Tuition fees: Finding a balance between quality and access
Tuition fees and students’ willingness to pay
Vietnam’s Decree 86/2015/ND-CP in 2015 stipulates the mechanism for the collection and management of tuition fees for educational institutions in the national system and is the current legal document that regulates the cap for tuition fees in higher education at the national level.
According to this decree, the ceiling on tuition fees for mass higher education programmes in the academic year 2020-21 would increase gradually and range from US$42.87 per month to US$62.55 per month, depending on discipline.
Accordingly, on average, a student attending a university to study medicine and pharmacy had to pay a maximum of nearly US$570 per year in the 2020-21 school year. That is a significant amount compared to the average monthly income per capita, which was approximately US$180 in 2021.
On 13 November 2020, in an interview with the media, Deputy Minister of Education and Training Pham Ngoc Thuong said that the ministry wrote a report to the government asking for permission to freeze tuition fees for the 2021-22 academic year to ensure students did not have to bear an additional burden during the pandemic.
However, are these the only fees students pay? In 2017, a survey by the Institute of Economic and Development Information surveyed 600 students and showed that nearly 90% of students had to pay for extra English tuition outside university. That implies that there is a great demand for additional study to improve students’ qualifications, knowledge and skills.
In a study of college students’ willingness to pay for tuition in a cost-sharing context, we estimated that, on average, a student is willing to pay US$400 a year for extra lessons outside the university.
More specifically, our research team conducted a survey of 285 students at Vietnamese higher education institutions and found that a student at a public university is willing to spend an average of about US$462 a year on extra classes outside of the university, compared to approximately US$342 a year for students studying at private institutions.
More interestingly, 237 out of 285 students who participated in the survey said that they would be willing to spend that money on university tuition fees if the university could provide the same quality service.
The above results indicate that Vietnamese higher education students are willing to pay extra tuition fees. If the government promulgates regulations to keep the tuition fee ceiling low, students from high-income backgrounds will still spend money outside of the university on the extra knowledge and skills that are helpful for their careers after graduation.
Status quo of Vietnamese universities
In order to meet the high demand for learning from students, universities need to have adequate resources. Around the world, many universities are gradually transitioning to an enterprise model as universities actively seek sources of revenue other than government subsidies. Diversifying universities’ financial resources is a way to improve their competitiveness.
The COVID-19 pandemic has increased pressure on Vietnam to improve the quality and accessibility of its higher education system to compete with other countries in Asia. As the Asian education system tries to improve its quality and mobility to compete with Western universities, more investment is needed to offset the problems caused by the pandemic.
In addition, accessibility has also become a critical concern since the pandemic. Pressure to increase the enrolment of students from low-income backgrounds has grown and access needs to be improved to reflect the motto ‘No one left behind’ used by the government during the pandemic.
Vietnam was no exception when mechanisms similar to the West’s cost-sharing policies were first promulgated in 1997 and universities were allowed to charge students tuition fees and access other funding sources such as donations and endowments and transfer technology. The more diverse their funding streams are, the more sustainable universities can become.
In another study, we examined the level of diversity of income sources in 51 Vietnamese universities in the period 2015-17 by applying the Herfindahl-Hirschman Index – an indicator of the relative financial sustainability of a higher education institution.
Our research results show that the financial health index of Vietnamese universities is worrying when institutions have no financial diversity.
Accessibility and quality
In the operations research method of problem-solving and decision-making, there is a famous problem: finding the optimal solution using the available resources to meet specific goals. For the higher education system, that problem is to meet the dual goals of quality and accessibility simultaneously. To solve this problem, it seems that the right level of tuition fees and investment in education is critical.
In a recent speech at the National Assembly forum, Le Quan, president of Vietnam National University, Hanoi, said that the current ceiling on tuition fees is too low compared to the expectations for and requirements of educational institutions.
Our research backs this up, showing that if the tuition ceiling does not match these expectations, what results is the “perfunctory study” Quan outlined in his speech. That means students go to university just to obtain a degree and look outside the university to acquire additional knowledge and skills.
In addition, Quan stated that “tuition should always be equal to two years’ salary after graduation”. That is, if a student in the four-year system graduates with a salary of US$420 per month, or US$10,080 in the first two years, the tuition fees for an academic year should be US$2,520.
This is quite similar to Professor Pham Phu’s method for calculating fee levels.
Using the World Bank’s approach to estimating the unit cost (cost per student in a year) in higher education in Vietnam and based on a comparison with service costs and GDP per capita, he estimated the unit cost in higher education was around 120% of GDP per capita. According to the World Bank, Vietnam’s GDP per capita in 2020 was about US$2,785. Thus, the unit cost of education should be approximately US$3,100.
It can be seen that there is a contradiction when it comes to meeting the dual goals of quality and accessibility in higher education in Vietnam simultaneously. In order to have a high-quality system, student investment needs to be high, reflected in higher tuition fees and state support. Conversely, when state support is low, students have to pay high tuition fees, which reduces their accessibility to higher education.
Fees based on ability
In order to remove this bottleneck, we could consider the idea of paying based on ability (pay-what-you-can-afford) and high-tuition, high-aid policies, which are being applied at several public universities in the United States.
When implementing these policies in Vietnam, the tuition fees of students in public education programmes should be calculated as the difference between the tuition fees of students enrolled on a high-quality, international partnership programme and the amount of support from the state. Meanwhile, students with less ability to pay should have access to financial aid or needs-based scholarships.
In addition, state support needs to be modified. State budgets for higher education institutions still need to be maintained, but their purpose needs to be changed. Educational institutions should commit to specific targets before spending and periodically check and monitor their spending.
Thong Minh Trinh is a PhD student at the University of Illinois at Urbana-Champaign, USA.