Saturday, March 26, 2011

Why reducing IIM fee subsidy actually harmed the whole MBA student body

People feel that subsidizing IITs/IIMs by the tax payer, is like the poor subsidizing the rich. After all, the average pay of the graduates exceeds that of most tax payers. There are flaws with this argument(education as public good, the average fallacy etc) but even taking this as true, there is another major reason for keeping the IIM fee structure low.

For good or bad, most other colleges take cues from the IIMs. Whether it be faculty appointment, case method, admissions(removing GD), curriculum etc, IIMs are the trend setters for most colleges(I say most because a few like IIPM dare to think beyond the IIMs). Even in fee structure, this had shown. Colleges like NMIMS, XLRI, SP Jain etc had benchmarked themselves(and thereby their fees with IIMs). No college could seriously justify keeping a fee structure above IIMs. But with the IIM fee structure(A, B, C) ranging from Rs 13Lakh-Rs 15Lakh(around $30,000-$35000 at $1=INR 45), even lower rung private colleges have been emboldened to keep their fees around 1/2/ 1/3rd of IIM fees, without any improvement in infrastructure/economic rationale for the same. This had hurt the students because placements at those colleges have not improved commensurate with the fees. And for that reason alone, subsidizing IIM students(and thereby keeping IIM fees low) would have helped students at other colleges,as those colleges could not have hiked their fees then.

Please note that I consider the value of my IIM-A education to be much above the fees I have paid-I take no issue with that. But in the larger interest, changing the fee structure to maybe having a deferred fee component, may help students of other colleges.

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