Are IIMs Still Affordable for the Middle Class?

The Numbers That Define The MBA Landscape

Fee Growth

The table below shows a surge in fees in a few IIMs between 2003 and 2025. These institutions, which at one point in time were considered affordable public institutions, have now seen the fee rise by 1500 per cent to over 2000 per cent. This clearly indicates that there has been a considerable shift in the cost of pursuing an IIM education.

Salary Growth

The table highlights the percentage increase in salary in the four IIMs. The salary has increased almost four times across all four IIMs in the past two decades. However, if we compare the fee, the increase is moderate, which questions the affordability and ROI.

Observation: There has been a massive fee increase (over 14 times) during the past two decades. Newer IIMs, such as IIM Kozhikode, have seen the steepest rise. The fee increase has been more than the inflation or the average income growth. This is an indicator that IIM education is gradually moving out of reach for a large section of middle-class students. Unless there are good scholarships or strong salary outcomes after the degree, there is little financial assurance for a student from a middle-class family.

Also Read: The Big Lie of “100% Placements” in B-Schools

ROI Positive, But Change of Entry Barrier

On paper, there is a strong return on investment; however, these calculations often ignore who can afford to enter the system in the first place. These days, an IIM student who is from a middle-class family has to pay Rs. 20 lakhs - Rs. 28 lakhs in fee; there are also the additional living costs, opportunity costs, and a loan that can exceed Rs. 30 lakhs.

For a middle-class family, merit is not the only factor determining admission in IIMs; It is also about how much financial risk the family is willing to take!

Are IIMs Losing Their Public Character?

The following tables look into the financials of IIMs by comparing the total income and expenditure. There is a constant surplus across all four institutes; this means that these institutes have become self-sustainable. Over the years, they have become revenue-driven institutions, due to which there are questions about whether IIMs are steadily moving away from their public-service character.

Income Vs Expenditure

The table compares the complete income and expenditure of four IIMs to evaluate their financial position. It points to the operating surplus that each institute generates. This indicates how IIMs have become financially self-sustaining institutions.

This particular data has added another aspect to the debate. IIM Calcutta recorded a surplus of Rs. 128 crores, IIM Kozhikode recorded Rs. 103 crores, and IIM Ahmedabad and Lucknow also recorded surplus income over expenditure.

Also Read: Early B-School Deadlines Are Forcing Students to Gamble

Income Vs Tuition Fee

The table below showcases how much these IIMs depend on the tuition fee to run their operations. We have broken down the income into academic receipts, tuition fee and executive education. This table highlights the fact that the revenue model for IIMs is evolving and does not solely depend on tuition fees. The income is increasingly being generated from alternative avenues as well.

This particular table shows that tuition fee contributes between 24 per cent to 35 per cent across the four IIms. It is an indicator that although fee remain a significant part of the revenue but these institutions are relying on executive education, certification courses, registration and other means.

The data in the table clearly indicates that the fee hike in IIMs is not the only source of revenue. Since there are clearly other ways to generate revenue, why is the burden falling on students who are pursuing flagship programmes from these IIMs? A hike in the fee is not a financial necessity anymore since there are other ways to increase the revenue.

When IIMs Hike, Everyone Follows

The fee hike in IIMs has a greater impact than anyone can imagine. IIMs are model B-Schools, and if they hike their fee, it gives other B-Schools the motivation to increase their fees as well. Whenever IIMs hiked their fee, private B-Schools followed suit. The fee affordability debate is not just about IIMs; it is also about how these institutes shape market behaviour.

The Middle-Class Reality Check

The way IIMs have hiked their fee, a student who is from a financially strong family, opting for an MBA from an IIM, makes sense. For a student who belongs to the middle class, there are several factors that go into the decision-making process.

• There is pressure to choose high-paying roles over meaningful ones or of their liking

• Due to this, education starts to shape life choices much before the job even starts

The Question That Remains

We keep harping on the demographic dividend that our country has; it sits on a very fragile reality, wherein top public B-Schools have increased their fees manifold. This raises a serious question about whether IIMs do the job they were supposed to do. Are they helping with social mobility, or are they turning into gatekeepers of privilege?

On one hand, they are public institutions, on the other due to the rise in fees, they are turning into institutions that reward affordability rather than merit. The question of affordability and who benefits from India’s public institutions will remain unanswered.