IIMA had announced a fee hike from Rs 2 to 3 lakh per annum. IIMB wants to raise- or has decided to raise- fees from R2.5 lakh to Rs 4 lakh. As I have argued repeatedly, IIM fees set the benchmark for other schools. I read in the papers this week that MDI is going to raise its two year fee to Rs 7.9 lakh; SP Jain to Rs 2.5 lakh. Others are following suit.
The IIMA move is being opposed by the central and state governments, TOI reports. There are two issues here. One is the principle of raising fees in order to recover costs. My contention is that in the non-profit model- which is where you get quality in education- you do this only upto a point. For the rest, there is a subsidy. The subsidy may come from government - as in Europe and most parts of the world- or it may come from private endowments- as in the US.
The top IIMs say they do not wish to take money from the government as that may compromise their autonomy. I am not sure. Whether the IIMs take funds or not, they remain public institutions accountable to government. Just as SBI or Bhel is accountable for government no matter that they give funds to government- through dividends- and don't take any.
Alright, the IIMs don't want to take funds from government. They must then declare where they will raise funds from- other than from student fees. Student fees can form only a small proportion of revenues. The rest must come from consulting- to an extent- and from government or private charity. Passing increasing costs on to students is inconsistent with the non-profit model and not just for financial reasons. Dependence on student fees for funds means more courses, more programmes and more teaching load. That works to the detriment of research which is the big strength of the non-profit model.
The second reason why higher fees for IIMs are a matter of concern is that fees at lower business schools go up. And lower busines schools cannot place students at quite the same salaries- so the load of loan repayment for the middle class goes up. Besides, I don't know how many private business schools have generous scholarships of the sort that the IIMs have whereby those from families with income of under Rs 2 lakh are given support.
Higher fees at IIMs thus have implications for the long-term business model at the IIMs themselves and for inclusion in education in general. The danger that leading educational institutions have to guard against is the gradual dilution of the non-profit model with its implications for quality and reduced access to quality education for large numbers of people. Caution must be the watchword.