Under the socialist system, India ignored cost analysis. The consequences of neglecting cost analysis are many such as:
(i) The promises made by political leaders for universalization of primary education and ensuring total adult literacy without verifying their financial feasibility have resulted in serious trouble and non-fulfillment,
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(ii) Adopting education technology and equipment from the developed western countries without studying its cost implications in future vis-a-vis its relevance to and improvement in learning aid educational outcomes would be disastrous in terms of financial stability,
(iii) Upgrading teachers’ salary or their placement in higher scales without cost considerations can lead the system to bankruptcy,
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(iv) Proliferating educational programmes without paying attention to financial needs for land, buildings, equipment and salary of teaching and non-teaching staff can lead to serious deficits, inefficiency and lack of educational effectiveness.
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Cost analysis can be useful in following ways:
(i) At the macro-level i.e., national level, estimates of costs are essential for estimating financial and other resources required for educational sector and its various sub-sectors.
(ii) It helps us to ascertain whether allocation of resources is optimum, appropriate and reflects equity.
(iii) It helps us to ascertain the extent of the efficiency of the educational system.
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(iv) It helps us to find out whether inequalities in opportunity, quality and quantity of education exist among different groups such as reserved category and open category people, between regions, between boys and girls and so on.
(v) It helps in costing and ascertaining the economic feasibility of educational plans.
(vi) It helps us to identify alternative ways of pursuing educational objectives and weighing their relative advantages.
(vii) It helps us to determine the short and long run implications of specific projects.
(viii) It can be used n determining the initial and long term expected costs of a major educational innovation.
(ix) It helps us to determine the economic implications and feasibility of policy decisions before they are made. Examples of such policy decision ; are free and compulsory education to all up to standard X, free mid-day meals to primary school children, establishment of academic staff colleges, higher pay-scale for teachers etc.
(x) It can be used in deciding whether major educational changes in the system’s structure, content, process and outcomes need to be replaced or not.
Classification of educational costs:
Cost of education can be broadly classified as follows:
Cost analysis in education, ideally, should focus on:
i. Cost per student admitted
ii. Cost per student attending school/college regularly
iii. Cost per student passing a particular examination
iv. Cost per student of the relevant age group population
v. Cost of education per capita