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Thursday, July 16, 2015

Six Months Internships for College Students

Many of the top technology companies have a six month internship program (generally, in addition to their summer internship programs). However, they often draw a blank when they try to recruit students for that. And the reason is simple. Most universities wouldn't allow the student to take a semester off during the normal course of the program. And even if the universities were liberal, most students (and parents) wouldn't want to graduate a semester late. To me that is a very short-term thinking.

A summer internship is good if you want to be exposed to the work environment of an industry, know what kind of things they are doing, what kind of culture they have, and may be just help a little bit to the group you were part of. The company either looks at it as their social responsibility and in such cases does not invest too much of their resources to make it really worthwhile experience for the student, or looks at it as an opportunity to find more about the students so that a pre-placement offer can be made to them. So they save the cost of recruitment, the attrition in this group is likely to be low (since most campuses will not allow students with PPO to sit in interviews for other companies), and the chances of a poor hiring are low, since they have been able to judge students over a long period of time as opposed to a couple of hours in a campus placement scenario.

So, summer internships are useful to both sides to some extent. However, the value of summer internships is limited on both sides. While it helps the companies to recruit later on, they any way have to go through the process of recruitment for finding interns. The only difference is that they can be a bit more relaxed, since it is possible to say no to them after the internship.

It is obvious that a longer internship would be of value to the companies, since in such a case, they can ask the student not just to understand everything and learn things, but also contribute significantly to whatever they are doing. This way, not only they get to judge the student over a longer period of time and hence reduce the errors of recruitment, but get a value for their investment right in those six months. For the student, it can be a life changing experience to work on something that will directly impact a company's business in some way. The quality of six month internship would usually be far higher than that of summer internship. And if the student's interests and skills are in fit with the company's needs, the probability of landing a job will also go up substantially. Even if the student does not get a job offer, the experience of working in a top technology company and working on a live project that had impact on the business would be valued very highly by other companies and that should help in securing a job with anyone else.

So a long term (6-month) internship appears to be a win-win situation on both sides.

But what about the delayed graduation. Well, the way I look at it is the following:

Whether you study for 8 semesters and then do a 1 semester job or you study for 5 semesters, work for one semester, and then study for 3 more semesters, in both cases, after 9 semesters, you have reached the same point in your career path. In addition, because of that industry experience, your learning in the remaining 3 semesters would be enriched. You would know where the things being taught to you could possibly be applicable in real life. You will not just do a passive learning but at all times thinking of possibilities and opportunities. And you are better prepared for a high quality job.

By the way, these six months internships need not be in top companies only. If you are considering higher education and research as a potential career, then spending six months in a great research group would be equally valuable. You would be able to get some publications that would definitely help in getting admissions in top places for PhD, and your application would be strengthen by letters of recommendation from the researchers you worked with. And it is easier to get funding for six months work than for 2 months summer internships.

If you look at students in top universities outside India, this model appears to be quite prevalent. Students take off for not just one semester, but often even 2-3 semesters to gain industry experience and some money so that you can live comfortably in that hostel. The problem in India unfortunately boils down to, "whether I can explain this to all my neighbours and relatives." What will they think. When they see me in college in the 9th semester, will they think that I failed, or will they be convinced that what I have done is good for my future. And unfortunately, people who did their study in minimum period of time are not likely to appreciate the value of such internships. And therefore, you won't be able to convince them.

Convince yourself. And if you are convinced, and your university allows a break, go for it. Don't worry about your relatives and neighbours. They are not responsible for your career.

Tuesday, July 14, 2015

Variable Pricing of Education

A lot of services are being sold today in such a way that different consumers of those services pay different price for the same. The most visible example of this is airlines, which vary their pricing based on a host of factors like how early you book, how much is demand, how convenient the time is, and also things like whether you agree to sit in the middle seat, or you have to have a window seat, and so on. Even goods have dynamic pricing. You would expect to pay differently for wooden clothes in winter and summer, what with all those beginning of season sales and end of season sales. The price of the same good could be different in the neighborhood shop and an exclusive store in a posh mall, and could be very different if purchased online.

