The Institute of Correspondence Education (ICE) of the University ofMadras is highly cost-effective when compared to the Conventional System (CS) as the unit cost at the former is 35 times lesser than that of the latter. Besides, the fact that major portion of the cost is also recoverable in the form of student fee by ICE makes the system more economical. In spite of these, the prime question addressed in this paper is whether ICE is cost-efficient: how the system can be made to achieve this. In the event of ICE becoming both cost-effective and cost-efficient, one can look forward to a model correspondence institution in the country.