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28 Mar, 2012

Rising Higher Studies Costs Will Widen Rich-Poor Social Chasm, ADB Warns

A new report by the Asian Development Bank has raised serious questions about the “massification” and privatisation of higher education in the Asia-Pacific, asserting that rising costs and higher fees will further favour the rich and exacerbate the region’s rich-poor income gap. That, in turn could lead to other downstream problems such as worsening social and political tensions, and in a worst case scenario, armed conflict.

The report will have a major food-for-thought impact on one of the most important current trends in international travel – the intense competition amongst many countries to attract well-heeled students to their shores. Its approach and conclusions also need to be studied by the medical tourism fraternity, which is also facing identical issues in its pursuit of rich patients with scant attention being made to the downstream, long-term impact on medical costs for the poor.

Says the report, “The increasing privatization of public sector Higher Education Institutions (HEIs), where fees are now often rising at rates higher than inflation, is having a particular effect on the poor, who are already falling further behind as the gaps between rich and poor and between urban and rural continue to increase in many parts of Asia. Traditionally excluded from quality private HEIs by virtue of high fees, such students are now also increasingly unable to afford the rising fees at public HEIs. If at all, their only recourse may be to poor-quality, demand-absorbing private HEIs.”

Noting that poor families also have to bear a greater burden in making higher education affordable to their children, the report adds, “It is one thing for a wealthy family in a major city to sustain sometimes substantial increases in tuition fees and associated costs; it is quite another for families of the rural poor, for women, and for disadvantaged minorities, for whom it represents a much greater sacrifice — if indeed it is possible at all.

“If the trend towards cost sharing without effective social protection measures to support the disadvantaged continues, the result will be a mere cost shifting, and the impact on equity will be profound, with major losses in terms of both social inclusiveness and equality, and economic efficiency.”

Appropriately entitled “Counting The Cost – Financing Asian Higher Education for Inclusive Growth,” (click on the link to download free) the report is a comprehensive analysis of one of the potentially most explosive challenges facing a future Asian century. It examines government policies on education and various associated factors such as demographic changes, university contribution to innovation, the Asian experience with student loans, the impact of rural vs. urban education development, gender discrimination, corruption in higher education and the impact of brain drain from various countries. It also questions the efforts being made by various countries to build world class universities.

The entire report is devoted to linking all these policies and changes within the broader context of pursuing inclusive growth and socio-economic equity. The report notes that although Asian economic miracle is producing results in terms of lifting millions out of poverty, it is also widening the rich-poor income gap.

“Given this widening gap between the haves and the have-nots in many Asian societies, the effects of rising inequality will be felt most starkly by the poor, and possibly also by other disadvantaged persons (such as girls, students in remote areas, and those from ethnic minority groups) for whom higher education may be becoming an ever more distant prospect.”

Says the report, “Any higher education system that fails to cultivate the breadth of talent in society—men and women, rural and urban, rich and poor—is sacrificing both quality and efficiency.” Noting that education, and higher education in particular, is a potent means to lift people from poverty, it is thus critical to link finance to equity in higher education.”

It warns, “The failure to make progress on inclusive growth is not merely inequitable and inefficient, but risks one of three outcomes:

l   the stalling of reforms, resulting in lower growth and higher inequalities;

l   rising absolute gaps in income and consumption between the poorest and richest quintiles, which could trigger social and political tensions;

l   or in extreme forms, armed conflict.

The report urges close monitoring of the effects on the poor and marginalized. “More and more systematic data are required to gauge the effects of higher education massification and privatization. This should include close analysis of the impact of the transnational trade in higher education upon the region,” the report says, adding, “The changing landscape of higher education requires new thinking and updated practices.”

It notes that quality education is essential for a country’s development. “Asia is experiencing a growing need for skilled managers and professionals in a variety of fields. Investing in higher education will help developing Asian countries build high-income economies, with the innovation, knowledge, and technology needed to thrive in an interconnected, competitive world.”

At the same time, the report notes that seen from the perspective of hard-pressed ministers of finance or education, cost sharing in higher education might seem a rational response amidst intense competition for increasingly scarce resources among different sectors such as defense, health, housing, and even within subsectors of education. “However, for poor and other disadvantaged students, cost sharing might well seem more like cost shifting, with the prospect of such students attending higher education, of any form, much less an institution of quality, becoming ever more remote.”