Does it make sense to consider variable pricing in education sector. Different students paying different tuition for the courses that they take based on some factors which we don't yet know. Of course, not. Are you nuts. This is crazy. How can two students pay different tuition for the same course. Variable pricing is ok in the commercial world but education is a noble profession, we must treat everyone equally. I can hear the sound of strong dissent.

But medical care is also considered a noble profession. Does everyone going to a hospital pay the same amount. Most hospitals today would have variable pricing for services. The services would be cheaper for those who come from economically weak backgrounds, and costlier for those who come from richer backgrounds. It is assumed that people who are short on money would not want to afford a Deluxe room in a hospital. So those who go for an expensive room are assumed to be rich and are charged higher for all services, not just the room. And people who are willing to stay in a ward with several other patients, will be charged less for all services. Good hospitals would ensure that medical care to all patients is roughly the same. It is only the "comfort" part which is different, and all patients can self select what level of comfort do they want knowing fully well that higher comfort does not just mean a bit more money for the room, but a lot more money for all tests, doctor's fee and so on. And we have accepted variable pricing because every individual can self select the pricing level at which s/he wants that service, knowing fully well that at least in theory and generally in practice too, the core part of the service will remain the same irrespective of which level of "comfort" one selects. It is also understood by people that without this voluntary cross subsidy, the cost of health care for economically weak would be much higher and that is not a desirable thing from the societal point of view. (Of course, I may add that the "comfort" is not restricted to type of room. Some hospitals would allow richer patients to have less waiting time, appointments, etc. Some hospitals would have a well known doctor do more appointments of richer patients, and smaller number of patients in the ward, which one could argue is differentiation in core service.)

Can we have a similar implementation of variable pricing in education. The core service includes lectures, tutorials, labs, library access, internet, and so on. That would be identically provided to everyone. But non-core services can be chosen by students. And based on what they choose as non-core services, their costs would vary. For example, a university could have several different types of hostel rooms. If you choose to live in an Air-conditioned single room, that would be taken to mean that you belong to financially well off class, and charged higher not just for the AC room, but for every thing else in the university. And if you choose to live in a shared non-AC room, it would be assumed that you belong to financially weak class, and charged less for everything. Just like medical care, there is self selection or in a sense, self declaration of income class. And students and parents know what costs are associated with each declaration. They also know that the core service will be same for everyone. And like in medical care, this could provide a model of subsidizing the financially weak students by charging the financially well off students a higher amount, thereby enabling a lot more students to access costly quality education.

This could possibly work, but the problem is that there aren't very many non-core services provided by the universities which are essential for students to subscribe. If we look at hostel as an example, universities may not have sufficient range of hostel rooms (and thus may not be able to offer sufficiently many price points). It may not even have sufficient rooms, and students may be forced to live off campus, and in that case, it becomes very difficult to find out what kind of accommodation has each student opted for.

By now, I am sure, people are saying, education is unique. It can't be run on the airline model. There can't be variable pricing in education. But, is that really true. in fact, we already have variable pricing model operational in most universities. Let me explain how.

Most universities offer scholarships to those students who are performing very well. Most universities are also offering scholarships to those students who come from financially weaker sections of the society. So we do have merit based scholarships, as well as means based scholarships. And a scholarship is nothing but an instrument of variable pricing. Universities look at all sorts of information to determine whether you really come from a financially weak background. They will look at self-declaration, pay slips of the employer, the tuition that you paid in the school before this one, ownership of certain assets by the family (do you live in your own house, or a rented one, what kind of smartphone you own, do you own a car), etc. But since this is not based on purely self-declaration and based on factors in which some fudging is possible, expanding the variable pricing is likely to face opposition from those who end up on the wrong side of variable pricing.

Currently, one would find that the variability in pricing of educational services through the instrument of scholarships is fairly limited. We either have small reductions to many people, or have significant reductions to a very small set of people. In order to really bring in the benefit of variable pricing in terms of reducing the cost to poorer students and getting them subsidized from students who can afford, we would have to have several levels of pricing, with a significant difference between the maximum and minimum tuition. And before any variable pricing is adopted, communicating it to all stake holders and taking them into confidence becomes extremely important. Otherwise, a mention of very high fees, even if that fees is not paid by most students can become a mental block for people to apply to this university.

