Payoffs On Education: How Long Does It Take To Recover Your Course Fee?

<p>&nbsp;</p><p><strong><em>By Kankana Roy Choudhury</em></strong></p><p>Parents in general and Indian parents in particular are known to be obsessed with their children's academic success. Ensuring that our children finish top of their class feels like something passed down the generations in our country. Being part of the country's academic elite has its benefits given the shortage of seats in coveted institutions. A lot of students going abroad, often do so cause they couldn't make the cut for their preferred domestic options.<br><br>While the economic merit in pursuing certain courses abroad makes for an entirely different article, in this piece we take a look at the economic argument for why craving the best institutions is not out of place.<br><br>To do so, we took a look at various courses in India across institutes and compared the fee structure and typical job prospects to understand how long would it take a student to recover his/her course fee, based on the institute type and the expected starting salary (industry average). Admittedly these are averages and there are probably several exceptions to these, but the idea is to illustrate the disparity.<br><br>We took 5 different disciplines and looked at the cost of education as a combination of the course fee plus basic living expenses (like hostel and mess fees etc) and then looked at average salaries people get upon graduating from these programs. We split institutes up by type / tier, based on the rankings by top publications. The premier and tier I are those that rank among the top 10, while tier-2 includes from 11-20. The last column is derived by dividing the course fee by the annual starting salary and is the number of years it takes the student to earn back / pay off the course fee.<br>&nbsp;</p><table align="center" border="1" cellpadding="1" cellspacing="1" style="width: 500px;"><tbody><tr><td><img alt="" src="http://bw-image.s3.amazonaws.com/table-lrg.jpg" style="width: 650px; height: 384px;"></td></tr><tr><td><a href="http://bw-image.s3.amazonaws.com/table%20popup.jpg" target="_blank">Click here to view enlarges graphic </a></td></tr></tbody></table><p><br>An MBA course from the country's premier business school costs around Rs 19 lakh. The institute gives you an easy entry to the world of high-paying jobs. The average salary of a fresher is around Rs 12-15 lakh. This means you can recover the money in a year or so.<br><br>The same course pursued from a tier II college/university is likely to cost around Rs 16 lakh, while the average salary, in this case, will stand at around Rs 8-10 lakh. The tenure for the recovery increases to 1.6 years.<br><br>An engineering course from India's best institutes costs around Rs 6-7 lakh, which a student can recover within 7-8 months of starting a job. However, he or she may take around three years to get back the invested amount in the case of a tier II college.<br><br>The trend is similar in other courses as well. A one-year diploma course (inclusive all) in mass communication and journalism from a government-sponsored institute costs around Rs 1 lakh, while it can go up to Rs 5 lakh from a private institute. A two-year masters programme in the same course costs upwards of Rs 12 lakh, whereas the average salary hovers around Rs 2-3.5 lakh.<br><br>Thus, the tenure to recover the cost would vary from 6 months to around 3 years depending upon the institute.<br><br>In all the abovementioned scenarios, we distinctly see that the return on investment is way better in case of premier, most often government-sponsored institutes. You are paying only half the fees being charged at private universities, while the payoffs are better. It's therefore hard to fault parents and students alike for wanting to do everything they possibly can to get into the best institutes<br><br>As a country though, it deserves a closer look. Why is higher education as in the cases seen above being subsidized. Even if subsidies have come down, is there not a valid case for charging full price and striving to improve the quality of each course consistently? Isn't the money better spent in subsidizing primary education and vocational training that will further the cause of key campaigns like Make In India?<br><br>For some reason, the current discourse seems to focus on a coherent land acquisition policy as the only impediment to making things in this country. How about availability of quality talent, which most businessmen constantly grumble about?<br><br>Not all who secure admission in the top colleges come from economically weak backgrounds. For all those who have the merit but not the means, grants and scholarship programmes should be made easily available. The government should also help them get education loans at lower interest rates, which students can pay off in easy installments and claim tax benefits.<br><br><em>The author, Kankana Roy Choudhury, is content head at BigDecisions.com</em></p>