It cites the huge growth in numbers – in Southeast Asia, East Asia, and the Pacific, the number of students rose twelve-fold, from 3.9 million in 1970 to 46.7 million in 2007 (UIS 2009:10). As a result, Southeast and East Asia now have 31% of global enrollments, the largest share globally—a dramatic change.

It notes the various efforts by Asia-Pacific governments to boost the quality of higher education: Viet Nam’s plans were to almost double its enrollments by 2010, from 118 per 10,000 to 200, and to more than double the ratio again to 450 by 2020. In India, current enrollments exceed 13.6 million but still deliver an enrollment ratio of only 12%. In Malaysia, the 9th Malaysia Plan contained an enrollment ratio target of 40% of the age group 17–23 by 2010; by 2009, it had reached 36%. In China, total enrollment increased seven-fold over the years 1998–2006 and was to reach 30 million by 2010.

The report notes that this dramatic expansion has occurred because Asian governments are agreed that “generating more highly skilled labor will unleash greater innovation and boost economic growth rates. Rather than wealth being based principally on primary or secondary industries, as was the case in the past, the future is seen to belong to knowledge- and innovation-based industries.”

Asserting the need to go beyond the “usual debates” of higher education costs and financing, the report says it “deliberately focuses on costs and financing from the perspectives of disadvantaged students such as the poor, females, ethnic minorities, and those from rural areas. For such students, the rising costs of higher education present a particular problem.”

It notes, “While higher education systems within the region have expanded rapidly over the past decade or more, funding has failed to parallel these increases, at least in per-student terms, thus sharpening long-standing issues of finance and equity, and the links between the two. Massification has also stretched the capacity of governments and agencies to respond, notably in order to maintain quality control and accreditation, including of transnational programs. Inefficient and nontransparent practices in the use of resources in higher education exacerbate the problem.”

It also discusses the parallel privatization of public sector higher education institutions, which have responded to increased pressures to diversify their income sources through a range of means, including selling places within high-demand programs, increasing fees for such courses, expanding international programs, and mounting parallel “diploma” or ”executive” programs for high fees but sometimes of uncertain quality.”

Says the report, “The implications for equity are troubling—while the poor have often been locked out of quality private HEIs by high fees, they have also been traditionally underrepresented in public HEIs, which have tended to be dominated by wealthier groups. Now some well-established public HEIs are levying fees that are as high as, or even higher than those of reputable private HEIs. However, the options for poor and other disadvantaged students are becoming even more limited.

“The costs of higher education are outstripping the capacity of such students to pay, raising acute questions about the need to strengthen social protection measures to make higher education more inclusive and able to contribute to inclusive growth.

“Higher education policies and systems that are inclusive provide opportunities for each individual to achieve his or her full learning potential and acquire relevant knowledge and skills to effectively serve as members of society and to contribute to inclusive growth. Inclusiveness and equitable access throughout the education system, including higher education, are key factors for establishing the broad human resource base that is essential for advancing inclusive economic growth, leading to greater recognition that educating disadvantaged students and raising their achievement is an economic imperative. Furthermore, if higher education is developed not merely for producing highly skilled labor, but also for innovation, how ought such benefits to be distributed? What are the costs of inequity?”

The publication concludes with a set of operational recommendations to effect change. It says: Basically, government and university leaders have six choices:

•             They can continue to underfund higher education and accept lower quality, though this poses a risk to national competitiveness that virtually all countries find unacceptable.

•             They can find new sources of funding for higher education by shifting some of the costs of public higher education to students and their families and by allowing and encouraging the growth of private, fee-based higher education.

•             They can lower the cost of delivering instruction in ways that do not erode quality.

•             They can cap rates of enrollment growth in public higher education at a level that allows for the delivery of quality education within available levels of funding.

•             They can develop a differentiated higher education system by deliberately concentrating resources in top-tier institutions while allowing quality to erode in the others.

•             They can undertake some combination of these strategies.

Each strategy offers advantages and incurs costs, the report says. For the academic community, it is a report well worth reading and analysing in detail.