Student Financing of Higher Education

A comparative perspective

Donald Heller, Claire Callender

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781135069452
• Edition: 1
• Topic: Education
• Subtopic: Education General

The financing of higher education is undergoing great change in many countries around the world. In recent years many countries are moving from a system where the costs of funding higher education are shouldered primarily by taxpayers, through government subsidies, to one where students pay a larger share of the costs. There are a number of factors driving these trends, including:

• A push for massification of higher education, in the recognition that additional revenue streams are required above and beyond those funds available from governments in order to achieve higher participation rates
• Macroeconomic factors, which lead to constraints on overall government revenues
• Political factors, which manifest in demands for funding of over services, thus restricting the funding available for higher (tertiary) education
• A concern that the returns to higher education accrue primarily to the individual, rather than to society, and thus students should bear more of the burden of paying for it

This volume will help to contribute to an understanding of how these trends occur in various countries and regions around the world, and the impact they have on higher education institutions, students, and society as a whole. With contributions for the UK, USA, South Africa and China this vital new book gives a truly global picture of the rapidly changing situation

1

Introduction

DONALD E. HELLER

The financing of higher education is undergoing great change in many countries around the world. In recent years many of these countries are moving from a system where the costs of funding higher education are shouldered primarily by taxpayers, through broad-based government subsidy of higher education institutions, to one where students pay a larger share of the costs. There are a number of factors driving this policy shift, including:

• a push for massification of higher education, and the corresponding need for additional revenue streams above and beyond those funds available from governments in order to achieve higher participation rates;
• macroeconomic factors, which lead to constraints on overall government revenues, particularly during periods of recession or slower economic growth;
• political factors, which manifest in demands for funding of other services, thus restricting the funding available for higher or tertiary¹ education;
• a concern that the returns to higher education accrue primarily to the individual, rather than to society, and thus students should bear more of the burden of paying for it.

In some countries, changes in the funding of higher education have occurred gradually over the years, with small, incremental changes to government policy and market forces. In others, large-scale shifts in policy have forced more rapid change, necessitating higher education institutions to make major adjustments in their operations as the sources of their revenues shift. Students, and in some countries their families, have also had to make adjustments as they have been asked to bear a greater burden of the cost of financing the university sector in many countries.

These changes have not been without controversy; the introduction of new tuition fees, or expansion of existing ones, have often led to protests by students. In recent years, students have taken to the streets in Canada (Seidman, 2012), Germany (“Students stage education protests nationwide,” 2009), England (Mostrous et al., 2010), and the United States (Blumenstyk, 2011) to voice their displeasure with government policies that forced them to bear more of the cost of their educations.

This book contributes to an understanding of how these trends occur in various countries and regions around the world, and the impact they have on higher education institutions, students, and society as a whole. The volume has two parts. Part 1 examines cross-national issues related to student financing of higher education. Chapter 2, authored by Pamela Marcucci, examines the impact of different political ideologies and their accompanying economic systems on student funding policies around the world and, more specifically, on the respective choices of nations about levels, targets (all students versus some students who display certain attributes such as need, or academic merit or are in particular sectors), and forms of financial aid (grants, loans, tax credits, family allowances, tax deductions). It also analyzes why such policies tend to be less the result of rational cost/benefit analyses and more the result of negotiation among stakeholders with competing interests who hold varying levels of influence and power. She describes the differences between the two primary forms of financial assistance available to students, loans and grants (often called scholarships or bursaries in different countries), and how they affect students.

Chapter 3, authored by Adrian Ziderman, provides an overview of student loan schemes around the world, and the characteristics of different systems. As governments have shifted more of the responsibility for paying the costs of tertiary education to students and their families, many have sought to ease the burden of paying the higher fees by offering loans to the students. While loans do not reduce the price of the education, as do grants and scholarships, they do allow students to postpone paying for their education to a period in their lives – after receipt of a degree – when they are likely to have more financial resources. Ziderman focuses on four central issues related to student loans: definition of loan scheme objectives; funding sources; financial viability and loan subsidy levels; and loan repayment methods. He also provides a deeper analysis of student loan schemes, and how they have changed in recent years, in three countries: Australia, England, and Thailand.

