The Ballooning Cost of Education


When economy is doing good, things go topsy-turvy in this country.

That is not unlike what happened in the boom years in other countries, whether they were in the West or in the East, so I am not surprised.

I can understand the price spiralling of all essential items such as food and clothing, and to a certain extent the rise in prices of real estate. This was to be expected. While relatively bad times such as the year 2008 did not depress the real estate market too badly (Indian economy was still growing close to 6% even during that year which saw global economies crumble), the good times after March 2009 are seeing a huge push up the ladder for most items. Essential food items have galloped to way beyond the affordability of millions of Indians – in many cases, the prices are some 70 to 100% more today as compared to 2008.

But what is incomprehensible is the determination by educational institutions that parents would pay anything, even the sky, for putting their children through good education, unavailable from public/government educational offerings.

Only the elitist of the real elite can now afford higher education. Forget higher education, let us look at LKG / UKG and Primary School Education, to start with. Annual Tuition Fees for premium schools have more than doubled in the past couple of years, on the back of the “robust” economic growth. If growth can be blamed for anything and everything, then I wonder what would happen to other investments and consumables in the near future, when the economy is expected to cross 9% GDP Growth rate.

My estimate of the annual tuition fee for Pre-Primary education is approximately USD 1,300 and for Primary education is now at USD 2,200. Imagine the plight of people with more than one kid. While salaries have gone up for sure, the cost allocation for education has to go up significantly as the above figures are only for annual school fees. The add-ons and other costs of sending children to school would easily come to at least another 50% of the above figures.

We are talking about a country, where the average per-capita income has just crossed USD 1,000 and almost 60% of the people pull-along at less than USD 2 per day.

Of course, the target market for premier schools are the less than 0.1% of the population, who make USD 20,000 or more per year. But even for these folks, setting aside some 20% or more for a two-kid family is fast emerging as a challenge.

One good fallout is the drop in the number of early marriages and the number of children in new families, leading to a drop in birth rates in metros like Mumbai, as has been recently reported.

Let us look at Secondary School Education now. The cost of such education is now slightly higher than the Primary School Education, except for those specialized programs such as the IGCSE or the IB, where the costs go up by twice or thrice respectively. The well-off parents are increasingly moving out of the Indian Boards of Examinations towards International Systems of Education such as the ones mentioned above. The costs are going up because of increasing demand and the deepening scarcity of teachers who are qualified and trained in the newer systems of education.

How about implementing government’s RTE (Right To Education) law in practice ? It is going to be very tough as principals of elite schools have recently highlighted “adjustment problems” for poorer kids who are admitted into their schools due to this RTE legislation.

So, at the end of it all, the conclusion is that nothing can replace an excellent public school education where the government expands its schooling system across the country without any economic objectives. For a country like India, we would need at least double the number of public universities and schools that exist in the United States. We should have set up 25 IITs in the 1960s……..

High-quality education is not easy to construct or deliver, and the free-market costs are going to be rising at the rate of GDP growth rate or Inflation rate every year. Imagine the plight of people who are just starting their families, some 5 years down the road…….

Cheers,

Vijay Srinivasan
19th December 2010
Mumbai

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2 comments

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