India’s Higher Education Ecosystem Is Elitist. Expels The Poor
Our aspiration to emerge as a developed economy must reflect in investments in higher education. It hasn’t.
Education drives societal development, strengthens the inclusive index and is key to the upward mobility of the individual. A graduate has a higher prospect of a ‘regular job’ and earns about 1.9 times more than undergraduates. Returns are even higher for women as it reduces the gap largely attributable to bias, discrimination, and circumstances. For the poor and the less affluent, it is the only avenue to an opportunity for a livelihood.
*Changing criteria. It’s cost over credentials, affordability over quality
The cost of higher education is widening socio-economic gaps. It’s essentially unaffordable for most working families, leading to the ‘expulsion’ of youngsters from the higher education system.
Investment in an engineering ‘degree’ in a government institution is about Rs 3 lakh. Less than 10 per cent of the applicants make the cut, the rest pay multiple times to private institutions. As an example, engineers pay Rs 20 lakh to graduate from a top quartile private institution. Most from this pool will be ‘snapped’ up by top-notch organisations and may well ‘earn’ the investment, fructifying the effort.
Cohorts from the bottom quartile of the colleges pay about Rs 9 lakh. However only a fourth acquire a ‘regular’ job. ‘Payback’ (time taken to ‘recover’ the investment) is five years. A third end up working in the unorganised sector with no job security, no benefits, and earning lower than the per capita income.
The rest remain unemployed. There is a negative ROI (rate of return). There are several other intangible costs borne by the ‘educated but unemployed’.
*Poor break the bank, borrow, mortgage. Suffer other indicators as a result
A Crux study titled ‘Why most households break the bank or mortgage to pay for professional courses’ underlines a very disturbing trend. Spending on education is a burden that most Indians cannot carry. It highlights a strong correlation between economic status (spending) and educational attainment.
Over 50 per cent of the employed, 60 per cent of the self-employed and almost all casual workers earn less than Rs 14,000 a month. Approximately 80 per cent of Indian workers earned less than the per capita income, reflecting the steep sacrifice they need to make to fund the rising cost of higher education.
The Crux study highlights that over 50 per cent of middle and low-income families seek loans to ‘educate’ their wards. These loans in the late stage of their life cripple their ability for upward mobility.
Even a higher middle-income family can afford to send only one child to a private college. The family foregoes insurance, health, and housing to ‘educate’ the second child. An insight from the study is that these aspirations have proved to be risky, given the terrible state of the job market.
The long-run supply curve for publicly funded higher education is theoretically vertical, (despite the several ‘new’ IIMs and IITs). It has proliferated privately funded institutions, most of which are contributing to the growing quality gap.
*Higher education ecosystem is anti-poor
The rich gain more from government subsidies including those for higher education. The top quartile households pocket Rs 1.48 of government support for every rupee that goes to the poorest from such spending. Rural households, and those from socially challenged segments of society report higher per capita benefits from subsidies compared to urban households that do not belong to these social groups. Economically weaker sections from the forward caste and the minority are the most deprived.
Skill is the currency of the century. The economic actors have a more important role than imagined. The educated and skilled workforce attracts investment, enhances productivity and is critical for moving up in the value chain. Academia and industry must collaborate for better outcomes.
The educational fraternity has a bigger role. It needs to address multiple trends, and reinvent for a future where costs are no longer the leading story. Our educational institutions generate the lowest endowment for similar ecosystems. Most haven’t kept pace with the rapidly changing pedagogy. ‘Rankings’ are the holy grail. There is too much focus on new and upgraded facilities at the cost of faculty, research and skill upgradation of technical staff. The outdated models have combined to create a perfect storm of cost inflation and value depreciation.
Social and economic disadvantages perpetuate educational inequalities. The state hasn’t helped; support is declining.
*Most expensive, factoring in income and purchasing power parity
The Crux study highlights that nine out of ten jobs ‘require’ a graduation. Two decades ago, it was three. Yet while the young need a better education than ever before to compete in the labour market, a college education is now 15 times more expensive.
The insight from the study across 12,000 students in four disciplines (medicine, business, law, and engineering)is that children from families in the top socio-economic quartile with lower test scores have an 80 per cent better chance of rising to the top half of socio-economic status. However, children from the bottom socioeconomic quartile but with top test scores have only a 25 per cent chance of being in the top half by their late twenties. The conditions worsen when the child comes from a rural and minority community family and nosedives when the household is larger.
The banking and financial sector must work with other stakeholders to design efficient financial models. They must take a leaf out of the books of other economies, offer income-sensitive and linked to earnings repayments. Similarly, they must offer human capital contracts i.e., ‘partner in progress’ where students’ pay a share of the future earnings. Lenders do well if the students do well and vice versa.
*Government has failed the disadvantaged
Policymakers can no longer ignore the reality of the poor being denied the multipliers associated with higher education. It is evident that both the government and society have failed to support the disadvantaged (but) talented youth to achieve their true potential.
Policymakers must be only too aware that the investment and the impact of higher education is not only higher but more sustainable. It’s a true multiplier.
Governments of all hues have been abdicating their responsibility. The government must fund higher education for the poor, and introduce holistic reforms that offer both access and equal opportunities. Investment in higher education is a true multiplier.
