Good schooling is the best investment you can make for your children

Readers of this blog would have probably noticed that I often hold a contrarian position to normally accepted views. This remains true in the case of children’s education. While most people will tell you to be conservative on the schooling part and invest the available money for their college, which is very likely to be expensive, I hold the view that schooling is really the most important part of a child’s education. Of course, if you are fortunate enough to get a great school which does not charge you much then, nothing like it. However, if that is not the case then go ahead and spend what is required.

Not that all schools that do not charge a bomb are necessarily bad – I know of several well run Kendriya Vidyalaya and other government schools that provide excellent education. My own children studied in a low profile neighborhood private school in Chennai when we were there and it was a pretty good school too. However, with the kind of competition that the current and next generation of children will have to face, it is becoming imperative that they are put in a school which not only gives them a good holistic education, but also prepares them to be well rounded personalities capable of taking on the global stage. A few years back, knowing good English would have been considered enough to get along well in life. Nowadays you need to be smart, articulate, well groomed, preferably knowing a foreign language and having a couple of serious hobbies. All these of course are in addition to the fact that you need to do rather well in studies. After all, the good colleges in Delhi will not even allow you to apply if you do not score above 95 % in your 12th Boards.

I do not want to come across as an elitist here but the fact of life is most of the Government schools and the lower profile private ones, while providing great basic education at times, are simply not equipped to take care of the kind of personality development that is required to make our children successful in the future. The schools that do have such resources and bandwidth will obviously need to charge more for their ability to do such stuff. I am not really talking about the slew of schools that term themselves as international schools, but the good Public schools that are available today in every major city in India. They will cost a fair bit today – I did a quick estimate with a friend and saw that for his two children, who are in classes 2nd and 9th, the average monthly expenditure is about 25000. If you add other non-school related expenses, the cost of education per child probably comes to 2 lacs per year.

This is very different from what I spent on my children when we were in Chennai – the annual education related expenses there used to be to the tune of about 70000 for both of them. On the flip side, the school only gave opportunities for extra-curricular activities to students who were clearly good to begin with. My daughter, who is good at public speaking got to represent the school almost regularly from the beginning. My son, on the other hand, was somewhat of an introvert and the school made little or no attempt to develop these skills in him. Of course, with about 50 people in each section the teachers would also have a herculean task, hence it must have been easier to promote people who were good to start with.

When we shifted to Hyderabad my wife and I were keen to put them in a good public school. This was made difficult by the fact we were shifting mid session in December. Fortunately, there were 2 vacancies in the respective classes in one of the reputed public schools there. Though reluctant at first the Principal asked them to take a test by seeing their earlier results  ( both were toppers with hardly ever getting less than 95 in any subject ). Their performance in the tests and my agreeing to fork out about 2 lacs for admission and related expenditure got them into the school. Once there, my daughter continued to do well as usual and topped the school both in her 10th and 12th Boards. She went on to Study Engineering from BITS and was a topper there, secured a placement in Accenture, joined XLRI in their BM program after a superlative performance in XAT, did rather well there as one of the top students and has now started her corporate career in a Consulting organization.

The transformation in my son was remarkable. He was always good in academics, but the attention that he received in terms of other activities developed him greatly in sports and other pursuits. So much so, that he started singing once in a while in the school assembly. His communication skills and general smartness also underwent a good deal of change. When he was in 12th he sat for the NDA exam and got through SSB to secure an all India rank of 20th in the merit list. A lot of the credit will go to him but I do not think that unless he joined his school in Hyderabad, he would have excelled in this way. Of course, he also got into IIM Indore IPM program which has only 60 open seats and BITS, so he was in a dilemma. Finally he joined BITS and is doing a dual degree in Msc Maths and BE Computer Science. Right now he is in his final year and doing an internship with a company in Hyderabad. He has plans to start in a suitable job by middle of next year.

In my own case, though I have studied Engineering and MBA from two of the best institutes in India ( Jadavpur university and IIM Calcutta ), I strongly believe my robust foundation built through St Xavier’s school has really helped me to achieve whatever I have achieved in my life. A good school does much more than producing a good student who will do well in the board exams. It actually develops people and makes them capable of handling whatever life has to throw at them. It also produces better citizens with the right kind of attitude to take the country forward in more ways than one.

