Funding HE more fairly calls for a shift in the discourse

In light of the central role universities play in the advancement of knowledge in the 21st century, countries are increasingly being urged to situate higher education centrally in their development trajectory, expressed through more sustained and equitable funding.

The Millennium Development Goals have been widely criticised for neglecting higher education and while their successor, the Sustainable Development Goals, are an improvement, they need to foreground and support higher education more.

Much of the world, particularly developing and emerging countries, have seen a massive expansion of their higher education sector – with still more anticipated in the future – and this has put even more financial pressure on higher education systems.

The challenges and opportunities of access issues will remain a key aspect along with other issues of funding, quality and equity. In order to cater to this anticipated explosion, it is imperative that universities diversify their sources of funding, recalibrate their institutional mission and revisit their modes of delivery.

It is well established that developing countries need to invest 1% of their GDP (gross domestic product) in research and development in order to make progress. However, most countries are yet to do that. Despite this, governments must be able to invest in the higher education sector sustainably, equitably and strategically.

In countries where public funding for the sector has reached a threshold, multiple avenues of generating both public and private resources have been sought. In the public sphere, trust funds, education taxes, graduate taxes and other levies have already been considered. Governments have also instituted favourable policies for subsidised loans for both public and private higher education.

The virtue of differentiation

In many countries, expansion has meant building new institutions from the ground up and, typically, with a similar mission and objectives as the existing ones, with no effort being made to differentiate them, often due to political reasons. And yet, differentiating institutions helps to expand access to higher education.

Universities have been largely, if not typically, isomorphic in their mission, modus operandi and goals. They have been largely chastised, often unfairly, for purportedly failing to meet the fast-shifting needs and expectations of society.

More often than not, universities aspire to ‘world-class’ status even when their actions, if not their mission, are far from meeting the expectations and requirements of such status.

In light of the burning desire for access and concomitant funding realities, countries need to undertake the delicate and thorny task of differentiating their higher education sectors. Global massification of post-secondary education necessitates a differentiated system of post-secondary education in every country, from greater private sector involvement to different routes into higher education, such as community colleges.

The private sector has contributed considerably to the expansion in higher education around the world. Within a decade, private African higher education institutions have gone from accounting for zero to around 20% of the overall tertiary enrolment. And yet, the role of the private sector has not been fully recognised and the sector lacks concomitant support in many countries.

For instance, virtually no government support or provisions exist in Africa for private institutions. Yet, it is vital that private providers, especially those non-profit organisations, like their public counterparts, enjoy comparable, if not similar, public provisions such as loan schemes, scholarships and so on.

Diversifying higher education institutions has direct implications for access, quality and excellence, relevance, cost effectiveness and impact. A diversified higher education system enables governments to provide higher education to quite a large section of the student body by containing the per student cost of education, for instance, in the form of community colleges in the United States.

It is thus prudent to focus on establishing and sustaining a few flagship institutions that focus on research and development, economic and financial status permitting, while expanding access to teaching and learning.

Taxes and foreign funds

Trust funds (for education) generated through corporate taxes exist in a few countries. Emerging and developing countries may need to pursue this important means of resource mobilisation by systematically imposing corporate taxes and surtaxes, for example, on luxury items.

In many developing and emerging countries, the funding instruments of regional, international, bilateral and multilateral organisations play critical roles in higher education, especially in areas of research.

Though miniscule in volume, these funding instruments are key in supporting research and development, professional networking and academic staff advancement (scholarships and training), among other activities.

For instance, though ‘marginal’ in terms of volume, the interventions of foreign funding in African higher education research remain critical.

As COVID-19 proved beyond any doubt, academic and research cooperation has become ever more critical. As issues of global concern are mounting, funding for research collaboration and partnership needs to be scaled up significantly.

Resource management

Whereas resource mobilisation has often been the subject of intense discussion about funding, its effective use has not. Higher education institutions exhibit a significant level of inefficiencies on multiple fronts such as student attrition, excess (administrative) and ‘deadwood’ (academic) staff, unpopular programmes, mission creep, idle facilities and unused resources, among others.

Addressing these inefficiencies would go a long way towards alleviating the financial state of higher education institutions.

Furthermore, considerable opportunities for conserving resources exist, but are often ignored. For instance, sharing heavy duty (expensive) instruments, taking out joint subscriptions (for journals and databases), negotiating group deals (for data and service packages) and holding joint ownership (of labs) could save a substantial amount of resources.

Countries which are busy establishing new institutions need to closely explore both resource generation as well as conservation strategies.

That noted, public universities in numerous countries strive to generate funds and resources through a multitude of academic, professional and business undertakings. Yet, in many cases, these funds are channelled back to the national treasury at the end of calendar years with little incentive therefore for institutions to undertake savings.

