T5E Debates: Let Them Eat Cake


T5E Debates, like the name implies, is an attempt to feature debates on different issues and stimulate thought and discussion.

The first of these debates is on the fee hikes that are being implemented in IITM and other IITs. Vinay Sridhar and A. M. Ayyappadas argue in favour of and against the fee hikes respectively.  

In this article, A.M. Ayyappadas argues against the fee hike in the IITs.

The case I wish to argue is that the recent fee hike, especially the near-100% hike in the B.Tech tuition fee, is a misguided decision which has negative implications and raises ethical questions. It is also my opinion that the decision to hike the hostel seat rent (which excludes the establishment and amenities charges) ten-fold (it is to be increased in three steps to Rs 10000 per year) cannot be justified based on the given premises. I also want to point out that such decisions signal a policy shift vis-a-vis education, which, if it does not imply immediate privatization, does suggest a gradual withdrawal of the state from this sector.

The idea that university education should be considered as a commercial venture, for which full or a substantial part of the tuition fee is to be paid with little or no subsidy on living expenses, got its foothold during the 1970s in America. This view, while not as prevalent in India, has been given back-door entry through many recent policy decisions in our country. Students in such a system are compelled to pay higher tuition fee along with frequent fee hikes, thereby putting their future at the mercy of commercial banks. The consequence of this philosophy in the US is evident today when we look at the Occupy Wall Street activists, many of them graduates with huge educational loans in their names which they are often unable to repay. This self-inflicted crisis has affected countries like Britain and even South Africa, where university students have staged massive protests against hikes in tuition fee.

It is wrong and misleading to claim that this so called “Washington consensus” is universal or even desirable. Most European countries (with the major exception of UK) charge a nominal tuition fee, or none at all. Australia has a different model where there are loans available which need to be repaid only when one crosses a threshold of income; they are even waived if one takes up a career in certain professions. Among the BRIC countries, China has a mixture of the old USSR system, the US system and the Australian system, while education is mostly free in the state universities of Brazil and Russia. One has to understand that charging a substantial tuition fee is not the only course taken by countries around the world, even in specialized areas like Engineering or Medicine. There is, however, a sophistry often played with the minds of the audience with an unsubstantiated argument that we should emulate the American system since they are the undisputed leaders in higher education. But correlation does not imply causality. If the same logic of copying the American system were applied in different fields, the consequences would be tragic. For instance, one could argue that we are not a highly developed economy because RBI’s policy does not emulate the federal reserve – but we’d then have to face the consequences of cheap money and living on debt!

Let us now address the question of whether the hike in the IIT B.Tech tuition fee can be justified based on the current scenario. The official justification given is that there has been a substantial increase in the input cost component over the last years. Then one is (time and again) reminded that the actual cost of education is much higher than the fee charged by IITs. Therefore, weighing in those two factors, a hike is justifiable, even desirable, as it is a balancing act to keep constant the proportion of the individual’s and the state’s contribution towards educating an undergraduate IITian. Quite plausible, isn’t it? But let us dig a bit deeper.

In my opinion, this ‘proportion’ argument is essentially flawed and even ahistorical. IITs have remained state-funded institutes ever since their inception. The idea was to develop centres of excellence with a national mission. This was reflected in their policy – every eligible (however imperfect that selection process may be) Indian student was given the opportunity to get an IIT education without worrying about the financial aspects. The cost of education was made affordable for every Indian family, largely without relying on commercial banks, during a substantial period of their existence. Over the past decade or so, this principle has been replaced with the idea of cost-sharing. As of now the new fee structure aims at recovering around one fourth of an IIT’s operational expenditure*. The point to be noted here is that there has been a paradigm shift from a principled position that justified its mission, towards a position that weighs in sheer economic considerations; at the same time, the state has remained essentially conservative in investing in education and research, which have proved to provide future dividends.

Very often, a point that we do not take into account is whether a publicly funded university is a commercial establishment which should worry about its profit and loss calculations. Should parents, or students themselves, be made to pay a hefty fee of roughly Rs. 4L over four years towards covering tuition costs alone, in a country where the current per-capita annual income is just around Rs. 60,000? The amount is not affordable even for the huge majority of the Indian middle class, which forms just 12.8% of the all households in India (according to the National Council of Applied Economic Research); the affluent class is far smaller. The argument that only just above 50% of the students need to pay the fee is also not a consolation. The limit of Rs. 4.5 lakh per annum as family income, which might make eligible around 25% of the students for merit-cum-means scholarship (which is a tuition fee waiver), is too low given that the lower rungs of the middle class (called ‘seekers’ by NCAER) are much more crowded than the upper rung (called ‘strivers’, for whom it might be affordable). Considering an average household size of 5, the per-capita annual income based on an average per-household annual income of Rs. 4.5 lakh is Rs. 90 000. Now consider that every eligible IIT B. Tech. at this income threshold pays exactly this amount just for her tuition fee! Isn’t that ironic? Also, the income limit for scholarship eligibility has not been revised even after the fee has been doubled. Neither has the income of the Indian middle class doubled during the last three or four years  (especially during the recession period).

One might argue that even at this fee, an IIT education is worth it and many people might be willing to pay for it. As far as quality is concerned, this is true, but if that is the case why do we not go for an auction for 50% of the seats among the people who get through JEE? We are sure to find many well-off people and a few middle-class people aiming at future returns, who will quote fees well above that suggested by the Kakodkar Committee. Most people would consider such practices to be morally abhorrent and detrimental to the reputation of the institute. So is it very hard to imagine that a fee structure for which around 90% of our national population will have to depend on commercial banks (often at interest rates of 13-14%) to be paid over say 4-10 years, is not in the  national interest? Some might call it a good bargain, but an IIT education should not be an asset that should be priced based on the criterion of income returns on the investment. That was not the reason why it was created, neither should it be the rationale behind the fee policy.

