A recent article in TheLEADER regarding rising tuition fees at Vinschool in Hanoi probably resonated with many readers, even if they did not have children at that particular school. Indeed, it is reasonable to suspect that high and growing costs of private education are becoming a major concern around Vietnam.
Foreigners such as myself are often dismayed by the costs of sending children to international schools here. For example, K-12 tuition at the British International School (BIS) or Saigon South International School (SSIS) is more than $20,000 per year. Many of our families back home did not pay a single dollar in tuition fees until we graduated high school and went on for further education in a college, university or vocational program.
Even then, tuition fees were quite affordable. As a US citizen and California resident, my four-year university tuition in the State University system was less than $5,000 per year. I subsequently attended graduate school at George Washington University, a well-known private university. The annual master’s degree tuition fees were considerably more burdensome, but they were about the same as sending a five-year-old child to Kindergarten at SSIS in 2017.
It is tempting to blame some private education providers for holding parents hostage with high fees, but they are mainly responding to a high level of demand. Vietnamese people tell me that parents are willing to pay whatever the market requires if this means their child will benefit from a better learning environment, a more prestigious diploma and better chances to study abroad.
Similar motivations have created an environment of “education fever” in some Asian countries steeped in Confucian culture, where education is highly valued, and grown children are expected to “repay” their parents by looking after them in old age.
Morgan Stanley’s chief Global Strategist Ruchir Sharma amusingly remarked that education spending is now accepted as an ultimate social and personal virtue; questioning this practice is almost as taboo as “criticising motherhood.” However, some leading economists and politicians are finally starting to take a more balanced view.
Mr Sharma, for example, has dispelled the notion that high levels of education spending will help poorer countries move up the economic development ladder. In his book, The Rise and Fall of Nations, he points out that South Korea is often seen as a textbook example of an education-obsessed Asian country. Its incredible industrial takeoff began in the 1960’s and 70’s when basic literacy rates rose dramatically. However, large segments of Korean society did not start devoting their life savings to expensive “cram schools”, private tutors and study abroad programs until much more recently.
Nowadays, younger Koreans have increasingly chosen to delay their entry into the workforce to pursue higher education. However, the number of job openings requiring a university degree is limited, even in advanced economies. This reality has created a labour market mismatch in Korea, where the number of fresh college graduates exceeds the number of suitable job openings. Even a foreign university diploma can no longer guarantee a desirable job posting, and many college graduates are opting to remain unemployed instead of working alongside less educated people in unskilled jobs.
In short, while higher levels of education can help a country succeed economically, especially when initial education levels are very low, the tangible economic benefits of educational attainment are not as good as advertised. Even as South Korea frequently tops the list in world rankings for schools performance in subjects like math and science, its productivity levels lag behind most OECD economies and remain at only 50% of the US level.
Looking beyond the abstract notions of GDP growth and productivity, “education obsession” can also lead to negative social and personal consequences. In recent years, some South Korean leaders and academics have said the phenomenon is partly responsible for the country’s unfortunate place some global indices - it ranks highest among advanced economies for youth suicide and near the bottom in terms of women’s fertility.
In Korea and China, spending on expensive private education programs has spread beyond the upper classes, and many families take on large loans to pay for them (According to Samsung Economic Research Institute, it now account for around 70% Korean disposable household income). South Korean household debt already ranks 7th in the OECD, but debt levels have climbed faster than any other large advanced economy since 2000 (from 50% of GDP in 2000 to 90% in 2016). According to the LG Economic Research Institute, 28% of South Korean households cannot afford monthly loan repayments and are hard pressed to live off their incomes.
The point here is not to disparage Korean society or educational achievement, as there is much to admire in both. However, people everywhere are well advised to take a more realistic view about what education can deliver regarding both individual and social wellbeing. The rush to splurge on expensive education programs is becoming a trend in Vietnam, but parents should weigh the potential benefit these investments can bring against the risks the family is undertaking given the resources at their disposal.
*The author is Business Development Manager at Global Integration Business Consultants (GIBC) in Ho Chi Minh City.