higher education funding

These are discussed in some detail in Changes to higher education funding and student support in England from 2012/13. The estimated RAB rate on new loans was put at ‘around 30%’, but subsequently increased to ‘around 35%’ 21 then to 35%-40% 22 , revised upwards again to ‘around 40%’ 23 and later to ‘around 45%’. 24 These increases were largely due to changes in economic forecasts, particularly on earnings. 25 These less optimistic forecast reduce the expected cash value of repayments and or delay when they will be made. Other factors behind the increase in the RAB rate include the higher than expected level of average tuition fee loans, a change to the timing of repayment threshold uprating, lower assumed repayments from the extra students who start higher education because the numbers cap is lifted 26 and improvements to the Governments loan repayment model which is used to forecast repayments and hence calculate the resource costs of

DOI: 10.4236/oalib.1104049 10 Open Access Library Journal are in conformity with the climate and the dynamics of universities to compete. The differences in campus’ orientation, as a research campus, regular campus, and campus focusing on culture make it necessary to set the General Cost Unit that takes into account the orientation difference. The standard budget planning system and the cost of university need to be standardized, simultaneously con- trolled and evaluated in the form internal and external audit by the auditor (public accountant) to ensure the accountability of budget management by a university (both public and private). Efforts to reduce cost barriers to access to higher education must continue to be assessed by the government so that every citizen who has the potential and high academic competence can be developed by the universities. Registration fee exemption for Government Universities (and also private universities) needs to be done and supported by all parties until the GER of higher education continues to improve. To get a more comprehensive assessment results, further researches need to be done related to the variables that become the focus and locus of higher education funding.

Quite simply, no state in the country is taking such an innovative approach to an issue with broad, national scope. Ohio’s public colleges and universities recognize that Governor Kasich’s charge is an expression of support for higher education, and sets a new standard for establishing criteria for state funding of higher education. It also supports the recent recommendation from Chancellor Jim Petro’s Complete College Ohio Task Force report for state funding to incentivize completion. 1 With this creative approach to higher education funding, the Governor’s administration

disappear, I could not take the house with me. For both reasons, loans are available on good terms. An analogous arrangement with human capital would allow the lender, if I default, to repossess my brain, sell it, and take what he is owed. That being ruled out, lenders have no security: they face uncertainty about the riskiness of an applicant – whether the person will acquire the qualification and whether their subsequent earnings will allow him or her to repay – and therefore charge a risk premium. 6 A risk premium assessed by a well-informed lender is efficient (analogous to higher automobile insurance premiums for bad drivers). But since lenders are not well informed about the riskiness of an applicant, they face incentives to cherry pick, i.e. to find ways of lending only to the best risks, analogous to private medical insurance. An obvious way to do so is to lend only to students who can provide security, e.g. a home owning parent. The resulting lending will be inefficiently low.

implications of a less generous uprating system and future IFS analysis will further examine the implications of freezing these thresholds for a limited period. Although high-income graduates are better off under the proposed Labour policy – their expected future loan repayments are lower in total – the new higher interest rate they face increases their incentive to repay the loan early or to not take out a loan in the first place. Early repayment would increase the cost to the taxpayer because it reduces the period of time high-income graduates would face a rate of interest on their debt that exceeds the government cost of borrowing. Non-take-up of loans by the highest-income graduates would also increase the cost to the taxpayer because we estimate that these individuals will repay more than the value of their loans under the proposed system.

Of course, only around 5% of those claiming student support at the moment are studying at alternative providers, many of whom do a good job. But I want to be very clear that I will not allow any institution – not a single one – to diminish the reputation of higher education in this country that has been so hard won. I announced last week a set of measures to make sure that only quality alternative providers can be designated, that they recruit only students who are suited to their courses, and that student numbers will be tied directly to the quality of their provision.

1994 1996 1998 2000 2002 2004 2006 2008 Applicants via UCAS hit new records despite higher fees Home applicants in thousands The £600 million budget cuts announced in March 2010 means that universities are currently facing their first period of reduced funding since 1997. 10 Many universities are therefore finding themselves subject to numerous pressures, simultaneously experiencing an increased demand, a cap on places and reduced funding. Also the international market for students has become more globally competitive with countries such as Australia attracting an increasing percentage of the overseas student market and more European universities offering courses taught in English. These factors coming together at a time of reduced private income from contracts and endowment funds due to the current economic climate, means that many universities could be facing severely constrained funding for the next few years, increasing the pressure on universities to raise fees.

Batu Pahat, Johor, Malaysia ABSTRACT This paper presents general aspects of funding system at higher education sector. Funding is not simply a mechanism to allocate funds to finance HEIs but an instrument for the government or public authorities to ensure the HEIs administration have the same goals with them, other than that the funding adopted by the government to influence the behaviours of agents. n response to the development of society and economy, the pattern of distribution of public funds in the education sector particularly HE experience a change in the context of increasing competition for public funds because of pressure from the community to enhance quality of education.