For readers who have heard from others that all schools are the same – do not believe an iota of it. There are many good schools but not all schools are good. Also, while exorbitant fees do not a good school make, it is a reality that to provide good facilities, infrastructure and teaching quality, such schools will need to charge high fees. My recommendation to all parents who are looking to admit their children to school next year – go ahead and identify a good school and admit them there, even if it costs more than what you thought is reasonable. Of course, you need to be able to afford it.

It can very well turn out to be the best decision that you will ever make for your child.

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College education of children – A personal perspective

May and November are those times of the year when all parents of college going children have to figure out ways and means of arranging the fees for the upcoming semester, term or year in college, as the case may be. I have been in this situation for 6 plus years now and am likely to be in it for a few years more, given that I have two children.

Let me give a brief background for new readers here. My daughter Rinki had graduated from BITS Pilani, Hyderabad campus with BE in ENI in June 2016. After her graduation in 2016, she had joined XLRI for their BM program and has now completed her course there. She has started her corporate career a few months back and is fortunately living with us in Hyderabad. My son Ronju is in the final year of  a 5 year dual degree course from BITS Pilani, Goa campus in Msc Maths and BE Computer Science. He will graduate in 2019 from there. As part of his course, he needs to do 2 paid internships in his final 2 semesters and is in the first one of them right now. If you are interested in knowing more about the overall costs and how I arranged for the funds etc, you can read up several posts available in the blog under “Education” category.

In this post I particularly wanted to discuss about the overall costs of a college degree in BITS and the inflationary nature within the course. Unlike some colleges, which give you a total figure for the 4 or 5 year course when you join, BITS only talks of the first year costs and then increases it every year. They have been transparent to say that the fees can increase by up to 15 % a year and, more often than not, it actually increases by that much. Let me take the component of the Tuition fee and see how it increased during the time Rinki was in college :-

  • In her first year 2012-2013, Tuition fee was 70000 per semester or 1.4 lacs in the year.
  • In 2013-2014, it was 78000 per semester or 1.56 lacs for the year.
  • In 2014-2015, it was 89000 per semester or 1.78 lacs for the year.
  • In 2015-2016, it was 101000 per semester or 2.02 lacs for the year.

Now apart from these there were Admission fees, hostel fees, mess fees, personal expenses, travel, practice school fees etc. From my notes I can see that the total expenses for her college degree was approximately 12 lacs.

At XLRI the overall costs are in the range of 24 lacs and you can add another 2 lacs or so for travel etc. Therefore her total Education costs in college is about 38 lacs.

For my son Ronju the last 2 years of Rinki will be common. Beyond this the fees for the other 3 years are as follows:-

  • in 2016-2017, it was 1.13 lacs per semester or 2.26 lacs for the year.
  • In 2017-2018, it is 1.30 lacs per semester or 2.60 lacs for the year.
  • in 2018-2019 it will be 1.59 lacs per semester or 3.18 lacs for the year.

Therefore for Ronju’s graduation the overall costs will be in the range of 20 lacs or so. I have not thought about his PG yet, as he is not sure whether he wants to do one. However if it is from a good B school, it will be in the range of 28-30 lacs. Assuming this to be the case, his total costs of college education will be in the range of 50 lacs or so.

From the above data you will be getting a pretty good picture of the educational inflation too. In 5 years the tuition fees has increased from 1.4 lacs to 3 lacs. The other costs have also increased and as you can see, a 4 year course for BITS starting today will easily cost more than 22 lacs or so, all things considered. Just the Tuition fees will be 18 lacs or so.

How will this look if your child is starting college after 15 years? Well, at an inflation of 15 % the tuition fees alone will be 1.8 crores. I know this sounds fantastic, but remember just 10 years back the Tuition fees of BITS was 50000 a year and it has gone up more than 5 times.

I am happy to spend this amount on giving a good education to my children as it is going to be a huge competitive differentiating aspect. In fact, this is borne out by what they are currently doing. At ages 24 and 21, they are financially independent of me and are pursuing a career of their choice. However, I was able to help them in doing so as I prepared for the same in terms of my planning. Even then the inflation was surprisingly high and I had to rejig some of my plans.

You need to work on your plans right now and put them in place.

