The Cost of an Educated Human

PRINCIPLE: Education needs to be affordable.

Let’s start with the first big challenge of a quality education. The fact that it’s so expensive.

I recently visited Tsinghua University in Beijing. Wandering through its tranquil wooded grounds dotted with striking modern architecture, I was struck by its grandeur. While Tsinghua is often called the Harvard of China, its pristine campus made Harvard's Science Center look like a brutalist relic, a concrete homage to some forgotten Soviet era. As the highest-ranked university in Asia-Pacific, Tsinghua sits at the heart of China's innovation ecosystem. Its influence is reflected in its leadership: for example, the board of Tsinghua's School of Economics and Management includes Tim Cook and many of China's leading entrepreneurs.

What struck me the most was when they told me how much tuition costs. It costs $700 a year. Yes, it’s subsidized. But it only costs $3,500 a year for foreigners.

That sent me on a brief research binge. How much do other universities around the world cost? In India, the incredibly elite and exceptionally difficult to get into IIT (with a 0.5% acceptance rate) costs about $3,000 per year. In Peru, UTP, one of the best technology universities in the country, costs $120 a month and makes a profit.

By contrast, Harvard costs about 70 times that. While a degree costs $2,800 at the "Harvard of China" and about $12,000 at the "Harvard of India", a degree from Harvard costs $331,000.

As a graduate of two of these world-class American institutions, Harvard and Stanford, I can attest to how incredible they are. The quality of the students and professors is beyond measure. These two places shaped my life about as much as anything. I am the person that I am today thanks to these incredible institutions. But the quality of their education is not in question. What’s in question is how we educate the billions of people who will never get into such institutions. For every person like me who gets to go, 32 applicants are rejected. There are a billion people of college-going age right now who can't afford to go to college, who can't dream of applying, even in places where a degree costs $120 a month.

One of the most important drivers of the long-term success of a nation, more than almost anything, is the cost of an educated human. When you educate your youth affordably, they produce one of the greatest returns you can possibly have. As Jeffrey Sachs put it, “I can tell you economically and financially the return is about the highest return you can find. Higher than Tesla, higher than AI, higher than the tech companies. Educating a child – I mean it in dollars and cents terms – of what skills you get, what marginal productivity of labor you get, what investments you get, there is no higher return than to put the five-year-old in school, help her go all the way through Upper Secondary, help her achieve all her potential and then she will find her way.” Let’s look at one example of this investment, in Singapore.

The Singapore Miracle: A Case Study in Educational Investment

In 1965, Singapore was a mosquito-infested swamp with no natural resources, forced into independence it didn't want. Its per capita GDP was $516, less than many developing countries today. The newly formed nation faced overwhelming odds: no natural resources, limited land, and a diverse population that had recently experienced racial riots. It didn’t even have water.

But Singapore's first Prime Minister, Lee Kuan Yew, made a decision that would reshape the nation's destiny. Despite the poverty, despite the countless immediate needs, his government chose to prioritize education. In 1968, when their per capita income was less than $1,000, they made the bold choice to prioritize teacher pay and education quality.

It wasn't an obvious decision for a poor country. Critics argued there were more pressing needs: infrastructure, housing, industrial development. But Lee Kuan Yew understood something fundamental: teachers shape the next generation, and the next generation shapes the nation.

That investment worked. Its education system consistently ranks at the top globally. It’s often placed in the number one spot. Its students lead international assessments in math, science, and reading. These achievements aren't coincidental - they're the direct result of prioritizing education when they could least afford it.

The result: Singapore's per capita income has grown to $85,000, making it one of the wealthiest countries in the world. On a purchasing power parity basis (i.e. the amount that their dollars buy you in their local economy), at $148,190, its GDP per capita is second only to Luxembourg.

That was an investment well made.

The Problem

The problem, as Jeff Sachs put it: “That's an investment that requires 20 years and then 20 years to reap the return.”

The implications of the cost of an education are incredibly high, and they show up everywhere. Why is it that people aren't having as many kids? One of the top-cited reasons is because of the rising cost of raising children. What is the number one most expensive part of raising a child? Educating them. Paying for the private schools because the public school system is not good enough, and paying for college. The wealthier a society, the fewer children it tends to have, in part because wealthier families prioritize having fewer children with a quality education.

At the other end of the wealth spectrum, as Jeff Sachs describes, "There's nothing more important. Not even water and sanitation and electricity. If you're not having children in school, forget it. There's no hope for your society in the 21st Century."

The scale of the economic challenge is staggering. He estimates that in emerging markets education needs to cost 15-20 percent of GDP. To give you a sense of that cost, the total cost of education for the largest 12 poor countries in the world would be 4 trillion dollars. Every year. Yet, as he notes, we can't even get the world’s developed countries to commit $40-50 billion. The future of the world depends on us marshalling the resources to educate, but we cannot afford it.

Toppling The Cost Structure

"My whole career has been dealing with finance ministers who don't have money," Sachs says. The education community, and Sachs, pleads, "don't ask us to do this without teachers, without facilities, without connectivity, without devices, without water, and electricity.” But it is looking like we are going to have to do it without all of those.

If there isn't the money, there isn't a choice. We are going to have to do it without teachers, without facilities, without connectivity, without devices, and electricity. We will have to design a system that accounts for those problems, even if governments cannot pay for them.

Perhaps I'm naive in believing that we cannot move the massive systems of government, but I take it as a given that we need a solution that can bypass them entirely. That can harness market mechanisms, working with governments optionally. We have to assume that there aren't enough dollars. That we may be working in corrupt countries, or countries where the leadership may simply not care about their people, and where they won't have electricity, nor internet, nor computers, nor teachers, nor the ability to change any of that even if they wanted.

We must have solutions that work for everyone, despite all of that. The future is at stake.

The question is, how? That's the topic of these writings.