India’s higher education system is increasingly caught in an “engineering cost trap”, where the cost of acquiring a degree far outweighs the financial returns it delivers. According to the 1 Finance Global Economic Outlook 2026, a typical engineering education now costs around ₹34.1 lakh, while the average starting salary stands at just ₹4.74 lakh, highlighting a severe return-on-investment (ROI) mismatch.

This widening gap reflects a broader trend of education inflation outpacing income growth. Families are routinely spending ₹30–40 lakh on higher education, only to see graduates enter the workforce with modest salaries of ₹4–6 lakh annually. In many cases, it can take over 20 years to recover these costs, making higher education an increasingly risky financial decision.

Engineering and MBA degrees

While engineering illustrates the problem most starkly, the issue extends to management education as well. The number of AICTE-approved MBA institutes has grown from 3,095 in 2021–22 to 3,465 in 2025–26, but job creation has failed to keep pace. As a result, placement outcomes are weakening, with several top B-schools reporting declines in average salaries, including a 15% drop at IIM Indore.

This oversupply of graduates without a corresponding rise in high-quality jobs is eroding the traditional premium associated with elite degrees.

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Employability gap widens

The employment challenge is becoming more acute. The report highlights that 83% of engineering graduates and 46% of B-school graduates in 2025 entered the job market without jobs or internships.

This points to a structural disconnect between academia and industry, where degrees are not translating into employable skills. Experts argue that the expansion of higher education has not been matched by improvements in curriculum relevance or placement infrastructure.

Skills trump degrees

A key shift emerging from the data is the growing importance of specialisation over generalisation. Roles in artificial intelligence and data science offer 20–40% higher salaries compared to traditional IT jobs at similar experience levels.

In contrast, conventional IT roles continue to offer entry-level salaries of around ₹5 lakh, with slower long-term growth. This divergence suggests that the value of a degree increasingly depends on the skills it enables, rather than the institution alone.

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Professional courses

The ROI challenge is not limited to degree programmes. Even professional courses like chartered accountancy are facing a supply glut. The number of CA aspirants has doubled from 6 lakh in 2019 to 12 lakh in 2025, leading to intense competition and entry-level salaries of just ₹3–5 lakh for many candidates.

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A structural reset

The findings underscore a deeper structural issue—rising costs, oversupply of graduates, and outdated curricula are collectively eroding the financial value of higher education. For families, this transforms education from a traditionally safe investment into a high-cost, uncertain bet.

Experts suggest a shift in mindset—from focusing on brand-name institutions to prioritising market-relevant skills and career outcomes. Without such alignment, the promise of higher education as a pathway to financial stability may continue to weaken in the years ahead.

Published on: Apr 28, 2026 8:06 PM IST