They make a single mention of what could be a significant contributing factor; student debt. A quick google search for India and China show that many of their top public universities charge ~$300 and ~$800/year while UC Berkeley is over $14,000.
After 4 years, with on-campus housing the first year, the Berkeley student owes about $72,000 while the Indian student owes $1,200.
As far as the income differences between the countries, the average Indian saves 31.4% [1] of an average $6,490/yr which means $2,037. While in the US it's 5.7% [2] of $58,030 which means $3,307.
So stated another way, the Indian education costs 0yr/7mon of average savings while the US one costs 21yr/9mon. By the time the American child has their bachelors, the American parents are already broke while the Indian parent's savings reserves haven't been depleted - a 2 year graduate program is something they still have the cash for.
I think I should give you direct values, instead of simple speculation. I am masters student in one of the US citizens, and am being funded by my parents savings, so this is all very relevant.
I grew up in an above middle class Indian household with an income of about $10,000 a year. My parents lived very frugally (I lived in possibly the highest Indian COL area) and my parents started saving early. Over about 25 years, my parents have managed to save about $80k, which they are fully using to fund my Masters.
Funding your child's masters is a huge risk to an Indian parent. The deal is that I fund my brother's masters and take care of my parents after their retirement. Should I bail after my Masters, that would leave my whole family in financial ruin. At the same time, the blind trust between family is one thing that I think helps Indians manage debt better than Americans where family members usually manage finances independently. (for better or for worse)
Now most Indians aren't above middle class or frugal/economically aware to start saving at the rate my parents did. Loans at 10-15% interest rate are very common.
If you look at the odds in this sense, it is absolutely vital that an Indian gets a job in the US after graduation. The person might not settle there, but they would usually work there for at least 5 years to pay off their debts or responsibilities. I am fortunate enough to be in a well ranked university with generally decent career prospects at the end of my Masters (sadly no funding). But, if Trump were to change immigration and h1B policies the ones at less prestigious places would possibly have their lives overturned. If such a change does happen, I hope it does not retroactively affect those already in the US and rather is applied to those who will be coming. (so students can avoid US as an expensive destination for higher studies, all together)
It’s very sad actually that in the US my parents saved absolutely nothing for college because when my one parent that attended did it they could afford it with a summer job.
My parents (when in Canada) saved hard for a scheme that would pay for university for me. In the end the fund performed so badly compared to its promise that it just about bought me some nice textbooks 30 years ago in the UK. (I came across some of the paperwork when 'archiving' the other day.)
Equally, I punt money into my kids' pensions, but at that distance it is a huge punt economically! I mean, some politician somewhere could do something stupid and destroy their value before my kids get to cash in in 50 years' time, just imagine! B^>
Since governments spend in the now, maybe it's rational for parents to also.
I think my parents ended up being really surprised that college couldn't be paid for with a summer job. I don't think Boomers realize the price increases we've seen in college tuition prices.
Yeah except for the tons of people who help out their parents on minimum wage jobs because family is family. And those parents "contributed nothing" (except for you know, labour and care and such).
It's nice when people have it together but you'll go crazy if you try to "add it up".
I hope I'm lucky and consistently organised enough that my children feel entitled to believe that their success was planned for them. Working on it. They'll probably hate me for it and have some point of view where it is "stifling". Still cool, get it.
I have a very different perspective but I also had some advantages and a particular “character roll” of genetics and upbringing (much was not positive). One thing - nobody is required to have kids!
Not sure you can compare them so directly. $800 is an unobtainable sum (?) for 1 billion Chinese/Indians. I'd also wonder about the difference in quality between UC Berkeley and a lot of those colleges. They are probably very good but US colleges tend to dominate world rankings (partially why everyone goes to them). If outsiders are willing to spend money in your schools, what happens to prices?
I'm also unsure about the comparison between averages (500 billion impoverished + 500 billion wealthy makes for an uninformative average), or savings rate. If US families save less (for cultural reasons or they don't need to), it's not relevant. Or it might be late.
Savings is used because looking at per capita income is a disingenuous metric.
Since making 10 times more than someone doesn't get you very far if you live in a place that's 20 times more expensive, savings rate was used as a rough proxy for "how much can an average person set aside for this considering all other factors".