My personal experiences on children’s college education

May is that time of the year when all parents of college going children have to figure out ways and means of arranging the fees for the upcoming semester, term or year in college, as the case may be. I have been in this situation for 6 years now and am likely to be in it for a few years more, given that I have two children.

Let me give a brief background for new readers here. My daughter Rinki has graduated from BITS Pilani, Hyderabad campus with BE in ENI. After her graduation in 2016, she had joined XLRI for their BM program and has now completed her course there. My son Ronju is doing a 5 year dual degree course from BITS Pilani, Goa campus in Msc Maths and BE Computer Science. He will graduate in 2019 from there. If you are interested in knowing more about the overall costs and how I arranged for the funds etc, you can read up several posts available in the blog under “Education” category.

In this post I particularly wanted to discuss about the overall costs of a college degree in BITS and the inflationary nature within the course. Unlike some colleges, which give you a total figure for the 4 or 5 year course when you join, BITS only talks of the first year costs and then increases it every year. They have been transparent to say that the fees can increase by up to 15 % a year and, more often than not, it actually increases by that much. Let me take the component of the Tuition fee and see how it increased during the time Rinki was in college :-

  • In her first year 2012-2013, Tuition fee was 70000 per semester or 1.4 lacs in the year.
  • In 2013-2014, it was 78000 per semester or 1.56 lacs for the year.
  • In 2014-2015, it was 89000 per semester or 1.78 lacs for the year.
  • In 2015-2016, it was 101000 per semester or 2.02 lacs for the year.
  • In 2016-2017 it was 113000 per semester or 2.26 lacs for the year.
  • In 2017-2018 it was 130000 per semester or 2.60 lacs for the year.
  • In 2018-2019 the proposed fees are 159000 per semester of 3.18 lacs for the year. This has led to a lot of student protests and BITS may be forced to reduce it somewhat now.

Now apart from these there were Admission fees, hostel fees, mess fees, personal expenses, travel, practice school fees etc. From my notes I can see that the total expenses for her college degree was approximately 12 lacs.

At XLRI the overall costs are in the range of 24 lacs and you can add another 2 lacs or so for travel etc. Therefore her total Education costs in college is about 38 lacs.

For my son Ronju the last 2 years of Rinki will be common. Beyond this the fees for the other 3 years are as follows:-

  • in 2016-2017, it was 1.13 lacs per semester or 2.26 lacs for the year.
  • In 2017-2018, it is 1.30 lacs per semester or 2.60 lacs for the year.
  • in 2018-2019 it will be 1.59 lacs per semester or 3.18 lacs for the year.

Therefore for Ronju’s graduation the overall costs will be in the range of 20 lacs or so. I have not thought about his PG yet, as he is not sure whether he wants to do one. However if it is from a good B school, it will be in the range of 28-30 lacs. Assuming this to be the case, his total costs of college education will be in the range of 50 lacs or so.

From the above data you will be getting a pretty good picture of the educational inflation too. In 5 years the tuition fees has increased from 1.4 lacs to 3 lacs. The other costs have also increased and as you can see, a 4 year course for BITS starting today will easily cost more than 22 lacs or so, all things considered. Just the Tuition fees will be 18 lacs or so.

How will this look if your child is starting college after 15 years? Well, at an inflation of 15 % the tuition fees alone will be 1.8 crores. I know this sounds fantastic, but remember just 10 years back the Tuition fees of BITS was 50000 a year and it has gone up more than 5 times.

I am happy to spend this amount on giving a good education to my children as it is going to be a huge competitive differentiating aspect. However, I was able to do so as I prepared for the same in terms of my planning. Even then the inflation was surprisingly high and I had to rejig some of my plans.

You need to work on your plans right now and put them in place.

Educational costs & inflation – A personal perspective

May is that time of the year when all parents of college going children have to figure out ways and means of arranging the fees for the upcoming semester, term or year in college, as the case may be. I have been in this situation for 5 years now and am likely to be in it for a few years more, given that I have two children.

Let me give a brief background for new readers here. My daughter Rinki has graduated from BITS Pilani, Hyderabad campus with BE in ENI. After her graduation in 2016, she has joined XLRI for their BM program and has now completed her first year there. My son Ronju is doing a 5 year dual degree course from BITS Pilani, Goa campus in Msc Maths and BE Computer Science. He will graduate in 2019 from there. If you are interested in knowing more about the overall costs and how I arranged for the funds etc, you can read up several posts available in the blog under “Education” category.