Let me also point out another kind of variable pricing, which is very prevalent. Charging higher for the popular programs is quite common across the world, including in India. So MBA fees within the same university will be typically higher than under-graduate programs. Within the under-graduate programs, engineering programs or professional courses in general may be priced higher compared with 3-year programs in science, commerce, humanities, etc. And that difference is not dictated by the difference in cost to the university but difference in willingness to pay by the student.

There is also a difference between price charged to in-state students and out-of-state students. The argument is that there is support available from the state taxpayers (or at least, state would have provided cheap/free land), and therefore, residents of the state should be offered discounted pricing.

Another type of differential pricing which is very common in Indian institutions is the higher price of students admitted under certain categories, for example, "Foreign Students", "Non-Resident Indians", "Sponsored students", "Management quota" and so on. We have had Free seats or Merit seats, and Paid seats or Non-merit seats. (Free seats were just reduced pricing, not free. And Non-merit only meant poorer rank, not that anyone who had failed in 12th class could get admission.)

So, we are actually, quite used to variable pricing of educational services in the country. After all, the coaching classes have a variable pricing for their services.

And finally, there is an entirely new unchartered territory of dynamic pricing, along with unbundling of services of a university. Could we have separate tuition for each course based on the popularity of that course. If you register for this course early, then you pay less, while a last minute registration pays a lot more, particularly when the seats are limited. I don't even want to think of these possibilities. I am afraid that there will be unintended consequences that we haven't thought about.

Monday, July 13, 2015

College Admissions: Infrequently Asked Questions

So, we all know about the frequently asked questions during the college admission season. The top three reasons are as follows:
  1. Which program has the best placement
  2. Which program gets the highest pay package
  3. Which program has the maximum scope
However, not everyone is like that. And every admission season, I do get asked unique questions, which are extremely difficult to answer. Here is a sampling of this year's questions.
  1. I have worked 80 hours a week for the last few years, and after graduation, I will have to work 50-60 hours a week. I have only four years in which I can relax. Which program/college is the easiest to get a degree in. (Can the readers help, so that in future I can answer this question. To my small mind, it seems that if one were to relax for four years, one may get to relax for the remaining lifetime as well.)
  2. Forget faculty to student ratio. Which college has the best male to female ratio. (This question gets asked pretty much once every year. And of course, I don't know the stats for any college, so I can't answer. But even if I knew the stats, I am not sure what does "best" mean. Would 50:50 be considered best, or would 10:90 be considered better. Would the definition of "best" be gender-specific, culture-specific, etc.)
  3.  A bunch of similar and yet distinct questions. Which college has the best festival. Which college has the best band. Which college has avid gamers. (I don't know. Why is it assumed that I might know the answers.)
  4. Which college is safe for my daughter. (It is not the college, but just take precautions in certain geographies.)
  5. Which is the closest airport to the college. How far is it. What is the frequency of flights from there. (I don't run a travel agency, my dear friend. But India is progressing if someone is deciding a college on the basis of ease of air travel.)
  6. What is the RoI of certain colleges. (I intend to write a separate article on this. Seeking help from my Economics friends in understanding this better.)
  7. And the award for the most unique question goes to this. I have a 3-digit JEE (Mains) rank, but not so good JEE Advanced rank. I don't want to sit in the class with 5-digit JEE rankers. Which program should I choose. In particular, should I go to a good private college, where there is no reservation and only a few students have a 5-digit rank. Or should I go to a good government college, where most general category students would have a rank similar to mine, but many reserved category students would be beyond 10,000 ranks. How do I decide which peer group is better on an average. (Don't have a peer group at all. You will be injurious to their health. Join a distance education program. They were designed for people like you.)
I also searched on Google for reasons why students attend a college, and I find this link.  (But, of course, these reasons are frequently stated, and are really not infrequently asked questions.)