Should We Do Away With Subsidies For Higher Education?

Social Issues Education

In the wake of a very public protest by students of the Jawaharlal Nehru University (JNU) over a proposed fee hike, a considerable amount of controversy has been generated on whether higher education should be subsidized.

Background:

More than two crore students studied in colleges and universities in the country.
The government’s expenditure on higher education is a mere 2.7% of the GDP against 6% as recommended by the Kothari Commission.
Public investment in higher education has declined from 1.14% in 2006-07 to 0.71% in 2016-17 of GDP,” as per the Education Quality Upgradation and Inclusion Programme (EQUIP) report.

Pros of govt. subsidy for higher education	Cons of subsidy for higher education
Subsidy increases equality of opportunity: In a subsidized higher education, students born in both poor and rich families have an equal chance of augmenting their future earnings, which would not have been the case if access to higher education had been dependent on parental incomes or wealth.	Subsidies go disproportionately to the rich: A World Bank study argued that the rich stood to gain more than the poor from public provision of services such as healthcare and education due to various factors. Despite free provisioning, availing of services entails private costs which the rich found easier to pay.
The growing debt burden on students: A sharp increase in higher education cost and lack of growth in employment has led to a huge increase in student loans.	Unevenness in the distribution of public finances: Student subsidies for premier institutions like the IITs and engineering colleges are incomparably higher than those for universities and colleges, particularly for liberal arts institutions.
Recession: The increasing student loan burden can add to the recessionary pressures in the economy, as young graduates are being forced to cut down on their consumption.	Improvement in higher education attainment does not necessarily lead to an increase in incomes: An analysis of cross-national data showed that, on average, education contributed much less to growth than would be expected in standard economic models.
Costly higher education from private players: In many cases, even after spending large amounts of money, students are unable to find remunerative employment.	The surplus supply of educated labor in the wake of sluggish demand leads to diminishing returns to an educated workforce.
Commercialization of higher education can actually bring down the social contribution potential of education itself and make it more focused on private gains, which are also not uniform for all.	The conflict between allocating money to higher education and elementary education: Given the lack of resources for elementary education, India should stop using scarce tax resources on funding higher education.

Govt. initiatives:

Rashtriya Uchchatar Shiksha Abhiyan (RUSA) is a Centrally Sponsored Scheme (CSS), launched in 2013 aims at providing strategic funding to eligible state higher educational institutions.
Interest subsidy scheme: This scheme benefits all categories of economically weaker students for pursuing professional/ technical courses in India only, and intends to provide affordable higher education.
Revitalizing Infrastructure and Systems in Education (RISE)—to step up investments in research and related infrastructure in premier educational institutions, including health institutions.
Higher Education Financing Agency (HEFA), a joint venture company of Canara Bank and Ministry of Human Resource Development which provides financial assistance for the creation of educational infrastructure and R&D in India’s premier higher educational Institutions
Post-Doctoral Research Fellow (Scheme)
Junior Research Fellowships
All India Council for Technical Education Scholarships
Education Quality Upgradation and Inclusion Programme (EQUIP), 2019-2024: The Human Resource Development (HRD) Ministry, has proposed new modes of generating funds in its five-year plan.
The govt. is mulling alternative funding models like crowd-funding, philanthropy, Higher Education Financing Agency (HEFA) loan reforms and opening up research for industry.
Rationalization of fee structure to make education more accessible and inclusive. The EQUIP report calls for “fee revision to be based on the cost of education and to protect the institution from fee subsidy.”

Concerns:

1. Failure to harness the potential of public education in the post-liberalization period, when incomes grew:

In the post-liberalization era, public expenditure in higher education went through a period of stagnation in real terms, and the per-student public expenditure actually declined dramatically. Although modern methods of education actually save money — use of the Internet and so on.
There was a shift in the focus of funding in the 1990s from higher education to primary education.
There is a major reduction in the effort to uphold the minimum acceptable levels of quality of education, particularly in State institutions.

2. Major disparities in the allocation of funds per student in Central universities and State universities

3. The correspondence courses and the revenues that are generated out of some universities are cross-subsidizing the other programs.

Various committees and recommendations

The Punnayya Committee 1992-93

The Punnayya Committee recommended that as a general rule, Universities should generate 15% of its annual maintenance expenditure through internally generated resources and this should go up to at least 25% at the end of ten years.
For enhancing internal resources the committee recommended that the tuition fees in all government-funded and aided institutions in all the states should be revised to a rational level of at least 20% of the annual recurring cost per student.

Dr. Swaminathan Panel 1992

The Dr. Swaminathan Panel which was set up by the All India Council for Technical Education put forth the idea of collecting educational cess from industries and other organizations.

The Birla Ambani Report 2000: The Committee recommended that

The Government should confine itself to Primary Education and higher education should be provided by the Private sector.
Enforcement of the user-pay principle in higher education.
Loans and Grants to the economically and socially weaker sections of society.

Best practices

China has massively ramped up spending on higher education over the past two decades.
USA’s Ivy League universities admit bright students regardless of their ability to pay. That is what has made them shine.

Way forward

University administrations should be encouraged to look for funds. To look for endowments, donations. newer generation opportunities are emerging.

Self-financing courses to make both ends meet.
20% of the annual recurring cost per student: Some very large public universities could, by now be approaching the 20% mark as recommended by the Punnayya Committee and National Knowledge Commission.
Equity, inclusiveness or on quality in public higher education: per-student public funding has to increase drastically.
The distinction between different kinds of higher education, like business studies to be charged more than liberal arts.
Public provisioning of higher education can also serve as an important tool in reducing inequality.
Differential fee structures: Below a certain income level, students can participate in higher education without payment of any fee and fee applicable for richer students.
A system of deprivation points: If a person was born in the most backward 100 districts, then she can get deprivation points. This criterion can be used for subsidizing, for charging a fee and for admission purposes.

The higher education sector in India is crying out for attention on all fronts: quality, quantity, and access. The university system’s contribution to the nation-building process is crucially dependent on how it is to be financed in the days to come.

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