Education is a classic example of a merit good — it not only generates benefits beyond household consumption, but also fosters economic growth, and social equity. In India, its provision reflects that of private goods, where access is increasingly determined by market forces rather than public interest. This commodification of quality education has been confined to those who can afford it, raising critical questions, particularly about equitable access of basic human rights, more so, in the case of higher education.
Currently over 43.3 million students are enrolled across 1,317 universities and 51,972 colleges, and the Gross Enrolment Ratio (GER) stands at 27.1 per cent (with the global average at 40 per cent), leaving a significant portion of the eligible population excluded from higher learning. While female enrolment has seen improvement, reaching 20 million, systemic inequalities persist, particularly for marginalised communities. However, the additional higher education enrolment that is happening today is driven by an increase at local ordinary colleges and universities.
Devaluation of qualifications
The entry of a large number of graduates from ordinary colleges and universities into the labour market appears to weaken the signal value of higher education qualifications and even lead to social problems such as graduate unemployment, devaluation of qualifications and class entrenchment. With tuition fees consistently rising faster than inflation, the financial burden of higher education on Indian households has been a growing concern. The average annual expenditure per student for general courses at the undergraduate and postgraduate levels is ₹8,331 and ₹11,762, respectively.
For professional and technical courses, undergraduate courses average around ₹50,307 and postgraduate courses at ₹64,763 per annum. The average share of expenditure on higher education out of total household expenditure is 15.3 per cent for rural households and 18.4 per cent for urban households participating in higher education. While some may argue that the average Monthly Per Capita Consumption Expenditure (MPCE) has more than doubled since 2011-12, it is important to understand that the proportion of expenditure allocated to education remains significant.
Education loan
In urban areas, the share of education in total consumption expenditure rose from 6.9 per cent in 2009-10 to 8.1 per cent in 2022-23. The opportunity cost of pursuing higher education for students from the lower income group is high. Here education loans, often considered a solution by families to tackle the evident financial strain, are frequently accompanied by high-interest rates and stringent repayment terms.
Some studies show that the student loan system in India has not been effective in alleviating financial barriers to higher education, primarily due to issues like high default rates and inadequate coverage. The current scholarship schemes also make little contribution to the efficiency and equity of the higher education system. Studies reveal that only 12.5 per cent of scholarships are based on financial need, and just 33 per cent are specifically targeted at helping disadvantaged groups like Scheduled Castes (SC), Scheduled Tribes (ST), and minorities.
Addressing the challenges
The obvious solution is that the government must increase public expenditure and focus on improving infrastructure, faculty quality, and research opportunities, especially in state-funded institutions. However, the solutions have to be precise, like:
Scholarships should be better targeted, and properly disseminated. It should avoid complex application procedures, which often overwhelm students. The shift to online application platforms has disproportion effects, therefore, there exists a need for a regional facilitation centre for students from diverse backgrounds.
Income-contingent loans (ICLs), where repayment begins only once graduates earn above a certain income threshold, can reduce the financial burden on low-income families. Australia’s Higher Education Loan Program (HELP) is an effective model that India could adapt. Additionally, reducing interest rates on student loans or providing interest-free loans for underprivileged students can make higher education more accessible.
Many graduates from local colleges lack the skills demanded by employers, resulting in underemployment and unemployment. A report by the National Skills Development Corporation (NSDC, 2022) highlights that 48 per cent of employers find new graduates inadequately prepared for the workplace. Here, empowering the National Board of Accreditation (NBA) and the National Assessment and Accreditation Council (NAAC) with autonomy and resources to ensure rigorous evaluations stands crucial.
This, along with publishing transparent institutional rankings, and periodic re-accreditation. Establishing continuous professional development programmes focusing on pedagogy, research skills, and industry trends. Examples include India’s Global Initiative of Academic Networks (GIAN) and TEQIP.
Local colleges can play a pivotal role in addressing region-specific challenges, therefore, establishing research centres in local colleges focusing on regional issues like agriculture, water management, and renewable energy. Encourage PPPs based on measurable outcomes like graduate employability and research output to mobilise resources for infrastructure and skill development programmes for local institutions that operate with limited budgets. Focusing on competency-based curricula, apprenticeships, and collaborations with industries, inspired by Germany’s dual education model.
A one-size-fits-all policy often fails to address differences effectively, here decentralisation of policies that are responsive to local conditions are important. For example, Tamil Nadu boasts a GER of around 50 per cent, significantly higher than the national average of 27.1 per cent. This achievement is attributed to State-specific interventions such as financial support schemes, expanded public infrastructure, and inclusive admission policies. Each State has distinct economic drivers (e.g., IT in Karnataka, textiles in Gujarat, agriculture in Punjab).
State-level policies can align higher education with local industry needs, fostering employability and regional economic growth. India’s higher education landscape holds immense potential but a lot needs to be done in the background. We have lakhs of graduates coming out of colleges every year but they fail terribly when it comes to their employability.
Skill-based interventions can help support the lower income groups and entrepreneurial targeting can be achieved through training institutions already set up in the country. This has to be clubbed with extra efforts into making higher education a quality-enriched addition to every student’s life.
The writer is a doctoral scholar at Gokhale Institute of Politics & Economics, Pune. The writer wishes to thank Prakhar Garg for his inputs