Public financing of education Globally, public expenditure on education increased quite substantially during the latter half of the previous century. By 1986 on average 11.6% of total government spending, equal to 5.4% of GDP, was channelled to education in OECD countries (de Villiers, 1996: 214–215). In 1998 the corresponding figures were 12.9% and 4.6% respectively (OECD, 2004: Table B2 & B4). In 2006 OECD countries spent on average 5.7% of GDP on education (OECD, 2009: Table B2.1). These high levels of spending on education can be linked to the development of the human capital model, formulated in the 1960s. Theodor Shultz, Edward Denison and Gary Becker did pioneering work in this regard 1 . According to the human capital model, people gain productivity by further training and the market then subsequently remunerates these skilled workers better. This resulted in the belief that greater investment in human capital will lead to higher economic growth rates and that the rates of return on these investments for both government and private individuals are very profitable. With growth accounting, human capital also turned out to be an important variable in explaining economic growth. The message from these studies was very simple – invest in education if improved worker productivity and enhanced economic growth are desired. Demographic forces also led to a vast increase in the demand for higher education in the latter half of the previous century.

sellers. In contrast with communist central planning, the OECD countries all have mixed economies in which most resources are allocated by the market. However, markets can fail – information failures being key – giving a robust case for public provision of health care and school education (Barr 2004 or, more briefly, Barr 1998). Consider the following stylised facts about health care: consumers are imperfectly informed because much health care is highly technical; treatment is frequently not by choice but because of an external event, such as breaking a leg; and there is often only limited choice about the type of treatment. Much of the efficiency case for the national health service is based on these facts. With food, the story is different. We are generally well-informed about what we like and about its costs, and there is considerable choice over how we meet those needs. These technical differences start to explain why we ensure access to health care by giving it to people (largely) free; with food, in contrast, we ensure that a person has access to nutrition by paying her a pension and letting her buy her own food at market prices.

Preparing for change in 2012/13 4) Since taking office, our overriding priority has been to reduce the fiscal deficit. Higher Education, like other areas of public spending, has had to take its share of savings, and this will continue in 2011-12. Nevertheless, it will continue to receive significant public funding during this CSR period, with the new feature that more funding will be provided directly to students, including part-time students, as up-front tuition loans, which higher earning graduates will over time repay. Less funding will be routed to institutions as grants via the Funding Council. These changes will contribute to eliminating the structural deficit over the lifetime of this Parliament. They will also support a more diverse sector, where the choices of informed students provide a constant drive towards high quality teaching and efficient use of resources.

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In its May 2014 budget, the Australian Government announced a number of proposed changes to the funding and operations of the Australian higher education sector. The changes were announced to take effect from 2016. They include changes to the repayment regime for the student tuition charge income contingent loan (the HECS‐HELP scheme) that involve a lowering of the first repayment threshold [Element A] and the introduction of a real rate of interest on outstanding debt [Element B]. These changes will affect both future and current students as they repay their loans. A third change affecting only new students involves the reduction of the Commonwealth’s contribution to universities, replaced by higher private student contributions [Element C]. The last proposed change from the Government will be to allow universities to set their own student tuition fees, subject to them not exceeding the amounts charged to international students [Element D]. The Government expressed the belief that a further change allowing private and/or non‐degree providers to receive public support will place some restraint on existing universities from increasing their fees too much. Nevertheless, concerns have been raised about the implications for students from these changes, particularly as they affect course fee increases, debt repayment burdens and the increase in the time taken to repay loans, as well as their differential impact on men and women. This brief looks at some of the consequences of these decisions, focussing on the time taken to repay student loans across the graduate income distribution, seeking to identify where in the income distribution the effects of these various changes will be greatest.

as martin trow had shown as early as in the 1970s (and later modified for the european context), the expansion of higher education in the number of students has to be coupled with adequate diversification of heis as its corollary. the student population has become far more heterogeneous, students differ in their interests, aspirations and also individual capacities; moreover they have to be prepared for diverse positions in society and the economy. at the same time, it is necessary to maintain the high standard of the best universities that are so important for the future of society. While the he sector has to fulfil many functions, no single institution is able to engage and compete in all of them. the range of functions naturally leads to the range of different characters and qualities of individual institutions. they have to “profile themselves”, that is, to focus on those activities they are doing best. alongside top research universities there would co-exist other heis focused predominantly on teaching and on their third function (or mission/role). the main aim of the new funding mechanism is to support them all, and to guarantee to all of them adequate funding in order to reach their specific aims.

