Tuesday, October 24, 2006

Lekha Pora : Kolkata to Harvard.

Heritage School: Rs 27lakhs.

So I’ve been thinking real hard about the great new education-age that we are in. I set out to gather data on the new schools of Calcutta and here is what I found.

Typically, one finds that students of these schools throng to the USEFI on JL Nehru road right beside Chatterjee International to prepare for SAT, in their last 2 years of school. Then they go abroad and get a Bachelors degree & a MBA from the US. Now, let us calculate the expenses for their college and Business School – say Harvard and HBS respectively.

Thus 18 years of education has cost Rs13403200 + Rs2634900 = Rs 1,603,8100. And this is just a fraction of the total cost since it does not include private lessons, travel etc.

So looking back, was going to an expensive school from Kindergarten to Senior High worth it? Personally, I think so. But there is a catch. I think that what makes it worthwhile was the fact that they immigrated to the US. Post-MBA salaries in the US for graduates from top Business Schools are stratospheric. This is the key fact that will help them recoup their investment on education. There are not too many jobs in India that pay enough to make up for all that money spent on education alone.

In Mumbai & Delhi my friends in IBanking, VC and Trading do send their kids to such schools. In Bangalore, ex-NRIs can afford these fees. But wealthy families in Kolkata, at least wealthy enough to pay through Heritage school, are usually business families or old money ex-zamindar families. For families involved in business, the tradeoff is between spending all that money and having the kid not tending to the business till he/she is 28/29. If they had the new blood employed in the family business from the age of 19, the business could probably be better off. But one could argue that the new connections made among the rich and the famous in elite institutions abroad could help the business in the long term. For ex-zamindar families, well … it’s anyone’s guess. The usual theory of Economics or Finance doesn’t apply when there is an infinite supply of money.

But the bottom line is if you go to one of these schools and your parents are wage-earners (even though very highly paid), you better make it abroad after your class 12.

Update: Here are some more numbers

Doon School : Rs 194000/yr X 12yrs + Rs 35000 + Rs 30000 + Rs20000 = Rs2413000
Lawrence, Sanawar: Rs74000 + Rs 110500/yr X 12yrs = Rs1400000