In Chapter 4, Jeffrey Williams continues the discussion of student loans as a mechanism for financing higher education by examining the impact they have on students, using the United States as a model. He traces the evolution of student loans in that country over the past five decades or so, demonstrating how policy changes, both explicit and implicit, that have served to increase the amount of money students have to borrow to attend college are affecting their lives. Bringing a critical perspective to the topic, he describes how the shifting of the burden for paying for university from taxpayers to students is part of a larger trend of privatizing what had traditionally been seen as a public good: the provision of higher education to a large proportion of American youth.

Chapter 5 turns to the role that information about financial aid plays in the decisions students make about attending college. Judith Scott-Clayton describes the market failures that often cause students, and nations, to under-invest in higher education, and how financial aid can address those constraints. She then examines in detail how information about financial aid, which can be a very complex topic for those who are the first in their families to attend college, affects students’ college enrollment decisions. She closes with some recommendations from the experiences of the United States and other countries in how to craft financial aid policies that will most effectively serve the needs of university students.

Chapter 6, by Kevin Kinser, turns to a particular form of higher education institution that has experienced rapid growth in recent years: corporate, or for-profit universities. In many countries, such as India and others in Asia, private universities have sprung up to meet the surging demand for university places that has been unmet by state-sponsored universities. Often these universities are operated by corporations. The United States, in contrast, has had a long history of private higher education (the earliest, colonial era universities were largely private), but in recent years has seen the growth of the for-profit sector as part of a political movement that has favored a market model of higher education. Kinser uses the example of the United States to examine the tuition fee charges levied by for-profit universities, and the financial aid available to students to attend them, as a distinguishing characteristic of the American system. He explains how federal government financial aid policies helped the growth of this sector, and provides lessons from that experience for other countries.

In Chapter 7, Claire Callender looks at a population of students often forgotten in discussions of student financing and financial aid policies: part-time students. Many of the student financing schemes in place around the world have been designed largely for the experience of full-time university students, which is the norm in most countries. But as many countries have expanded their higher education systems to accommodate larger numbers of students, they are finding that more students wish to attend part-time, a decision often made due to work and family constraints. While some universities have found ways to enroll part-time students, the financial aid systems in many of these countries are not structured in a fashion to meet their needs. Using England as a case study, Callender examines the advantages and disadvantages of that country’s system of support for part-time students, and how it has changed in recent years. She concludes with an explication of what other countries can take from the English experience.

In Chapter 8, the concluding chapter of Part 1, Rachel Brooks and Johanna Waters examine a phenomenon that, like that of part-time students as described in Chapter 7, is becoming more salient for student financing policy: how to address the funding needs of students who leave their country to attend higher education. The authors use the United Kingdom as an example for other countries, which has seen a rapid rise in tuition fees from £3,000 to as high as £9,000 in the coalition government’s most recently implemented changes to university fee structures. They describe how these changes have provided more incentives for students to attend tertiary education institutions in other countries, and the challenges this has presented for the student funding scheme – which consists of a mix of grants and loans – for students there. They analyze how the British system supports or hinders student mobility across borders, and how other countries can learn from this example.

In Part 2 of the volume, we turn to in-depth national and regional case studies of how some countries and regions of the world have wrestled with the challenge of funding their expanding higher education systems, and recent policy changes that have tried to accommodate that growth. In Chapter 9, Pundy Pillay looks at student financing in Sub-Saharan Africa, a part of the developing world that has had relatively low tertiary participation rates, but as with other countries, has faced the challenge of expanding access to higher education. After providing an overview of the higher education funding schemes in this part of the world, the chapter provides more detail about how governments implemented student loan programs in four countries in Sub-Saharan Africa: Ghana, Kenya, South Africa, and Tanzania.

