Is US Higher Education too Expensive?

Larry, the hero of Somerset Maugham’s Razor’s Edge forgoes all the wealth and status his sweetheart would bring him, and he was last seen somewhere as a truck driver. Nevertheless, he got what he was seeking all his life, happiness. Not necessarily so for today’s seekers of happiness by investing on higher education in the US. We estimate that Sathya Nadella, CEO of Microsoft might have spent a princely US $31,533/ at current prices for studying his Bachelors in Engineering (including campus residence and food) in a nondescript Indian town, Manipal for the entire four year programme. He might have spent twice that money per year for his Masters in Wisconsin University, Milwaukee.

A recent study by PayScale, a research firm, on return on investment in education in the US, throws some light on the subject – if money counts as a source of happiness, then not many who invest on higher education in the US will get what they seek, happiness.

In most engineering institutions the ROI is a merely 8 per cent over a 20 year period (See table 1 below). In Arts and Design the ROI is about 5 per cent over 20 years. In liberal Arts the ROI is from 5 per cent to 8.8 per cent (See table 4). Hold your breath! Even the Ivy League institutions do not give you a much better ROI with Princeton at 7.6% and Yale at 6.5% (See table 2). And what about the business schools, the dispensers of tickets for the high-street? They fare the same as the others (See Table 3).

Why, then, such large numbers flock to institutions of higher education? The answer may lie in effective branding of the programmes and sweet hope, as Keats said: