The State of Schools in Bangalore (& possibly elsewhere too)

I must warn you that this post might offend you — while I have no intention of offending anyone, I might inadvertently do so, and for that I apologize.

Now that the disclaimer is out of the way, let’s begin.

The Issue

A high proportion of parents in the city of Bangalore are quite pissed off with the state of education in the city. You only need to read some of their posts on Facebook to see that they are gravely dissatisfied with the bang for the buck they are getting as far as school education is concerned. Perhaps Cambridge Analytica will be able to help Narendra Modi with education policy by sifting through some of these posts. We shall see.

While it is necessary to state that the anger and general resentment with life exhibited by some people stems from a number of factors which are well beyond my control, I hope to lay down why schools appear to be so ridiculously expensive in Bangalore. And why they won’t (and shouldn’t) be getting cheaper. And also why they seem to offer little value for money.

Full disclosure — I run a school myself an therefore have views which might add a bit of perspective beyond the one sided arguments that you tend to read on social media (these are usually put forth by parents who simply refuse to take a broader view of the issue). So read on…

Real Estate Ain’t Cheap

If you live in Bangalore, you will know that the cost of real estate is very high.

For an average wage earner, it is becoming close to impossible to buy a house. In the central areas like Indiranagar, Koramangala, Richmond Town and the like, renting even a basic 2 BHK in a building without amenities can cost you upwards of 25k a month. And that is at the lower end of the spectrum.

The situation seems to be getting worse over the years. Landlords seem hell bent on getting a certain rental income, irrespective of the time they have to wait to get a tenant. One property I know of in Domlur lay vacant for three years because the landlord had made up his mind that he would not accept less than 1.2 lakhs per month for the property. Fortunately for him, an ambitious young start-up came to his rescue and took it on rent, which subsequently had to wind up operations seven months later, citing ballooning costs and a lack of revenue streams as the reason for their downfall. You get the picture…

To analyze whether a product or service is overpriced, one needs to look at the cost of the factors of production. And in the case of schools, the most expensive factor of production is undoubtedly land and buildings. To run a school, one needs a certain minimum amount of space. I am not even talking of expansive grounds with the most modern infrastructure. Even a small preschool needs to rent out a building which has at least a few rooms and perhaps a small play area. If this space costs you an arm and a leg, then the only way you can stay afloat is if you charge a certain minimum amount in fees. This burden undoubtedly falls on the parents.

Unfortunately, with one factor of production being so expensive, capitalistic tendencies lead to squeezing expenditure on other factors of production — in our society, it is the teachers who bear the brunt, and are usually, grossly underpaid for what they do.

The other aspect to consider is the perceived value from buying a product or service. With all the outrage against school fees, it is clear most parents do not see much value.

So when people go off on a tangent complaining of the high fees in schools, they seem to miss the obvious point that schools don’t really have an option, in most cases. This is particularly relevant to new schools. The only exceptions to this argument are the old, traditional schools like the convents and the like, which have been sitting on prime property for decades, if not centuries. Their cost of land is minimal, and they received their property as hand me downs from trusts which were formed eons ago. In fact, I know of one school which is still paying Rs. 1,200 per year in annual land lease rental — the same amount that was agreed upon thirty years earlier.

Builders Are Smart

Following on from the above, a situation of expensive real estate is disadvantageous to most of us, but very profitable for certain sections of society.

The most obvious are those that already own land or have easy access to it.

We’ve all heard of that Uncle who sold his house on 6th main in Indiranagar for an insignificant sum of 14 crores to a builder, who demolished the structure and put 9 flats in its place, of which 2 went to Uncle, 2 to the builder and the remaining were sold to fools who thought that paying 4 crores for 1700 square feet in a city which will probably run out of water by 2025 is a good investment.

Uncle in the mean time has moved to Coorg, having achieved his life’s ambition of sending his children to college in the US (before the real estate windfall) and going to bed every night with the peace of mind that his 2 flats will go to his grand children when they are 18, thereby providing financial security to every generation that is alive today. Isn’t this what we all dream of?

Hell no, I don’t give a damn about Uncle and his real estate windfall…

Which comes back to another obvious point — when a factor of production which has limited supply is under your control, capitalistic tendencies ensure that such resources will be used to squeeze every ounce of profit out of them, benefiting a minority while leaving the majority worse off.

Builders and land owners own pockets of land everywhere. They are in prime position to capitalize on building flats, villaments and of course, schools.

Build an apartment building, and once all units are sold, the cash flow ends there.

Build a school however, and you guarantee an income for generations to come.

Everyone thinks like Uncle!

Which is why most of the schools that have come up in the last 20 years are owned by builders, or in tie-ups with builders. Think of any big school in Bangalore and you will find a large builder associated in some way — either as outright owners, or as the party that has supplied the land and the buildings.

I don’t have any friends who are builders, but I have often heard that their ‘impact’ from opening a school is often measured by the ‘profit per square foot’. So the ultimate decision hinges on the amount of fee to be charged in order to satisfy the ‘profit per square foot’ that they are looking for.

In short, even those who own the most expensive factor of production do their budgeting based on how much return that they would like to earn as a result of such ownership.

Regulations Make Opening a School Difficult

The regulation with regard to education in our country is such that it is massively skewed against those who don’t own land.

This is obvious since 90% of schools that are opening these days are owned by people with very deep pockets. A very large proportion of these owners fall into the following categories:

• Builders
• Large conglomerates who are diversifying into education
• Politicians and their larger cycle of homies (sons, daughters, uncles, aunts etc — with this group in particular, I often wonder how they made so much money. I am sure you are as curious as I am)

Why? Well, they are the only ones who can afford to satisfy the regulations.

If you have land, you might as well make it fancy and ‘impress the parents’ with fancy infrastructure. And it is this sort of infrastructure — swimming pools which magically clean themselves without chlorine, tennis courts with the same material used in the Arthur Ashe Stadium, basketball courts which have the blessings of Michael Jordan, astro turf which has been ratified by the Beckham Foundation — which allow schools to command the fees that parents are paying these days for ‘schools’.

Most of these ‘facilities’ don’t add very much to the children, but they do provide the school with a reason to charge a much higher fee than they would be able to had they not offered such gimicks.

Add to this a Swedish principal (yes, Bangaloreans love everything Nordic nowadays) and some teachers from countries I’ve never been to but desperately want to, and you have enough basis to charge an annual fee which makes Harvard seem under-priced in comparison. Quick disclosure - I love diversity, but don't encourage schools charging an arm and a leg simply because their teachers are 'expats'.

But worry not dear Bengaluru parent, the situation is the same in every country where government sponsored education does not serve the middle class. Just look at Dubai for instance. The ‘best’ (and I use that term with a degree of skepticism) Indian school in Dubai charges more for high school per year than I paid for all 3 years of University in the UK. But there seem to be no shortage of people willing to pay such ridiculous fees.

Education is one of the few industries where it is virtually impossible for the small time entrepreneur to start up. Simply because the amount of capital needed is almost always beyond the scope of the average Jitender. And the regulations favour the person with the most capital. In fact, the regulations are most undemocratic because they ensure that only those with significant amounts of capital are able to satisfy the criteria.

That is not the case in most other industries. If you have a little amount of capital, and are really passionate about Maggi, you will always find a shack that you can rent out to serve people every flavour of Maggi ever produced. There is no regulation which gives your Uncle who owns a house on 6th main in Indiranagar an edge. The same for a tech idea — the government doesn’t ask you if you have a 20 year lease on land so you can start coding up an alternative to Facebook on the blockchain.

This post isn’t meant to be a jibe against builders. Some of them are doing a great job and have the right intentions. Kudos to them. But many don’t, and as a parent, you need to be able to choose well.

The Prevailing Mindset of People

It is unfortunate that almost everyone agrees that education needs to be more experiential and hands on, but so few are willing to risk putting their children into schools which actually make education more hands on and experiential.

This is a perfect case of the question investors often ask of would be investees:

“Are you really passionate about solving the problem, or do you just like the idea of solving the problem?”

Too many people just like the idea of an education which is more hands on and less driven by rigorous testing. As soon as they hear that a school doesn’t use books or doesn’t have tests, they wonder if their children will be able to cope with the ‘real’ world.

Well, guess what?

The real world is more about experience than it is about static learning and tests. This has started to change all over the world, but it will take a long time before everyone is on board with this thinking.

The Prevailing Model of Schools

Given all that I have described above, most schools follow a model which consists of the following:

• Classes of more than 25 children per class (in most cases it is 40 or more)
• Thousands of students on campus (how else will you achieve that ‘profit per square foot’?)
• Just enough teachers to portray a ratio of 1:25
• Impressive infrastructure to justify a given level of fees (signaling)
• Paying teachers a tiny fraction compared to the total revenue of the school

Such a model is the only model which justifies the financial return on the amount of capital invested.

School principals, who are usually not the owners of the schools, are under tremendous pressure to increase admissions and consequently revenue.

It is ironic that the advertisements for schools these days sound a lot more like advertisements for housing, and not education.

‘Spread over 30 acres of land, with the best international facilities, So n So International School will provide your child with the best facilities money can buy…’

Or something along those lines.

The only problem with such a model is that it is sub optimal for students and teachers. Neither are able to do justice to their potential when you are dealing with such huge numbers.

Students often feel lost and are not able to use the facilities — what is the point of boasting of the oh so great facilities when a child only gets to play on the field for one 30 minute session every week? Teachers too are overwhelmed by the sheer numbers they are dealing with, and the cookie cutter approach that results from following a syllabus to the T.

In other words, too many schools these days resemble factories. Not the fluid, free thinking communities that they are meant to be.

The Chasm

If it hasn’t already occured to you, there is an ever growing chasm between what schools do and what they claim to do.

Every school in Bangalore claims to follow some methodology or the other — using methods and philosophies that everyone admires. But this is usually just marketing spiel — talking to the students and parents reveals a story that does not correspond at all with the image that the school tries to portray through its radio and other advertisements.

The one thing that is becoming increasingly clear to me is that Bangalore is gearing up to produce a well informed society, not an educated one.

Knowledge of facts alone does not make one well educated. In the current context, it only makes one well schooled. Possibly even well indoctrinated. But certainly not well educated.

If the dynamics described in this post are perpetuated due to the greed of capitalists and capitalist oriented government policies which seek to channel public wealth into private hands, the chasm will only get wider.

When the chasm gets wider, we will all pay for it dearly — very high fees, low standards of education and a society in which wealth in all its forms is concentrated in the hands of very few.

And if you’re reading this, chances are that you won’t be part of that ‘privileged’ elite.

The Problem of Choice

Hiding behind the monster of high fees, is the devil of no choice. Parents do not have much choice when it comes to choosing a school. Despite the huge number of schools on offer.

If government regulations don’t support the establishment of smaller schools, or micro schools, as this article describes, or even schooling co-operatives, parents (and by extension their children) will be stifled. Not only does the government need to enable greater choice for parents, it needs to be sensible about implementing measures such as fee caps. If it doesn’t do anything about the cost of land available to schools (the most expensive input), it has no business interfering with the fees charged by schools. If parents do get their way and the government does indeed put in place regulations which don’t take into account the high cost of real estate, it will lead to fewer talented people going into education and only those with financial might staying there. In other words, the situation is likely to get worse.

Oh wait, here is another reason why schools are so expensive. The RTE (Right to Education Act) mandates that schools take on 25% of people who pay a very minimal fee, and therefore, the revenue that is lost by giving admission to those who pay a minimal fee is made up by charging those who pay normal fee extra — just to make up for lost revenue. So yes, the RTE is also responsible for the increasing fees being borne by those who do not fall under the RTE quota.

Allowing all sizes and types of schools to flourish will increase the supply of quality education and give people more choice. This should serve to give more impetus to keep prices (fees) under control.

Furthermore, the government needs to legalize and promote all sorts of home schooling. If I choose to teach my child at home, why on Earth should anyone object to this, and even go to the extent of calling this illegal? How can a government be so draconian as to impose upon people a choice which costs money AND provides them with inferior quality? In any case, from what I have seen, home schoolers get a better education than children studying in the most expensive schools in the city. One home schooler built her own cryptocurrency price tracker app and sold it for a huge sum. I doubt she would have been able to do this had she been grinding her way through tests and exams.

Are there solutions?

To be honest, I know that every problem has a solution. What I don’t know is whether our society is ready to implement certain solutions.

Information, and access to information, is more freely available to us than water.

Nobody needs to attend school or college to learn. For as little as Rs, 1,000 per month, you can get access to the internet and learn from the best teachers on the planet. That most don’t think of this as a viable solution is a different matter.

The government needs to stop regulating education with the underlying assumption that schools have a monopoly on the delivery of education. They don’t. If anything, schools in Bangalore will never match up to the quality that is available online.

What people need to realize is that putting their child in a big mainstream school where they are constantly complaining about (high) fees and (low) quality is not the only way forward.

Given that the problems are so nuanced, we need to work together to find solutions to these problems.

And that is why I love Bitcoin

And if you have been following my journey, you will know that I have become a big fan of bitcoin, and everything that decentralized and permissionless blockchains can do for us.

We have the means to create our own money now.

When will we start creating our own systems of education? Systems that work for us all…

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