Another argument which might strike a chord with the general public is that undergraduates from IIT usually get a hefty package and, therefore, it is justifiable that they share a good part of the cost. While it is true that many do get good job offers and the mean/median package quoted is often substantial, this argument misses the full picture. There are two assumptions involved in this – first, the only reason one seeks an IIT education is to secure a high-paying job, and, second, that each and every IIT UG will get a well paying job (the fallacy of misinterpreting a central tendency). But there are no guaranteed jobs. Essentially there will be a minority who will bag prized offers and most students will get median packages, but this will depend upon the discipline and even the state of the economy. It should be noted that there will be people who will not receive any jobs despite being reasonably qualified and there will be students who might want to pursue higher studies, be entrepreneurs or take up offbeat careers. Paying a high tuition fee will only make the job situation tight (for most people will have loans to be repaid) and will discourage other choices. The ones who do not get good offers will be at the mercy of commercial banks. Given the increasing number of IIT students graduating each year, and the economic slowdown, this is not going to help anyone other than banks.

It is fairly obvious that no family in the the immediate vicinity of a household income of Rs. 4.5 lakhs per annum will be able to squeeze out around Rs. 1.5 Lakhs/annum towards their ward’s education from their family income. In the majority of cases, loans will be the solution. This translates to an additional amount of above Rs. 3500 on your future income for a 5 year repayment period, in the case of a reasonable bank loan, other conditions remaining the same. While this in itself might not amount to a big sum, people do not take into account job market uncertainty. We do not have any social security nets like in UK or Australia. People who could afford this fee, or even the fee suggested by Kakodkar committee, could always give back to the institute in various forms. Some have done it too. But let us not club that with the real issue here: the higher fee is not a good way to eliminate free-riders, because it is bound to have an impact on the selection side and will prove hard on the not-so-well-off. We can think about ways to avoid free-riders (and that is another debate), but we must acknowledge the fact that there is more than income and earning involved with education.

The case of the hike in hostel seat rent is a rather curious one. From what was told to us, there is a central Govt. directive to remove all subsidies from the hostel sector. In fact, to consider in-campus housing as a ‘subsidy’ is reminiscent of proverbial Orwellian Newspeak. Perhaps, in that case, the institute land would have been better utilised in developing real-estate! And let us not make the mistake of comparing the so-called doles with what happens in economies like US, where the population is far less, median per-capita income much higher and there are many good public universities in almost every state.

The present fee hikes and the direction of higher education policy have a definite slant towards the ideology that education is a commercial venture. For now, state subsidies are being viewed akin to an oil subsidy, to be gradually phased out. This is not different from the standard privatization doctrine with the exception that the governing body of the institute might still be under the central Government. The Kakodkar Committee report, although not accepted under its current form, was a step towards that process under the pretense of ‘quality improvement’. One cannot help but wonder how financial autonomy (which, again, is a farce, since scholarships are still to be given by the Government) will guarantee quality. Worse, these policies are being gradually pursued at a time when they have caused unrest in their own Mecca.

We have heard various perspectives regarding this issue from the news media and the panel discussion that happened inside IITM. Every now and then I see critics playing a false dichotomy card – if you are against fee hike for higher education, you are hurting primary education! But this argument falls flat when you consider the fact that this is not a zero-sum game: the money spent by Government of India for education at large is far from adequate in both primary and higher education, and needs to be increased in both sectors.

Some supporters of the fee hike also argue that high fees incentivize students to perform well. But Indian states which have done better in primary education (Kerala, for example) did so by making schools accessible, through lowering the fee for all, among other things. If one were to use the ‘incentivize’ concept here, the consequence itself might have been disastrous. But, for the sake of argument, why not apply the same principle in primary education sector, if it is assumed to work in the higher education sector?

The one aspect shared by many (with honorable exceptions) Indian critics of ‘subsidised higher education’ has baffled me. Let me put it this way. Consider these two quotes from the European renaissance era. The first is attributed to Sir Isaac Newton and goes, “If I have seen further, it is by standing on the shoulders of giants.” A contrasting quote often attributed (perhaps wrongly) to Marie Antoinette is, “If they do not have bread, let them eat cake.” We live in a nation where it is rare to find a person who has not been the recipient of any state subsidy (in education, fuel, food or health) and has come far in life. When some people make a case, often displaying a pseudo-moral angst, that those students are stealing from us or that they should be asked to pay fully for what they get, I guess the second quote is appropriate. It takes a higher ethical calibre in this context to agree with Newton.


*According to the Kakodkar committee report a fee of Rs. 2.0 to 2.5 Lakhs per annum should be levied on students in order to cover the operational expenses.  If we take into account the 52% seats under full or partial fee-waiver scholarships given under various schemes, a full cost recovery fee might come to around Rs. 4.0 lakhs/annum. If that is the case, it is safe to assume that the current fee comes to around 25% of the actual operational expenditure.


About A.M. Ayyappadas: A member of a mostly nocturnal species which feeds on Google, Wikipedia, books and, when time permits, re-searching the self. Mostly harmless.

You can read Vinay ‘Slicer’ Sridhar’s argument on why the fee hike is acceptable and justified here. If there are debates you believe should be featured on T5E, let us know in the comments or by emailing us at [email protected]

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