Chapter 10, authored by Daniel C. Levy and Prachayani Praphamontripong Kanwar, examines student financing of tertiary education in Asia. As described earlier (in Chapter 6), this region of the world has seen a rapid rise in the development of private universities, and this has had a large impact on the student financing systems in countries there. Focusing on South Asia, East Asia, and Southeast Asia, the authors describe how the rapid rise in university enrollments in this part of the world has presented challenges for ensuring that students have adequate means of support for paying for higher education. The parallel rise of private universities has caused these countries to develop student funding mechanisms that allow students to be able to afford the higher-priced option.

In Chapter 11, Po Yang and Baoyan Cheng explain recent changes in the student funding scheme in the world’s largest country, China, also home to one of the fastest growing student populations. From a system that was totally devoid of tuition fees as recently as 1997, the Chinese system has evolved over the past 15 years to a system of grants and loans designed to meet the needs of a country that has had very low higher education participation rates and that strives to increase these. They describe how the country struggles to meet the growing demand for higher education while addressing issues of access and equity across a very large and diverse population.

In Chapter 12, Barrett J. Taylor and Christopher C. Morphew look at the role that institutional subsidies contribute to the price that students pay to attend university in the United States. While the posted, or “sticker” price to attend university is generally well understood, there has been much less focus on the implicit subsidy to that price that is provided through other resources, including government subsidy as well as other institutional sources. Using the United States as an example, the authors examine how the level of government subsidy provided to state-supported universities has changed relative to other resources in recent years. They examine in detail how these changes affected state-supported and private universities differently.

The book concludes with Chapter 13, by Claire Callender and Donald E. Heller, in which we summarize what the volume has told us about how student financing of tertiary education is changing around the world, and what impact these changes are having on students and institutions alike. This will not be the last word on the topic; the changes to higher education financing policies around the world that have been described in this book are ongoing, and we expect to continue to see them evolve. As individual countries choose to implement different policies, researchers will have a rich body of natural experiments to analyze to help us understand which student financing policies work and which do not.

Note

1  Throughout this volume, the phrases “higher education” and “tertiary education” will be used interchangeably to describe education beyond secondary school.

References

Blumenstyk, G. (2011, November 29). Protest again centers on Baruch College as CUNY trustees approve tuition increase. The Chronicle of Higher Education, retrieved July 13, 2012 from http://chronicle.com/article/Protest-Again-Centers-on/129919/

Mostrous, A., Booth, J., and Bird, S. (2010, November 24). Violence at student fees protest. The Times, retrieved July 13, 2012 from www.thetimes.co.uk/tto/education/article2819896.ece

Seidman, K. (2012, June 13). Quebec’s plan for loans, bursaries programs “inappropriate,” students say. The Montreal Gazette, retrieved August 13, 2012 from www.montrealgazette.com/news/Quebec+plan+loans+bursaries+programs+inappropriate+students/6777529/story.html

Students stage education protests nationwide. (2009, November 17). The Local, retrieved September 23, 2012 from www.thelocal.de/national/20091117-23321.html

I

Cross-National Issues in Student Financing of Higher Education

2

The Politics of Student Funding Policies from a Comparative Perspective

PAMELA MARCUCCI

Introduction

National and international economic, political, and social environments influence the decisions that countries make about:

1. undergraduate tuition fees: what costs, if any, should students and their families be responsible for covering and how and when should they be called upon to pay them; and
2. financial assistance available to undergraduate students: what policies should be put in place to ensure that less affluent students are not precluded from attending higher education because of financial barriers.

This chapter defines politics as both the institutional arrangements in which, and processes by which, government decisions are made as well as the struggle between diff...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of Figures and Tables
• List of Contributors
• Series Editors’ Introduction
• Acknowledgements
• 1. Introduction
• Part I: Cross-National Issues in Student Financing of Higher Education
• Part II: Country and Regional Studies
• Index