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Govt cuts to tertiary education penalise the poor
UTech's response to cost increase for tertiary students
Monday, August 09, 2010
Dear Editor,
The University of Technology has taken note that the reports in the newspapers on Thursday July 29, 2010 noted that the government intends to move the subsidy for tuition fees from an average of 80 per cent to 60 per cent for the 2011/2012 academic year. The university wishes to point out that the level of subsidy to its students average about 44 per cent. As such the university does not envisage that a 100 per cent increase would apply to its students.
It was also suggested that the increase for the 2010/2011 academic year would go up by 12 - 15 per cent. In fact, the increase projected thus far ranges from a minimum of 5 per cent to a maximum of 8 per cent.
At the recently held conference of the Association of Caribbean Higher Education Administrators, the minister of education intimated that it was the government's intention to move to a student-based subsidy rather than the institutional-based system that now obtains. The proposed student-based system was predicated on a recapitalisation of the Students' Loan Bureau from its present level of $3b to $20b. Other aspects of the proposal presented to the conference was that the repayment of students' loans would be on an income contingent basis, the government would absorb the repayment for persons who opt to work in the public sector and a credit bureau would be set up to deal with the graduate migration issue.
Implicit in the minister's proposal was the removal of restriction on the amount higher education institutions would be able to charge for their services. This, as students, with the assistance of the loan from a recapitalised Students' Loan Bureau, would be able to exert market control and access their preferred institution according to their perception of quality relative to cost.
UTech supports the proposal in principle but wishes to point out that in order for an income contingent loan repayment system to be successful, the following are required:
(1) The national budget must be able to manage the upfront cost of universities' operations. The recapitalised Students' Loan Bureau may be an alternative to this. In which case the full cost would have to be charged to the student as the institutions would be getting little or nothing from the national budget.
(2) The taxation system must be able to track all citizens throughout their lifetime. The tracking through the credit bureau may be an alternative if there are sufficient powers to enable the SLB to take action across international borders and to garnish beneficiaries' salaries.
(3) There must be sufficient information to encourage participation from low-risk, high-return graduates as this would prevent the moral hazard of beneficiaries not exerting enough effort to avoid default on repayments.
(4) There should be incentives for early repayment. This would encourage those who are able to do so to repay before expiry.
(5) There should be an insurance provision to absorb risk for non-payment.
The university also wishes to point out that the design of this student-based financing system seems to mimic the voucher system practised at the secondary level in some countries. As such, we wish to draw attention to the finding of a study conducted by the Legislative Council Secretariat of Hong Kong (2002) which revealed some unfavourable outcomes of such a system, and instances where there was inconclusive evidences to prove some of the claims of such a system. The unfavourable outcomes were:
* Middle and upper classes were the major beneficiaries
* The private schools cream the best students
* There were comparatively poor academic results for lower-c1ass students
* There was closure of participating schools due to unstable financial conditions
* There was unused capacity owing to low programme awareness and competition from other educational programmes
* Some low-income students could not benefit from the programme
* There was high administration cost
* Some school developments were affected due to unstable source of funding
* There was inequality of choice due to insufficient voucher value
* There was competition on unequal grounds among public and private schools due to different funding arrangements.
The study also revealed that there was inconclusive evidence to show:
* That private schools were more effective and superior
* Overall quality of education had improved
* There was better student performance in private schools
* That the provision of access to education had increased.
A reform of the financing of higher education is long overdue and the proposal that was tabled by the minister seems appropriate. However, pertinent issues need to be addressed to ensure successful implementation. The university therefore welcomes dialogue as we move forward.
Dr Kofi Nkrumah-Young
Vice President, Planning and Operations
University of Technology, Jamaica
Kingston 7
Monday, August 09, 2010
Dear Editor,
The University of Technology has taken note that the reports in the newspapers on Thursday July 29, 2010 noted that the government intends to move the subsidy for tuition fees from an average of 80 per cent to 60 per cent for the 2011/2012 academic year. The university wishes to point out that the level of subsidy to its students average about 44 per cent. As such the university does not envisage that a 100 per cent increase would apply to its students.
It was also suggested that the increase for the 2010/2011 academic year would go up by 12 - 15 per cent. In fact, the increase projected thus far ranges from a minimum of 5 per cent to a maximum of 8 per cent.
At the recently held conference of the Association of Caribbean Higher Education Administrators, the minister of education intimated that it was the government's intention to move to a student-based subsidy rather than the institutional-based system that now obtains. The proposed student-based system was predicated on a recapitalisation of the Students' Loan Bureau from its present level of $3b to $20b. Other aspects of the proposal presented to the conference was that the repayment of students' loans would be on an income contingent basis, the government would absorb the repayment for persons who opt to work in the public sector and a credit bureau would be set up to deal with the graduate migration issue.
Implicit in the minister's proposal was the removal of restriction on the amount higher education institutions would be able to charge for their services. This, as students, with the assistance of the loan from a recapitalised Students' Loan Bureau, would be able to exert market control and access their preferred institution according to their perception of quality relative to cost.
UTech supports the proposal in principle but wishes to point out that in order for an income contingent loan repayment system to be successful, the following are required:
(1) The national budget must be able to manage the upfront cost of universities' operations. The recapitalised Students' Loan Bureau may be an alternative to this. In which case the full cost would have to be charged to the student as the institutions would be getting little or nothing from the national budget.
(2) The taxation system must be able to track all citizens throughout their lifetime. The tracking through the credit bureau may be an alternative if there are sufficient powers to enable the SLB to take action across international borders and to garnish beneficiaries' salaries.
(3) There must be sufficient information to encourage participation from low-risk, high-return graduates as this would prevent the moral hazard of beneficiaries not exerting enough effort to avoid default on repayments.
(4) There should be incentives for early repayment. This would encourage those who are able to do so to repay before expiry.
(5) There should be an insurance provision to absorb risk for non-payment.
The university also wishes to point out that the design of this student-based financing system seems to mimic the voucher system practised at the secondary level in some countries. As such, we wish to draw attention to the finding of a study conducted by the Legislative Council Secretariat of Hong Kong (2002) which revealed some unfavourable outcomes of such a system, and instances where there was inconclusive evidences to prove some of the claims of such a system. The unfavourable outcomes were:
* Middle and upper classes were the major beneficiaries
* The private schools cream the best students
* There were comparatively poor academic results for lower-c1ass students
* There was closure of participating schools due to unstable financial conditions
* There was unused capacity owing to low programme awareness and competition from other educational programmes
* Some low-income students could not benefit from the programme
* There was high administration cost
* Some school developments were affected due to unstable source of funding
* There was inequality of choice due to insufficient voucher value
* There was competition on unequal grounds among public and private schools due to different funding arrangements.
The study also revealed that there was inconclusive evidence to show:
* That private schools were more effective and superior
* Overall quality of education had improved
* There was better student performance in private schools
* That the provision of access to education had increased.
A reform of the financing of higher education is long overdue and the proposal that was tabled by the minister seems appropriate. However, pertinent issues need to be addressed to ensure successful implementation. The university therefore welcomes dialogue as we move forward.
Dr Kofi Nkrumah-Young
Vice President, Planning and Operations
University of Technology, Jamaica
Kingston 7
....ANYHOO
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