You could certainly factor in GINI coefficients and quintile distributions for a more accurate analysis, but I don't think it will change the fundamental nature of the results:
The capital a parent earmarks for their child's college education takes more time to accumulate and is more quickly exhausted in the United States than in many other countries. This means that the United States parents may be less able to afford a secondary program for their child in the United States than their counterparts abroad who didn't have to bare the same initial cost burdens.
800$ is a very big sum for a lot of my countrymen. Also it is true that a lot of Indian schools operate with very few resources, that would be required to appropriately educate all the students they serve. And this makes them noncompetitive in international university rankings. And to be frank it is not in our interest to pander to the rankings, because they encourage expenditure of a large amount of resources to train a few people who may or may not directly help the nation's economy.
I don't think rankings are as important to even individuals as access to employment opportunities. The cost of college education has to be weighed against the return on investment. If for example, the H1B restrictions are tightened to the extent that foreign students aren't able to find job opportunities, then the ranking of the university would be irrelevant in absence of decent return on investment.
I believe the same holds true for the native students seeking graduate education. If the cost of education is too high, be it monetary cost or opportunity cost, the people will not seek it.
" train a few people who may or may not directly help the nation's economy."
The words "who may or may not directly help the nation's economy" makes me think they mean this: IITs are considered the top institutions in India. I have heard that the people who come out of these IITs don't really help India. Most of them end up working in developed countries and contribute to those economies. Nothing much for India. So, it doesn't make sense to spend money on them. If I have to choose between funding for one IIT or 5-10 low grade engineering colleges, I would choose the latter because in some way, it is still benefiting India. IITs, I don't know.
You need top scientists to get publications in Nature, Science etc. These scientists (and the equipment they need) cost a lot, and it's unclear whether it's actually a reasonable investment for a country where so many basic needs (ex. reliable electricity) are still unmet.
Except the American scientists we're paying aren't publishing their statistical code or data just an advertisement of scholarship. I'm not convinced it's a good deal. In fact, I think it's probably a huge waste considering the opportunity cost of the money.
Some people argue that US government’s generous spending on sciences is in big part for security reasons - so that, if the next deadly weapon is to be discovered, US will have it first. In such case, sharing code and data is be counterproductive.
Can confirm, 800 dollars is nothing for average Chinese family, consider how highly the value education. The money they send their kids to cramp school for college entrance exam can easily top that. The bigger question here, is how to earn to ticket to get into top schools.
In 2016,the average Chinese GDP per capita is 8,123.18 US dollars, it is almost as much as Russia ($8,748.18) or Mexico ($8.201.31). This really surprised me.
In 2010, only 11.2 percent (almost 150 million people) lived on less than $1.90 a day. Not shown above is that 27.2 percent (almost 360 million people) lived on less than $3.10 a day.
So that's what, a bigger population than the US who live on less than $1k a year?
Even in that 27.2 percent, a family of 3 lives on $3k a year. I don’t think 4 months of living expenses is unobtainable, especially when we take into account Chinese people high savings rate.
I didn't understand your math, but your comment about 0 year/7 month prompted me to write this. For my bachelor's education in India, my parents took a loan of 200k (2 lakhs) rs that took them I think 4 years to pay off. Unless we can get into a government college, a lot of us cannot afford private education.
In India, I didn't see anyone taking out debt to pay for their undergrad. The cultural norms were such that parents paid for their kids education until graduation. On the flip side, neither was there a culture of summer jobs (apart from a handful of universities) where one can earn money to pay for college.
As sibling comment mentions, the deal is that when parents turn old, kids are expected to take care of them.
What I don't understand is that top universities in US receive grants, hold patents, receive royalties and contributions from alumni. They seem to have a lot of money. Is it not self-serving to reduce the costs for fees so that eligible students can join the university and be a factor in it's march ahead?
Or do these universities go bankrupt without such high student fees??
After 4 years, with on-campus housing the first year, the Berkeley student owes about $72,000 while the Indian student owes $1,200.
As far as the income differences between the countries, the average Indian saves 31.4% [1] of an average $6,490/yr which means $2,037. While in the US it's 5.7% [2] of $58,030 which means $3,307.
So stated another way, the Indian education costs 0yr/7mon of average savings while the US one costs 21yr/9mon. By the time the American child has their bachelors, the American parents are already broke while the Indian parent's savings reserves haven't been depleted - a 2 year graduate program is something they still have the cash for.
[1] https://www.quora.com/What-is-the-average-savings-rate-in-In...
[2] https://www.fool.com/saving/2016/10/03/heres-the-average-ame...