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!