It is paramount that countries eliminate this nagging hurdle so that they can generate resources – systematically and professionally – with integrity and transparency.

The private ecosystem

In countries where expansion of the public purse seems to have reached its limits or further mass public expansion seems impossible, advancing the private higher education sector, especially in the form of (secular) non-profit institutions, remains a major, if not the sole, alternative and needs to be explored systematically.

This support could start with favourable policies and directives as well as rigorous, but considerate, regulatory regimes. A new form of public-private partnership scheme governing higher education may also need to be explored.

Furthermore, the funding realities in many countries – especially those with large populations – are such that multiple delivery modes need to be effectively advanced, augmented and consolidated.

The same could be said of countries with small populations which may not warrant a larger home-grown higher education sector. For instance, the COVID-19 pandemic has moved the online and distance education delivery mode from the margins to the centre, in the process opening up a revitalised – and better recognised – frontier to mass access with direct and robust implications for funding.

That said, in the private sphere, a number of countries have employed a multitude of favourable policies to enlist the private sector to expand access to higher education, though the sector still attracts ambivalent attitudes and public mistrust in many countries.

Governments have offered tax incentives and customs privileges; granted land, buildings and equipment; extended student loans; offered government scholarships to staff at private institutions; and accorded official commendations. But a lot remains to be done in many countries.

It is important to note that the private vs public lines have increasingly blurred as the privatisation of public institutions (in the form of higher tuition fees) as well as the publicisation of private institutions (in the form of free or subsidised tuition) are growing.

Fee-free higher education is never free

With a few exceptions, the fee-free higher education movement seems to have been mute. To be sure, ‘free’ higher education is never free, as society, in one form or another, pays for it. The wholesale provision of ‘free’ higher education to all, especially in countries where huge economic disparities exist, would be unfair, unequal and unjust.

It is hard to predict which way the wind will blow with this movement, but given the enormous pressure on both governments and ordinary citizens, the needs-based, as opposed to needs-blind approach (as espoused by UNESCO), may appear to be the way to go.

Typically, student loans are repaid in monetary terms. In light of the well-recognised apprehension of potential borrowers (who often tend to be from low-income groups) to commit to hefty loans (in a market where college graduation does not guarantee gainful employment), different forms of payment regimes may need to be considered.

For instance, student loan repayment through a variety of community service forms prior to or following graduation could be one.

‘Who should not pay?’

The discourse on funding higher education predominantly dwells on ‘Who should pay’ for the service. In a seminal book entitled Financing Higher Education Worldwide: Who pays? Who should pay?, Professor Bruce Johnstone focused on the costs of higher education that are borne by students and-or parents under the now widely used term ‘cost-sharing’.

Johnstone, colleagues and many others have extensively studied and written on financing higher education from the context of ‘Who should pay?’ Their work has been pivotal in the dialogue around cost-sharing and who should pay for higher education, largely through means-testing, though this has been an uphill battle to implement in many developing countries.

It is time that the long-standing mantra of ‘Who should pay?’ that deeply pervades the discourse and analysis around financing higher education instead zoomed in on ‘Who shouldn’t pay?’

This is particularly relevant as the middle class – which is presumed to be able to pay for its education – is growing around the world, and the argument that this group should pay for higher education is gaining more traction.

Moreover, in a world with an increasingly unequal wealth distribution and a growing middle class, the central focus of the discourse on financing should be on those who cannot afford it. This would help to focus attention more directly and sharply on socially and economically marginalised communities when it comes to access and equity.

For instance, means-tested practices for establishing loan or fee-remission eligibility, which typically centre on the wealth of a student’s parents, would instead focus on poverty.

The principles of ‘Who should pay?’ are firmly grounded in many countries where collateral possessions – as expressed in homes, land and property – are mandatory as loan guarantees.

As the world is changing economically and demographically, it is important that other forms of collateral items are actively sought in the interests of those who cannot pay. Public policies on material-based guarantees, used as loan collateral, may need to be effectively diversified in the interests of valuing citizens who are worthy of investment.

Furthermore, the idea of ‘Who shouldn’t pay?’ could also look beyond what is paid in tuition fees. Tuition fees, the mainstay of higher education funding globally, are just one of the major hurdles to accessing higher education. Those who cannot afford to pay tuition fees are often financially constrained when it comes to covering other study and subsistence costs such as clothing, food and accommodation.

For instance, even when provisions in the form of loans exist, they are often far from adequate if they are not restrictive. The shift in discourse from ‘Who should pay?’ to ‘Who shouldn’t pay?’ may help address these glaring and nuanced challenges and other associated complex deficits.

Damtew Teferra is professor of higher education at the University of KwaZulu-Natal, South Africa, director of research and programmes at the Association of African Universities, and founding director of the International Network for Higher Education in Africa. E-mail: teferra@bc.edu or teferra@ukzn.ac.za.