Studying in America and Canada  

5.1 Financial Requirements

We have mentioned, several times by now, that the cost of higher education in America and Canada is extremely high. The total cost of education in America ranges from $15,000 to $45,000 per year, and in Canada from Cdn$15,000 to Cdn$30,000. Given the exchange rates, the cost of education is considerably lower in Canada than in America. Yet, the quality of education in Canada is quite good. Your choice between America and Canada depends on many factors, of which cost is one.

In determining cost, one should focus on the total cost of education, and not just on the tuition. The total cost includes tuition, fees, room & board, books & supplies, transportation, medical insurance and other miscellaneous items. As you can see, the total cost is made up primarily of two big chucks - cost of education (primarily tuition) and cost of living - which we shall address in more detail.

The cost of tuition can vary dramatically across schools, particularly in America. One might assume that, in free-market economies like America and Canada, the cost (or price) reflects the quality of education: the higher the cost, the better the quality of education. However, one would be wrong. Price of tuition does not always reflect the quality of education. The free-market pricing based on supply and demand - higher price for products and services in greater demand for a given supply - is distorted by at least two factors. First is the government intervention to subsidize the costs for some colleges. Second is the variations in the philosophy of private colleges, ranging from running a commercial enterprise to offering a somewhat altruistic service.

Colleges and universities in America are either public or private. A public school receives direct funding from the government - to some extent but almost never fully - to subsidize the cost of education of its students. The state or provincial government is the primary source of such funding. A private school, on the other hand, does not receive direct funding from the government. Both private and public schools can, however, compete for and receive research and other specific-purpose grants from the federal and state governments. They can also receive grants and donations from private sources.

Due to the subsidy that public colleges receive from the government, the cost of tuition structure is "differential;" that is, international students are required to pay higher, if not substantially higher, tuition than local students. Remember that the government subsidizes public schools to make education more accessible to its citizens and legal residents. Private colleges do not use the differential tuition structure - that is, tuition is the same for local and international students - but their cost of tuition is generally higher, and sometimes substantially higher, than the cost at public colleges.

The cost of living varies dramatically across America and across Canada, and between America and Canada. Generally speaking, the cost of living is lower in Canada than in America. A part of the reason is the value of American dollar relative to the Canadian dollar. The fact that cost of living can vary significantly should not come as a surprise to anyone. Cost of living in Mumbai is higher than it is in Delhi, which in turn is higher than it is in Bhopal. A similar situation exists in America and Canada.

Does this mean that you focus only on public schools? Does this mean that you focus on colleges located in areas with the lower cost of living? Does this mean that you focus on public colleges in low cost cities? Not necessarily! We suggest that you hold off making such decisions for now.

A note on medical insurance is appropriate at this juncture. The quality of medical care in America and Canada is quite good, but the cost is very high. Most colleges require that international student must pay for medical insurance. Even if the college does not require it, we strongly advise you to plan on acquiring it.

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