Shifting trends in higher education funding

Stellenbosch Working Paper Series No. WP12/2010
 
Publication date: 2010
 
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch)
[protected email address] (Department of Economics, University of Stellenbosch)
 
Abstract:

The global increase in the demand for tertiary education, with higher education systems expanding in many countries from elite systems to universal access, necessitated changes to the nature of higher education financing. Tuition fees, or other charges (where it was previously free) were introduced, substantial increases in tuition fees (where fees previously did exist) took place and student aid systems moved away from grants towards student loans (to replace or supplement grants). The controversy and debate surrounding these issues were influenced by politics, legal issues, social policy issues and economic reasoning. The paper firstly considers the shift in higher education financing since the 1960s in light of the focus of economic thinking in the 1960s and 1970s (the human capital model, growth accounting, views on elite versus mass systems, the private/public nature of higher education and rates of return) compared to the more recent focus on primary education, private and social rates of return and cost sharing. The global typology of allocation mechanisms is then examined. Although a myriad of allocation systems is operational, a definite shifting trend from direct to indirect funding (to support students) of institutions can be identified. The paper subsequently explores the global workings, conditions and problems of income-contingent student loans (ICL) and then focuses on the South African trend in direct funding (including the current subsidy formula for higher education) and student support systems. The South African allocation system exhibits the global trend towards indirect funding and the South African ICL (NSFAS) is internationally highly commended.

 
JEL Classification:

H40, H52, I20

Keywords:

Higher education, Public financing, Income contingent loan, Cost sharing

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BER Weekly

27 September 2021
Besides the escalating woes at leading Chinese property group Evergrande, global and domestic financial markets were focused on a slew of central bank policy meetings last week. ...

Read the full issue