The decision to investing university education in Kenya: An economic appraisal

Abstract

The decision to invest in any project centers on the balance between the cost of the project and the expected benefits from that project. Investment in University education in Kenya is a case in point. The costs consist of direct out-of-pocket expenditure and the opportunity cost of earnings foregone. The benefits are the expected future earnings. The existing income differential has ensured that University education has been a profitable investment. There was however an increment in the private costs of University education in 1974, with the implementation of a students' loans scheme. This scheme had been provided for in the Development Plan of 1964-1970. This paper examines University education from the point of view of the Kenyan form six Ieaver. In the face of private cost rises, should he proceed to University? The decision hinges on the calculation of Net Present Values for the expected stream of earnings. This analysis was done using published data and data contained in published material. The main finding was that University education was still profitable in 1975. Therefore the form six leaver who has the chance should take it. However, there should be an additional consideration of time preference and unemployment rates