798 in rural and urban areas respectively. Across both sectors, the shift from government to private unaided schools represents an almost eight-fold increase.

For most Indian children, schooling is financed overwhelmingly by family budgets

Figure 3 shows that schooling in India is financed overwhelmingly by students’ families across every school type and in both rural and urban areas. Family funding exceeds 97 percent for nearly all school type categories. Government scholarships form only a very small share of primary funding and are concentrated almost entirely in government schools, where just 2 percent of its rural students and 2.2 percent of its urban students depend on them as their main source. In all other school types, reliance on government scholarships as the primary source of funding is almost negligible. Non-government scholarships are also limited, with the only notable exception being urban “other” schools, where 4.3 percent of students rely on them as their primary funding source. Loans and self-funding remain virtually non-existent in India. 

Who depends on a second funding source? Mostly, students in rural areas and those in government schools.

Figure 4 shows that students in rural areas are generally more likely to rely on a second funding source than urban students, except in two cases where the latter’s share is only marginally higher: government schools at 14.2 percent compared with 14.1 percent for rural, and unrecognised schools at 5.9 percent compared with 5.4 percent for rural. Despite being the lowest-cost option (Figure 2), government schools have about 1 in 7 of their own students relying on a second funding source, both in rural (14.1 percent) and urban (14.2 percent) areas.This suggests that low fees alone do not eliminate financial vulnerability- many households still require layered support even within the most affordable public system. They trail only the “others” category, where the recorded shares are higher at 25.9 percent in rural areas and 14.5 percent in urban areas. Secondary-source reliance is lowest among students enrolled in private schools, despite being the most expensive schooling type (Figure 2). About 1 in 14 in rural private schools (7 percent) and 1 in 16 in urban private schools (6.3 percent) draw on an additional source- roughly half the levels seen in government schools.

Educational funding in India remains anchored in household contributions. Families shoulder most of the cost, forming the base on which the entire system stands. Public aid and institutional support play smaller roles- stepping in to supplement, not sustain. The picture that emerges is of a system powered more by private effort than by public commitment. For India’s education to truly advance, this imbalance must shift. Stronger and more consistent public investment is essential to turn schooling from a household burden into a shared national responsibility.