It is said that schooling, for children between specified ages, is compulsory. However, not all of these children attend public schools. Some parents prefer to send their children to private schools. Thus choices vary from family to family. In the private schools, it has been observed that the government provides subsidy to the private schools. In this regard, many people are of the opinion that this subsidy should be removed. Instead this subsidy should be utilized in other developmental activities. But there is a huge debate regarding this.If the subsidy is removed, then the cost of education will increase. As a result, education may become out of reach of some people. Thus some people will be deprived from education.

But education is a very important factor for fostering economic growth. Therefore every economy should focus on the development of this sector.In general, education increases employment. This will increase the income of the individuals. Thus medical facilities will become more accessible. Thus general education can also affect health outcomes. Therefore, for a healthy and growing economy, education is very important.

Recently, college fees, enrollments and student debt are rising. This has lead to a debate about the role of higher education in the 21st Century. Therefore, many people think that whether earning a higher education degree is worth or not. The answer is undoubtedly yes. U.S. data on education has revealed that a college student (bachelor student) earns about 84 % more than a high school student. Again if we consider further studies, we can see that a major student earns a lot more than a high school student.  The study also found that the highest earning major earns about 314% more at the median than the lowest earning major.Thus without any hesitation, having any degree is better than having no degree.

Thus we can see that education generates positive externalities in the economy. Therefore, it must be ensured that all the citizens of a country receive education. But presence of externalities can lead to market failure. To prevent market failure government intervention is necessary.

Now, it has been observed, that in many cases, the governments provide financial aids to private schools to promote education. Now-a-days, education has become very expensive all is not possible for all the citizens to bear this cost without the aid of subsidies. Hence, if no subsidies are provided to private schools, some students will be compelled to leave their educationat the middle due to their financial conditions. This will lead to a loss in the social welfare. Therefore, the government, who aims in maximizing social welfare, needs to provide subsidy in order to ensure education for all the citizens. Though many people are against this argument of providingsubsidy to private schools, this view cannot be supported. In spite of increasing burden on the government, subsidies increase the level of education among people, which in turn accelerates the economic growth of the country. Therefore, in the long run the economy will benefit from this activity of the government.