Wednesday, April 02, 2008

The cost of education

Much has been made of the recent hike in fees by the IIMs. The fees for IIM Ahmedabad has shot up from Rs. 5 lakhs to 11.5 lakhs for the 2 year PGP course. Other IIMs have also followed suit and raised their tuition fees for the 2 year course in management studies. As expected, Arjun Singh has voiced concern and met with the chairmen of the premier management institutions. Following the meeting, Vijaypat Singhania , chairman of IIM-A told media folks that there was no question of a review of the fee hike.


Why the fees of the IIMs for so long was so heavily subsidized is beyond me. As Atanu, pointed out on his blog numerous times, that while investment in primary education yields positive rewards for the country, investment in higher education yields rewards for the individual. Which lends support to the argument that primary education should be subsidized to educate as large a percentage of the population as possible, but individuals should have to bear the full cost of their higher education. Ofcourse the government can incentivize a quest for higher education, by providing low-interest loans. I don't see why most banks will not follow suit. There is quite a large market of students who are interested in higher education but are unable to afford it. Providing such students with assistance in the form of low-interest loans is a win-win situation for all concerned.

So, the fees for IIM-A has gone up by about 6 lakhs. Please tell me what is so scandalous in an individual taking a loan of the same amount or more. The average starting salary for domestic placements is about 11 lakhs or so conservatively. Even if the individual makes meagre monthly payments for 5 years he will rid himself of the loan. Aren't the rewards of a post IIM job sufficient for an individual to help himself to such a loan?

If there is a robust, transparent and student friendly credit institution, bolstered by a strong scholarship system, I don't see why fees for premier higher institutes in our country need to be heavily subsidized.

Also, it is heartening to see the IITs follow suit.


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