Ideal financial planning for the higher education of children

Education has become fairly expensive in absolute terms and calls for better planning of finances. There is an interesting twist, however, to the whole context, goals, and the process of higher education – the best quality higher education could increasingly be organised outside formal classrooms! And at the prices comparable to 1990s levels and lesser! Free yet world-class online courses are among the fastest growing ‘products’ on the web! However, such courses are for the adept self-learner!

Not surprisingly, the more important aspect of the ideal financial planning for higher education is about ensuring that your child becomes a self-learner while in school! Indeed, planning for higher education is to avoid the trap of the ‘standard school education’ – weak basic skills of learning reading, writing and arithmetic; in many schools across the world majority of children regress with each passing year, and as a result develop an unfavourable attitude towards learning.

A general rule of thumb for the Indian education system, including the IITs (B.Tech graduates prefer to move away from their alma mater for higher education), is that the longer a student spends in the system, the poorer he will be at learning. Thus, expect a Class V student to be a better learner than a Class VIII student and the latter has a better chance of learning something new compared to a class X or XII pass or a graduate.

Thus, the entire financial planning for education has to be overturned. Please save for higher education if you are left with spare cash after spending all you can in the nurturance of the multiple intelligences of your child till the age of 18. Invest in a ‘solid’ foundation for your child. Besides, your savings are unlikely to match the inflation in higher education costs anyway.

The changes in parenting and nurturance at home and the resultant pressure on schools to stretch too much to cover-up for poor quality values and overall development context at home, is pushing academic excellence outside schools. In the process, academic education quality has suffered a big blow.

Clayton M. Christensen is among the leading figures on disruptive innovation and this is what he has to say on higher education:

The economic urgency around higher education is undeniable: the price of tuition has soared; student loan debt now exceeds $1 trillion and is greater than credit card debt. At the same time, more education does not necessarily lead to better outcomes. Employers are demanding more academic credentials for every kind of job, yet are, at the same time, increasingly vocal about their dissatisfaction with the variance in quality of degree holders.

The signalling effect of a college degree appears to be an imprecise encapsulation of one’s skills for the knowledge economy of today. McKinsey analysts estimate that the number of skill-sets needed in the workforce has increased rapidly from 178 in September 2009 to 924 in June 2012.

Therefore, whether institutions like it or not, students are inevitably beginning to question the return on their higher education investments because the costs of a college degree continue to rise and the gulf continues to widen between degree holders and the jobs available today.

‘Learning and work are becoming inseparable,’ argued the authors of a report from the Institute for Public Policy Research, ‘indeed one could argue that this is precisely what it means to have a knowledge economy or a learning society. It follows that if work is becoming learning, then learning needs to become work—and universities need to become alive to the possibilities.’

By breaking down learning into competencies—not by courses or even subject matter — these knowledge providers can cost-effectively combine modules of learning into pathways that are agile and adaptable to the changing labour market.

And over time, the industry-validated experiences that emerge from the strong partnerships between online competency-based providers and employers will ultimately have the power to override the importance of college rankings and accreditation.

Source –
“Hire Education – Mastery, Modularization, and the Workforce Revolution” By Michelle R. Weise and Clayton M. Christensen, July 2014
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