In this post I particularly wanted to discuss about the overall costs of a college degree in BITS and the inflationary nature within the course. Unlike some colleges, which give you a total figure for the 4 or 5 year course when you join, BITS only talks of the first year costs and then increases it every year. They have been transparent to say that the fees can increase by up to 15 % a year and, more often than not, it actually increases by that much. Let me take the component of the Tuition fee and see how it increased during the time Rinki was in college :-

  • In her first year 2012-2013, Tuition fee was 70000 per semester or 1.4 lacs in the year.
  • In 2013-2014, it was 78000 per semester or 1.56 lacs for the year.
  • In 2014-2015, it was 89000 per semester or 1.78 lacs for the year.
  • In 2015-2016, it was 101000 per semester or 2.02 lacs for the year.

Now apart from these there were Admission fees, hostel fees, mess fees, personal expenses, travel, practice school fees etc. From my notes I can see that the total expenses for her college degree was approximately 12 lacs.

At XLRI the overall costs are in the range of 24 lacs and you can add another 2 lacs or so for travel etc. Therefore her total Education costs in college is about 38 lacs.

For my son Ronju the last 2 years of Rinki will be common. Beyond this the fees for the other 3 years are as follows:-

  • in 2016-2017, it was 1.13 lacs per semester or 2.26 lacs for the year.
  • In 2017-2018, it is 1.30 lacs per semester or 2.60 lacs for the year.
  • in 2018-2019 it will be 1.5 lacs per semester or 3 lacs for the year.

Therefore for Ronju’s graduation the overall costs will be in the range of 20 lacs or so. I have not thought about his PG yet, as he is not sure whether he wants to do one. However if it is from a good B school, it will be in the range of 28-30 lacs. Assuming this to be the case, his total costs of college education will be in the range of 50 lacs or so.

From the above data you will be getting a pretty good picture of the educational inflation too. In 5 years the tuition fees has increased from 1.4 lacs to 3 lacs. The other costs have also increased and as you can see, a 4 year course for BITS starting today will easily cost more than 22 lacs or so, all things considered. Just the Tuition fees will be 13 lacs or so.

How will this look if your child is starting college after 15 years? Well, at an inflation of 15 % the tuition fees alone will be 1.8 crores. I know this sounds fantastic, but remember just 10 years back the Tuition fees of BITS was 50000 a year and it has gone up more than 5 times.

I am happy to spend this amount on giving a good education to my children as it is going to be a huge competitive differentiating aspect. However, I was able to do so as I prepared for the same in terms of my planning. Even then the inflation was surprisingly high and I had to rejig some of my plans.

You need to work on your plans right now and put them in place.

Investing for your children? Invest in them instead

I often get asked about how I was able to positively influence my children into focusing at the right areas as far as their academic careers go. In reality much of it has been done by themselves, though I have been a constant presence. More importantly, I think many parents try to emphasise on the financial part of the education by investing for their children, so that they can pursue a course of higher learning, when the time comes. While this is definitely very important, a much more important aspect, often neglected, is what are you doing to invest in your children?

Whether we like it or not, parents remain the single most important source of influence for their children, till pretty much the teen years, when their peer groups and friends take over the role. If you are able to guide them properly and instil the right values in them during the pre-teen period then you would have done something really good for them. The mind of a child is akin to a blank canvas in the first 6 years after birth and this is really the right time to influence them in the right manner.

So how does one go about doing it? Well, for starters, even without any effort on your side, you have already played a role by just being their biological parents. The genes you have passed onto them will determine to a degree, how they turn out to be in future. In many ways, they will inherit your good qualities and unfortunately, most of your poor ones too. While this is something, you cannot do much about, how you come across to them is going to play a large part in the creation of their value system.

It is important to understand here that children learn the most from observing things. If there is a contradiction between what a parent is saying and doing, the child will pick up the second. Therefore, it is pointless to pontificate on the virtues of punctuality if you do not go to office on time yourself or are unable to keep some appointment you have fixed with your family. Yet, this is precisely what I have seen many parents do, time and time again. One of the key areas for you to look at as a parent is to achieve consistency between what you say and what you do. This will instil a core value in your child – words are important to honour, and your credibility as a parent will also be on a good footing.

