Wednesday, October 26, 2005

Cost of education at an IIT or an engineering college


A quick update: A shorter, snappier version is presented in the next post.

There are many different estimates being thrown about. What follows is my own -- admittedly crude -- attempt to arrive at a figure that I can work with. Please feel free to criticize the major aspects of what follows; in doing it, please avoid minor quibbles. I admit my crime upfront: the estimate is crude.

Let's take some examples, and see what would be this cost under different scenarios. I have chosen these specific examples only because I found some numbers for them recently (and rather easily, through just one article!). The data are all from this interesting Rediff article by Yogesh Upadhyaya.

Let us start with -- what else -- IITs! Yogesh reported that the annual budgets of these institutions ranged from 0.9 to 1.3 billion (90 to 130 crore) rupees a year. Let us take an indicative figure of 1 billion (100 crore) rupees, and assume the number of UG students to be 3000 (all the four years put together).

PG and doctoral students don't count, since their numbers are far smaller and they also pay a far smaller fee. Raising their fee is a non-starter, because it is one sure way of killing the research programs.

This one billion rupee estimate is only the budget allocation for the current year, and doesn't include the cost of the infrastructure that is already there. If you put a value to all that, perhaps you get a figure of 4 billion rupees which, amortized over ten years, is perhaps around 500 million rupees. Add to it the amount the students already pay -- 30,000 rupees per year per student [source: this page on the IIT-M website]. For 3000 students, you get a figure of 90 million ruppees; round it off to 100 million.

Add it all up, and you get a grand total of 1.6 billion (160 crore) rupees as an IIT's annual budget.

The ever reliable Satya, the Oracle of Chennai, has a post about the revenue patterns of four US research universities: Harvard, Cornell, Michigan and UCLA. If you look at the data, some 20 to 25 percent of the revenue of these colleges is derived from UG students -- I am assuming the support from the state government -- for Michigan and UCLA -- to be towards subsidizing in-state students. This gives me a uniform range of 20 - 25 percent of revenues from UG tuition.

Evidently, not all of it is used for UG population. Only a fraction of the budget is 'devoted' to teaching, with the rest of it going into other functions including research.

I am not even going to pretend I know how much of an IIT's budget goes for teaching. What I will do is to use a certain number (which is evidently an underestimate) and use it to arrive at a figure.

In another nice post, Satya has an extract from an old Business Standard editorial in which Prof. Indiresan, an ex-Director of IIT-M, has been quoted as saying that IIT education costs about 200,000 a year.

I am taking it to be 20% (which I think, is a reasonable estimate -- perhaps on the lower side of reality). This yields 320 million as the teaching budget of an IIT. Make it 330 million, and divide it by 3000 students, and you get 110,000 rupees per student per year.

Do a similar exercise for another type of college: an engineering college. The same article by Yogesh Upadhyaya gives a figure of 100 to 200 million (10 to 20 crore) rupees as the annual budget of an institution. I am taking 150 million. Again, I am assuming the infrastructure to be worth some 800 million which, when amortized over some 10 years, results in about 100 million per year. Assume 2000 students paying some 20,000 rupees each, we get 40 million rupees per year from tuition fee. The grand total then is 290 million, rounded off to 300 million.

If you assume that 50 % of these institutions is devoted to teaching undergraduate students, then you get 150 million rupees; when this is divided among 2000 students, you get 75,000 rupees.

Bottomline: If you are in an IIT, the 'real cost of your education' is in the range is 100,000 to 200,000 (1 to 2 lakh) rupees per student per year (depending on whether you want the lower figure of 20 % or a higher figure of 40 % as the proportion of your institute's budget used for UG education.

If you are in an engineering college, it is in the range of 75,000 to 150,000 rupees per student per year.

Well, you may quibble with my numbers and methods. If you are an accountant, you can include the exact impact of interest rate on the amortized value of infrastructure. You may also quible about whether hostels, faculty housing, messes, shopping complexes, gymkhana, etc, should be included. And so on. I am sure you all have your own pet number for the percent of an institution's time and money that go into undergraduate education. Your perceptions are also likely to depend on whether you are a student or a teacher!

7 Comments:

  1. Sunil said...

    I agree......the cost of education is heavily subsidized in India...especially in most government institutions (i went to one......and my fees was some Rs 3000 per semister, or a grand total of Rs 6000 per year.......and that was no where even close to the cost of actual education).

  2. Sue said...

    I live in a country where education is free and I couldn't imagine paying for my engineering degree..dont you think it should be the same in India?? I am just curious to understand your views.

    BTW, I have been a silent reader on your blog for a while now and really like the topics you cover and your writing.

  3. Anonymous said...

    Education in India is getting less free over time. I was fortunate enough to study at IIT Kgp and I joined in 1993. My annual fees was 2000 Rs annually. My cousin joined IIT Kgp in 1990 and her annual fees was 500 Rs. My sister joined IIT Kgp in 2000 and her annual fees was 15000 Rs. All these are undergraduate fees.

    Education is even less free in the US.

  4. Anonymous said...

    When I was at IIT from '93 to '98, the figure that was bandied about was 100000 Rs annually per student.

  5. Abi said...

    Let us see if I succeed this -- my third -- attempt to post this comment. I am glad I kept a copy of my previous attempt! What the hell is wrong with blogger today?

    Sunil, Sue, Anon: Thanks for your comments.

    Sunil, Anon: I too remember paying only Rs. 250 or so for my engineering education in IT-BHU during 1981-85. It was so insignificant (for example, less than a month's mess bill) even then that I have forgotten if it was for a semester or for a year!

    Sue: Thanks for your kind words, and for breaking your silence and commenting here.

    You sure are lucky to be living in a country where college education is free, and taxes are high! I too would like free (or, inexpensive) college education in our country. All you need is just one look at the existing reality to see why I lean the other way:

    1. The reach of primary education is less than 100%. Among those who do go to school, an estimated 40 % do not get to finish it.

    2. The tax/GDP ratio has barely crossed 10 % this year. The combined fiscal deficits of all our governments put together are about 10 %. In other words, there is very little money.

    3. Only an estimated 6 % of the relevant population goes to college. And, there are at least a hundred thousand students who pay big money to get educated in really shady engineering colleges. So, it is not as if people cannot pay for their college education (at least for professional education).

    With these facts of life, I would vote for more spending on primary education, with totally un-free college education -- with, of course, scholarships for the poor and bright students.

  6. Aswin said...

    As reg IITM, I think the figure that gives 20% recovery is closer to being accurate. The undergrad subsidies should be reduced. But, I guess such a decision will take aeons to get thro our political establishment.
    On the other hand, I don't quite buy the "there is very little money" argument. Why do we want to stockpile nukes when our primary education is in such a pathetic state ? If the bosses want to make a difference to primary education, they can always do it. I don't think it is coupled to UG subsidies..

  7. Abi said...

    Aswin: Thanks for the comment about the 20% being the norm. As for the government's reluctance to make students pay for their education, I am not so sure. If there is sufficient commitment, and a lot of noise, government can do it in no time at all!

    Whether we like it or not, primary and higher education budgets are coupled; and increasing the former can happen by expanding the pie or by taking money from higher education. What I said was, in the absence of a bigger pie, I don't mind if higher ed loses a little (which can easily be compensated using a higher fee for undergraduate students). All said and done, I too prefer a bigger pie.

    As for stockpiling nukes, we just have to live with the fact that you and I (along with a few others) are in a small (minuscule?) minority. Cheers!