Random thoughts on higher education

Just finished the 'Last Week Tonight with John Oliver's' episode on 'Student debt'.

After I finished the episode and went through many of the YouTube comments (which are far more interesting than the actual video, many times); I felt that a serious rethink about the importance of education & current education system is needed. Hold on, I am not one of those arm chair critics who likes to ruminate over the content in our textbooks & state of our government run primary schools! I am more in favour of critical & dispassionate examination of role of education & its importance in our modern capitalist society in India.

Just to put things in perspective- I graduated from one of the top 2 business schools in India with a loan of close to 13 L. After more than a year in job, I am yet to pay off a significant part of that loan. Still, I consider myself fortunate enough to be able to earn a decent salary & have a spendthrift nature. Others will find it a long & tiring job.

John Oliver, apart from usual dose of sarcasm presented some appalling stats- Student debt in US now amounts to more than 1 trillion USD; that's more than credit card & auto loans and surpassed only by home mortgages. Also, for profit institutes account for 13% student intake & 31% of total student debt. And the level of fraud instituted by these schools would make IIPM feel proud. India & US are not much different, it seems!

But the thing which strikes me odd is nobody seems bothered about a much worse scenario developing in India. I finished my school education (class I-X) for a cost less than Rs. 5000/- (including tuition fees, books & other costs) but my cousin is spending close to Rs. 1,00,000/- /year on my niece's education in a private (non-funded) school. This is not just true about primary education; it is true across the board. The government may have made the secondary education compulsory & free in government funded schools; but any further education would cost you an arm & a leg. An engineering course would cost at least Rs. 50,000/- an year in a third rung engineering college. And to what end? It seems that engineers are not faring better these days. Sensationalism aside, but the returns on investment in higher education seem to have gone down pretty low (though I don't have sufficient data to back my claim at this point). And still, hundreds of engineering colleges, B-schools & vocational institutes are popping all over the country.

What could be the reasons behind this seemingly glaring anomaly- of education not being so important when we were told the exact opposite our entire life?

Firstly, I believe the poor quality of infrastructure & faculty of these educational institutes are responsible. I agree that every engineering can not be an IIT (at least one of the older ones :P) but some sort of restraint in approving these new institutes. After all, education, unlike manufacturing cannot be scaled up within a couple of years. So, unlike other areas of market driven economy , education cannot simply be a function of demand & supply.

Secondly, I sense the case of decreasing marginal returns (from education) at a societal level. Assume, you are one of the only carpenters in a small village, good for you. But, if suddenly many people decide to take it as their main occupation (and assuming you don't have exceptional skills); everyone will be worse off. In India, people just need to know a way success, a channel to direct all their efforts- may it be becoming a Computer engineer, joining US universities to pursue MS or one of latest fads- pursuing CFA. No doubt, the early movers & the more talented will succeed but same won't be true of the blind followers.

Thirdly, the unholy nexus of education czars & politicians! We know enough stories about private engineering & medical colleges flouting norms left & right only to be looked after by their powerful political guardians.

So, how does this affect us as a society? When inputs costs skyrocket, so does the output price! So, when an aspiring medical student has to shell out a crore plus rupees to complete his medical education; expect the rates of private medical care to go through the roof. Secondly, I see India  becoming a country of highly educated (but somehow under-qualified) unemployed youth. By some estimates, 1 crore youths are going to join workforce every year for a next decade or so.And, if they are under-qualified & there are not enough job opportunities (this is an albeit a separate topic); we will see huge societal issues. And last but not the least, only a section of society would be able to afford the education they want (e.g. only Doctors can afford to send their children to private medical schools). It may seem all doom & gloom, but I am confident about the occurrence of these problems even if not the scale

Finally, it brings me to role of capitalism as a whole plays in our life. In spite of its many shortcomings, I am a big fan of free market economy. As Warren Buffet once famously said, "Capitalism has many faults, but it seems to be the only system that works across the world (unlike communism et al)".

Can we keep in check the pursuit of profits from our education system? Can we model our essential services like healthcare & higher education on the lines of socialist models followed by the Scandinavian countries? Only time will tell.