So, in very simple terms, be a living example for your child. Whatever attributes you want him to pick up such as good manners, usage of proper language, honouring your commitments etc, must be things he sees and observes in you with unfailing regularity. Falling short of the standards ourselves and then complaining that our children have not grown up to be like how we wanted them to is really meaningless. 

How can you play a role in personality development of your child? The problem is most parents try to focus on what career they want their children to have, rather than what kind of individual persons they should grow up to be. Focus on the process and the outcome will take care of itself. Give confidence to the child that he/she can attempt all that they want, it is all right to fail at times. Our role as parents is to guide, provide for and facilitate – leave the acting to themselves. Building the self esteem of the child is really the most critical aspect of their growing up and we must never forget this. So, be it in studies, sports, music, reading or any other activities, encourage the child to try out the best possible and do not be worried about the results.

Specific to academics many parents get very agitated if their children are not doing well in school in terms of the marks that they get. It is important to be ambitious for your children but, here again, focus on the process and not the outcome. Try to guide them into being interested in what they are learning, once they are keen on that their efforts will be automatic and the results will follow. For example, if they develop an interest in Maths they will do well in it at whichever level they study it. Unfortunately, way too often we focus on short cuts, not realising that even if this brings in some short term results, the effects of these are not going to be lasting.

At the end though, you also need to steer them in the right direction when they falter. This will inevitably occur in their teens, when they are confused and a little insecure about how fast their world is changing. As a parent, you need to help them focus on the important stuff. I keep reminding my children that while college life must be fun and they need to have their fair share of it, it is also a crucial stepping stone to their future careers – one that needs to be on a firm footing. I think I recognise the potential and capability of my children, it is important for me to point it out to them.

Of course, in terms of directly being involved in their academic careers, I have been so from their early school days and continue to do so to the extent possible even today. I have been able to do it as they have chosen streams where I have a great deal of knowledge. However, even if they had studied Medicine or Commerce, the basic principles would have remained the same.

To summarise, help your children to become better human beings and they will be successful in whatever they choose to do. Even if you have not got their college fees covered, they can always get an Education loan. The question really is whether they can secure admission to a good college – that is something you can play a role in.

Top B school salaries – What and Why

In one of my posts recently, I had touched upon the issue of salaries in the top IIMs and there were quite a few responses to it. Most of the responses were unfortunately not correct and some of them went the political way rather than a reasoned discussion. In this post let me try and address this issue in a more structured manner.

To begin with my top B schools will be as follows and this post is about these. There are several other good B schools but I am not talking about them here. In order of merit these are IIM ABC, IIML/XLRI/FMS, IIM KI / SP Jain / Bajaj etc. My focus in this post will be for IIM ABC as they are really what we are talking about.

So what companies come to these institutions and what salaries do they offer? Firstly we need to understand that there are several companies, specifically in the areas of Consulting and Investment banking to name a few, that come only to specific institutes and not to others. So if one is looking at an initial job in Boston Consulting Group ( BCG ) then it is almost impossible to get through unless you are in these institutes. Some companies like Accenture do go to several other Technology and Management institutes but they look for a different profile there and not Strategy roles.

Secondly, the top IIMs and other B schools get most of the top companies in the different areas. These companies come here for they are absolutely clear they will not get such quality of people anywhere else. If you look at the recruiters from these top companies, many of them have been Alumni of these institutes themselves, so it is very natural for them to pick people from their Alma Mater.

Thirdly for the people who debate as to whether a general candidate from a top IIM is actually one of the best that the country has, let me state what it really takes to get into a top IIM today:-

  • 95 % and above in X and XII board exams. These are normalised in case of IIM B, so getting 99 % etc in a weaker board will not help.
  • CGPA of 8 and above from a good Engineering college, 9 plus will be more like it.
  • 99.5 percentile and above in CAT. About 2 lac people take the exam so you will need to be in the top 1000 people.

The above is just to get a call, and rejection rates after that is also 80 % and more. So you can easily understand what we are talking about here.

