Pricing Engineering Education: How to Reduce Tuition

After my earlier blog post on pricing engineering education, it has been pointed out to me that not only affiliated colleges, but even universities are now coming under fee regulation in some states. Even Gujarat, an otherwise progressive state, has been controlling tuition for professional courses in the private universities in the state, and that too at levels much lower than what we discussed in that blog post.

Many people asked me that considering the political reality, is there something that the universities could do to manage their finances, and offer cheaper education, with only a limited reduction in quality.

So, here is an attempt to give a few suggestions. Please note that these suggestions are more in terms of "thinking aloud" and may not be well thought through ideas. Feel free to improve/decimate them, as well as give more such ideas.

First of all, let us understand why state governments want to control tuition to such low levels. Obviously, they want to provide access to residents of their state (read, voters) at a low cost. They believe that it is more important to provide low-cost education, even if low-quality, than to provide high-quality education at higher cost. If this be the case, I believe it should be possible to convince the state governments to have a lower tuition for students from within the state and a higher tuition for students from outside the state. Most US state universities have the concept of in-state tuition and out-of-state tuition, and there is no reason why that cannot be replicated here. Currently, states do allow a higher tuition for students under management quota, or NRI quota, and the same can be allowed for out-of-state students. To make sure that colleges and universities do not only admit out-of-state students in such a situation, one can have 50% seats for in-state students. This will be a politically acceptable way of improving the yield.

On the cost front, some of the AICTE norms are simply luxurious in the current scenario. Having a 1:15 teacher student ratio for a teaching only institution is luxury. We need this ratio when we have a substantial post-graduate program. So what AICTE can do is to allow a 1:25 teacher-student ratio for UG programs, and a 1:10 ratio for PG programs. So, if an institute only has 1000 UG students, it should need to have only 40 faculty members. On the other hand, if it has 600 UGs and 400 PGs, then it should have 24+40 = 64 faculty members. This would reduce the cost of faculty substantially for the honest players (most dishonest players anyway have 1:25 ratio or worse). We really need to look at all their norms and cut down the requirement. For example, there is no need to have as many PCs now, since most students come with their own laptops. The library size too should be determined by taking into consideration that most of the material is available online.

The technical universities should realize that it is counter-productive to teach a lot of courses. The students cannot really concentrate and learn 6-7 subjects in a given semester. If they are taught only 5 courses (or god forbid, even 4) in a semester, they will learn much more, and the cost of teaching comes down substantially.

Technology should be leveraged to reduce costs further. Having a campus management software should reduce the number of staff members. Having cameras at important places can reduce the need to have physical security. A digital library can provide access to material more easily to every student without the need to have a large library to host the large printed material and have lots of reading spaces.

Colleges also need to look at alternate sources of revenue. One way to augment revenue is by sharing one's facilities with outsiders. For example, there is nothing wrong in having a coaching center use the lecture halls in the evening. If you have a guest house, rent out empty rooms to outsiders (subject to local laws and tax rules). Similarly, your primary health care room for students can also double up as a doctor's clinic for outsiders at other times. Commercial establishments on campus like a book store, photo-copier, canteens, etc., need not be given space for free or very low rent. Somewhat higher charges by these businesses is a politically acceptable way to get students to pay a bit more of the cost incurred on them. Similarly, a higher charge for hostel and mess facilities and generating a surplus there is generally tolerated by governments. Of course, all this will be minor unless the institution has excess land at disposal and can plan its commercial establishments properly.

Another revenue source, at least, for institutions providing higher quality of education, are workshops and short term courses. Most institutions anyway do these things for their students and faculty. If marketed properly, they can attract a lot of high paying industry persons. Management institutes already earn significant revenues through this route, and there is no reason why other professional colleges cannot do the same.

The faculty should be strong encouraged to write research proposals to both government an industry sponsors. The research cost should preferably come from such funding sources instead of dipping into student tuition. In fact, the monitoring of such funding is so poor in India, that most institutes (primarily government ones) who are in this game, are able to buy excess equipment from projects and use them for teaching.

One source of revenue which Indian institutions seem reluctant to tap into are philanthropists, foundations, and alumni. IITs have been trying to attract some money through this route for the last two decades, but the amounts are still not very large, compared to what their alumni are capable of. This apparent failure of IITs has discouraged other institutes to get into this mode of revenue generation. But, I believe that IITs have not reached even a fraction of their potential because they haven't yet learnt how to do it effectively. Of course, government can help by giving tax incentives for the same. Currently donations to educational institutes give you income tax rebate on 50% of the donation (except institutes of national importance like IITs, where you get income tax rebate on 100% of donation). The new budget proposes that a company giving money to educational institutes for research can deduct 200% of the expense from its income. There is a need to give that 200% rebate to contributions towards teaching as well.

If there are any more ideas, I would love to hear from you.