While it is important to ensure that the higher education funding system encourages students to enrol in courses which lead to employment in occupations where skill shortages exist, evidence suggests that these policies have had limited effect in stimulating demand. Several submissions expressed support for HELP holiday-type schemes for students who undertake work in a specific industry. Under this type of scheme, students are able to delay making repayments on their HELP debt, or have their debts waived or reduced depending on the length of time they work in the industry. The HECS Reimbursement Scheme already exists in the medical field, where doctors who work in rural areas may be eligible for their HELP debts to be paid. Such schemes need to be promoted effectively to ensure that potential students are aware of the incentives they provide to enrol in courses of high priority. The existing reimbursement scheme is a government program, but it could be adapted for a range of employers to make payments to reduce employees’ HELP debts.

A brief history of performance-based funding Between 1979 and 2007, 26 states experimented with measures that attempted to incor- porate institutional performance as a determinant of higher education funding. During this period 14 states that had enacted performance-based funding programs eventually discontinued them, although two of the discontinuing states later re-established new programs. 1 The states’ dissatisfaction stemmed from the fact that these early funding models were plagued by a number of fatal design flaws. In particular, many programs were inflexible to institutional differences, resulting in rigid and seemingly arbitrary requirements that focused too heavily on degree completion and failed to reward inter- mediate progress. Furthermore, many models failed to allocate enough funding to create genuine incentives for colleges to improve.

While there is a common belief that universities play key roles in the knowledge-driven economy, there is at the same time some disappointment with the performance of Europe’s higher education institutions. here, reference is frequently made to global university rankings that show a clear domination of American universities over Eu- ropean universities. Media attention for higher education performance increased dramatically with the release of two international university rankings: the Academic Ranking of World Universities by Shanghai’s Jiao Tong Univer- sity and the World University Ranking by the Times higher Education Supplement (ThES). Although the Shanghai and ThES rankings were not designed to be aggregated into rankings of national hE systems, that is exactly what is done in some policy papers and research reports. in the Progress towards the Lisbon Objectives report of the European Commission (EC, 2008) the Shanghai scores are presented as the summary information on the global position of European universities. Some governments have implemented policies to improve the position of their national universities in the rankings. Some analysts and policy-makers have used the rankings to call for revisions in Europe’s higher education funding and its governance regimes. in the report higher aspirations, an agenda for reforming European universities (Aghion et al, 2008), the authors state that Europe is lagging behind the US and suggest it should increase the budgetary autonomy of its universities and increase higher education spending. Similar messages were expressed by other observers and policy-makers.

evaluative state’ (Neave, 1988). NPM approaches therefore seek to emulate a market-like environment for publicly-funded institutions but they come along with a different type of accountability. For the issue of higher education funding, the introduction of market or quasi market relations meant that competition for funding was increased in order to enhance efficiency and quality. In light of this, many universities have started to concentrate their research activities, trying to build up a strategic profile and reap the benefits thereof. These changes have been widely documented (Geuna, 1999; Kaiser et al., 2001; Jongbloed and Vossensteyn, 2001; Benninghoff et al., 2005) and are all considered to be part of a changing paradigm towards a different governance model of higher education (Teixeira et al., 2004). Universities have tried to enhance their competitive position and have sought to streamline their organization in order to cope with an increasingly complex environment. Developing institution-wide polices, always problematic because of higher education institutions’ fragmented character, strategic planning, and ‘identity-building’ are now regarded as survival strategies. Higher education institutions are increasingly been made to act as

A. HIGHER EDUCATION FUNDING MODELS a. COST SHARING MODEL In Rwanda according to (Nuwagaba,2013) in his study on Evaluation of the current higher education funding model in Rwanda using Higher Education Students’ Loans Department, found that Rwanda uses cost-sharing model among other models such as use of tuition fees, internally generated funds by higher learning institutions and bank loans. In his findings, he concluded that the cost sharing model was the best model for Rwanda but it faced challenges of corruption .He noted that those who deserved to be given the funds were not given but rather those who did not deserve were awarded. Nuwagaba adds that, good financing of higher education helps in production of graduates who are not only good in academics but also who are competent in the corporate world and this is the goal that Kenya want to achieve in its vision 2030.

The areas proposed to be rewarded under a new performance pool are based on the Board of Regents Strategic Directions, institutional missions, and gubernatorial and legislative priorities. These variables include degrees awarded, sponsored research and external expenditures, and progress toward degree for community colleges only. In order to compare outcomes across institutions, scaling the outcomes is necessary. The outcomes must be appropriately scaled or the calculation of points for the purpose of distributing funds in the performance pool will be skewed and will not represent comparable success for each institution, regardless of size. Utilizing methodology comparable to Tennessee's higher education funding formula based on performance, the following tables are provided as a starting point for a system‐wide discussion on the development of appropriate outcome measures for an NSHE performance pool.