So, given all this what are the salaries offered there? Let me give some data points rather than go by isolated figures:-

  • At the topmost tier will be jobs outside India where we get to hear of crores of Rs as salaries. These are very few in numbers and can be only secured by the top few people in every year. For all practical purposes these are statistical anomalies.
  • Highest domestic salaries are typically in the range of 50-60 lacs nowadays.
  • Average salaries are in the range of 20 lacs plus.
  • Median salaries are also in the range of 20 lacs plus – this means half the students in any batch ( 240 out of 480 ) get this salary.
  • The minimum salaries are still in the range of 10 lacs plus and this is normally for people in the reserved categories – even for these people the change in them is quite extraordinary once they go through the 2 year program.

Are these salaries justified? Well, ultimately all salaries are based on market demand and supply, so companies pay for the skills and potential of the people they are taking. The debate about others not getting the same salaries even after several years is not logical. An IT developer with 5 years experience will probably get about 10 lacs but the pressure and accountability he has to face in the job is significantly less compared to an MBA in the first 2 years of his career.

So if you are in the first 2-3 years of your working life and looking for doing something different, you can consider this as an option. Of course, you will need to be really good to get through a top B school.

In today’s India I do not think there are any better opportunities than this.

Is a B school education worth it?

March is that time of the year when B school fever is at it’s peak. Most of them have had their placement season’s, leaving some outgoing students ecstatic and others rather forlorn with the job options they have landed. Throughout the country, a lot of activities are going on with the new admissions. Finally, the first year students are looking forward to the summer internships – their first exposure to significant money in corporate world.

To several students and their parents, B school education is like a holy grail that promises a lucrative career like nothing else does. The type of admission seekers we have to the B schools can be roughly divided into the following categories:-

  1. Students just graduating from college who are looking forward to earning more qualifications that will lead to better job options.
  2. Young people in the first 1-2 years of their careers and not liking it much.
  3. People in their careers for 4 plus years who are not able to see much career growth in the future – this is especially true for IT professionals.

If we simply go by available data then there is no doubt that an MBA degree from a B school of pedigree will definitely help in terms of getting the kind of initial breaks like no other alternative. People in all 3 categories listed above will see significant benefits to their careers and exceptions are rarely there. However, there are a few caveats which these people will need to keep in mind:-

  1. Selection of the right set of B schools and your ability to get into one of these are important considerations. Remember, the top 20-30 B schools will give wings to your career, the rest may not be so hot.
  2. Irrespective of which B school you get admitted to, you have to evolve as a professional manager and present yourself well in corporate life, both at the time of interviews as well as thereafter.
  3. Learning is a lifelong activity, a good B school will set you on the path but you have to traverse it through your career.

So if we broadly agree on the efficacy of doing an MBA from a leading B school, the question is where do you do it from? Let me try to answer it by a ranking hierarchy I have for the B schools when I advise students and others who seek my counsel.

  • IIM Ahmedabad, IIM Bangalore, IIM Calcutta.
  • IIM Lucknow, XLRI, FMS
  • IIM Kozhikode, IIM Indore, SP Jain, MDI, IIFT
  • IIT B schools, IIM Shillong, Other IIM’s
  • Newest IIM’s, Good private B schools

If you are able to get your MBA done from any of these you should be fine. Any other places can also be OK but then you are depending more on your ability as an individual to do well and not so much on the institution’s brand power to get you started.

How much will all this cost? Well, the figures can range from 10 lacs to 25 lacs for a 2 year education. FMS is the cheapest among the lot and XLRI is currently the most expensive. Fortunately, this is not too much of a problem as there are many banks which will give you loans covering the entire cost of education. The pay back will really not be a problem even if you are able to get a reasonable paying job and, for most people, the loan can be squared off in the first 3 years of their careers or so.

How much does one earn? The range can be quite wide and is obviously depend on which B school are you from. For the top B schools an average or median salary can be around 20 lacs per year in India. The highest domestic salaries can go upto 50 lacs or so and the salaries outside India can be 1 crore and above. More importantly, even the lowest salaries in a good B school will rarely be less than 10 lacs a year.

So, if you have the aptitude and the ability to get into one of the top notch B schools of the country, it is always a good idea to try for it. Remember, it is hugely competitive and ,unless you are blessed with the benefit of reservation, the elimination process is rather brutal. I was just in an IIMC panel the other day and we could recommend only 3 out of the 20 general category candidates we interviewed. This was after all of them had scored more than 99.5 percentile in CAT.

But that is life for you – to get the best you have to be the best too, more often than not.