Let the rich pay for tuition

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SummaryA moderate Rs 15,000 a year from half the students in government colleges will meet a sixth of the deficit reduction target

in India. This is about half the international average, with both China and Brazil close to this average of 25 per cent.

This India gap is rapidly becoming less as more and more people enter high school and a greater fraction of them graduate. Where are the resources to finance this ever-widening pool? There aren’t — but by increasing fees for the top half of university entrants, more of the “bottom of the top 20 per cent” can aspire that their kids go to college.

Some idea of the magnitude of the extra subsidy (over and above that received by the private colleges) for government colleges can be provided by data available from the Employment and Unemployment National Sample Survey for 2009-10. Questions were asked of each household member as to the type of college attended, tuition fees paid to the college, expenditure on books, etc. The simple result — on average, fees at private colleges were Rs 30,000 a year and fees at government colleges Rs 6,000 a year. Projecting the data to 2012-13 on the basis of the information available, one obtains the result that private colleges now charge as tuition an average of Rs 60,000 and government colleges Rs 8,000. The number of students going to college — approximately half in each, or 22 million students in all.

Government expenditure on higher education is provided by both the states and the Centre, with the former accounting for about two-thirds of the total of Rs 90,000 crore a year — for about 11 million students. Rounding off, one obtains that the government spends about Rs 1 lakh per college student per year — and collects less than 10 per cent in tuition. The education cess yields about Rs 32,000 crore with about a third, around Rs 11,000 crore, going towards higher education. The present structure of tuition fees yields another Rs 10,000 crore. The higher education subsidy is therefore close to Rs 70,000 crore, or about 1.3 per cent of GDP.

Why this massive subsidy? Because the forefathers of Indian higher education, the British, believed in free universities. But even the British have moved on, as they price higher education at the market for those who can afford it, and subsidise those who cannot. Can’t we do the same?

Yes, we can. So the modest proposal is as follows. About 60 per cent of college-going students can pay for an

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