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The rising cost of higher education

In the mid-80s, a generation ago, the average American household spent about one-third of its income on housing expenses (rent or mortgage payments), about 20 per cent on food, 15 per cent on transportation, 5.0 per cent on apparel, 5.0 per cent on entertainment, 15 per cent on retirement and savings and the last 10 per cent on various other things (education, healthcare, etc).

A lot has changed since then and by the 2020s, the allocation of household spending has changed significantly primarily owing to two factors – the meteoric rise in the cost of healthcare and the equally rapid rise in college tuition fees. In 1985, after adjusting for inflation, the average college student loan debt was approximately $13,000. For the average student of the class of 2021, that figure now stands at more than $31,000 and individuals with student loans as high as $100,000-200,000 are not uncommon.

How, you may wonder, are changes in household spending in the US relevant to us here in Pakistan? Because a lot of times, like pop culture and fashions, those same trends cross the Atlantic to Europe and sooner or later reach us (although I cannot offer you a clear causal link). Tuition rates in the UK are on a similar trend now.

The rising cost of education abroad coupled with the devaluation of the rupee at home have brought things to a point I never thought I would witness. Families I have known for decades and that I have to describe as super-wealthy by our standards, whom I would never expect to do anything less than educate their children at the best universities abroad that would have them, are bargain-hunting and forced to eliminate universities based on cost.

Until the early 1990s, for urban middle/upper-middle class households in Pakistan, sending a child or two to university, (almost) any university, was a very manageable expense. It could be budgeted from the monthly salary without requiring years of prior savings and planning.

The 1990s saw the establishment of several new universities in Pakistan – for example, NUST, GIKI, FAST (now NUCES), LUMS (undergraduate programmes), etc. They popularized the semester system and the grade point average in the country, previously foreign novelties, for which some described them rightfully as ‘the new generation’ of universities. Most offered significantly revamped curricula in step with what similar programmes were teaching in good universities around the globe and employed more engaging assessments than the annual exams that were the norm until then.

Those innovations also began translating into greater placement and workplace success and better preparedness for graduate programmes at Western universities for their graduates. As word-of-mouth spread, further fueling demand from prospective students. But they also came with price tags that were one to two orders of magnitude higher than the norm at that time.

Since the 2000s, the plain BA/BSc/MA/MSc degrees have lost much of their sheen and most universities – public and private – that have been established since then are trying to emulate those new universities of the 1990s. Whatever a graduate’s chances of success in the job market may be, one effect it had was to raise acceptance for a higher price for an undergraduate education.

According to the International Labour Organization’s last Household Income and Expenditure Survey (HIES) of Pakistan, in 2019, the average monthly income of a Pakistani household was Rs41,545 (Rs498,540 per annum) – a little higher for urban (Rs543,396 per annum) and significantly lower (Rs361,320 per annum) for rural households. To put these numbers in perspective, one year’s tuition fees in the aforementioned universities range between Rs300,000 per annum at the low end and Rs1,600,000 per annum – ranging from the lion’s share of to several times the average annual household income. With education loans almost inaccessible to those with the greatest need, that means tuition fees must be shouldered by students’ households.

A good education for a child has ballooned into a significant life expense that most households can no longer cover out of the running household budget but must be planned and saved for years before a child enters high school even.

I venture there are two types of HEIs today. The first are HEIs that offer what I will call a largely ‘effective education’ – programmes that enjoy name recognition locally, are largely in step with the rest of the world, and have enough skills that reasonably motivated students can leverage on merit as a jumping-off point into a first job and, eventually, a successful career that makes them part of the globally mobile workforce.

The other HEIs offer what I like to call a ‘nominal education’ – a paper degree that serves as little more than allowing its holder to be counted as university educated, useful for little more than completing official requirements (famously memorialized by a politician with the words: “Degree, degree hoti hai!”). These programmes are still relatively inexpensive but their graduates’ prospects for career success on the merit of the education they provide are less certain.

If that was the end of it, the matter would have been simple – unfair but simple. We would conclude that in education as in life, you get what you pay for. But at some point, in the public’s mind, higher tuition fees got (wrongly) linked to greater student success post-graduation.

Today, many universities are charging tuition fees comparable to those of the NUSTs, GIKIs, LUMSs, and FASTs, but all their students are getting in return is splashy marketing, Instagramable campus backdrops, lax social lives but little substance in terms of education. Many for-profit private universities are guilty of that. This means that for prospective students operating without good information, it is easy to fall for the flashy marketing hype and find themselves in an overpriced programme.

That is why the regulator – the Higher Education Commission – ought to dispense with collecting statistics of secondary importance that have little bearing on people’s decisions about what university to attend. Instead, it ought to make it its top priority to: one, require all universities (both public and private) to collect and report relevant data (employment rates after 12 months, graduation rates, dropout rates, average salaries after one/five years, cost of education, etc.) for every department or program; and two, publish these statistics annually.

As the state’s contributions to the (higher) education per student per capita are dwindling and costs are rising, students’ households have been, inevitably, shouldering more of that cost. We are still a country in which most of us strive to give our children the best education we can afford but this has naturally invited greater scrutiny and accountability of the value proposition university programmes offer.

If the pressure of a growing population, shrinking resources, a stagnant economy, other priorities, or all of the above force the state to defund public higher education, at the very least the regulator should act as an instrument of transparency that enables the public to make informed decisions. The marketplace will separate the wheat from the chaff – leaving the calculus of cost-benefit analysis to the people. Some will choose differently, others will choose the same, but it will enable all to make the best possible choice subject to their constraints and circumstances.

Dr Ayesha Razzaque, "The rising cost of higher education," The News. 2023-12-30.
Keywords: Education , Higher education , Education loans , Graduation , Accountability , Pakistan , HIES , LUMS