Private Investment in Higher Education: Problems and Constraints

This paper deals with problems of calculations of returns to investment in higher education. Theoretical concepts and assumptions are based on human capital theory. One of the most important questions of human capital theory in connection with higher education is how to measure the rate of return to investment in human capital acquired through higher education. In general we can say that it is possible to measure the profitability of investment in human capital using the same techniques of cost-benefit analysis and investment appraisal that have been traditionally applied to physical capital. The data on costs and benefits of investment in education can be obtained in the form of students` earnings and costs expectations. It transpired that students` earnings expectations are quite accurate. There are also some sensitive parts in the cost-benefit analysis of human capital investments which are dealt with in last part of this paper.