The Growing Demand and Cost of Subsidised Indian Higher Education

Arguments against subsidised higher education simply don’t stand.

Education is the only way one can overcome social and economic barriers.

Only 10% of students have access to higher education in India (according a 2014 report by the US-India Policy Institute in Washington), while 22% of students in China have access to higher education, and 28% in America.

India needs subsidised higher education. But in a country with limited resources and huge disparity across gender, socio-economic religious and geographical lines, the question is – is higher education subsidised in a justifiable manner, or are the affluent availing of subsidies meant for the disadvantaged?

Subsidised Education, a Global Norm

Social participation in higher education is the highest in Western Europe. Apart from a very marginal tuition fee introduced only in the last 15-20 years, universities remain highly subsidised.

In the United States, which is considered to be a model for higher education, state schools have higher enrolment than private schools and remain heavily subsidised.

Top American institutes like Harvard, MIT, Princeton and Yale function on a ‘need blind’ admission process whereby the cost of education of meritorious students is covered by grants and endowments.

The Grudge Against Subsidy

A grudge against subsidy in higher education is futile because one wants a progressive population.

In India, the demand for heavily subsidised higher education is growing disproportionately to our ability to provide it. The fact that 10 lakh students appear for less than 10,000 IIT seats is an indicator of our shortfall. The government has tried addressing this by announcing the setting up of five new IITs, but monetary considerations of setting up heavily subsidised public institutes can be daunting.

In April this year, the Human Resource Development (HRD) ministry hiked IIT fees from Rs 90,000 to Rs 2 lakh for undergraduate courses.

The fee hike, the ministry said, was to ensure the cost of maintenance of the IITs, to be met largely with the fee collected.

As per the HRD ministry’s 8 April 2016 statement, the government, on an average, is spending about Rs 6 lakh on each of the 80,000 students enrolled in 21 functional IITs.

But despite the subsidies, the costs of decent higher education are rising . In the last three years alone, an undergraduate course in IIT has become dearer by 122%.

Balancing Social Responsibility and Economic Barriers

So how does one balance the need to cross an economic barrier and social responsibility?

The common argument against subsidising education at the IITs is that most pass outs opt for high-paying jobs that may or may not necessarily have something to do with engineering or technology. One can, however, argue that these highly paid professionals also end up contributing to the country’s economy in terms of high taxes.

The tendency is to veer towards the “loan model”. For example, the IIMs which charge Rs 17-18 lakh for a two year MBA course. The logic in levying a high tuition fee is that the student is able to pay off the loan because he/she likely to get a high-paying job after graduating.

IIT (Delhi) Professors M Balakrishnan and Pankaj Jalote argue against the “loan model” and have suggested a middle path for financing education.

Deferred Mode of Payment, a Possible Solution?

As per their deferred mode of payment, a tuition fee is computed on the basis of cost of education. The student has an option to pay a significant part of their fee after graduation. The amount will be a fixed percentage of their income for a fixed number of years – say 10% of income for the next 3 years. There will be a cap on the fee, which can be collected from each student for each course.

This, Professor Balakrishnan tells The Quint, will have a social and economic impact.

It will allow students a bit more flexibility in choosing social entrepreneurship over high paying jobs at MNCs. This is not to say that all students will want to get into the social sector to pay less for their education. Large number will still go for good jobs that pay well. But this model will not restrict them from choosing options which may have a larger impact on society in the long run, but may not give them personal wealth.

There will also be some cross subsidy to help promote a more equitable social system, lessen the burden on tax payers and allow students more flexibility and independence in choosing career paths.