Funding Higher Education

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Enormous funds are required to provide scholarships, soft loans or to building skill-based education models, assert AICTE Chairman Prof SS Mantha


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The economic progress of a country is strongly linked with quality education with values for all. It is therefore, necessary for our higher education systems to undertake periodic review of the curriculum and subject content of the technical programmes to ensure  that they are up to date, not outmoded or obsolete, and effectively fulfill the technological requirements of the country.

Research is  important too, to enhance quality in teaching learning processes and eventual meaningful employment. However, quality comes at a  price.

When statistics read that 40 percent of India’s school going population is trying to register in private schools that are seven percent of the total and only 18 percent of the youth are able to enroll for higher education, a mismatch in demand-supply ratio for quality education becomes glaringly obvious and a lot needs to be done in this domain.

An education system where more than 50 percent fail between X, XI and XII standards of schooling, we need to analyse the problems. A study indicates that those who fail and eventually drop out have to make ends meet and hence work, or a majority finding the  current education not interesting enough.

Either way, enormous funds are required to provide finances like scholarships, soft loans or even change the current predicament to building skill-based education models.

Higher education, in general, and technical education in particular, in India, contributes a major share to the overall education system  and plays a vital role in the social and economic development of our nation.

In India, technical education is imparted at various levels such as: craftsmanship, diploma, degree, post-graduate and research in specialised fields, catering to various aspects of technological  evelopment and economic progress.

A truly massive education system such as ours is highly stressed and needs funds to sustain and grow. Higher education institutes and  universities are starved for funds today. So private investment is needed urgently, but one cannot neglect the mechanisms through which public subsidies are allocated to the universities.

One cannot expect the solution for higher education’s problems to come only  from increased student (or graduate) contributions. The mechanisms for public funding contain important incentives to achieve higher education’s three main goals, viz. quality, efficiency and equity.

Bringing these incentives more closely in line with incentives to generate increased private resources for higher education would seem  to be the goal to be achieved.

It is not just the level of public and private funding, but it is just as much the basis and criteria according  to which public funds are made available that can improve the quality and accessibility of higher education.

During the financial year 2011-12, the Centre allocated `38,957 crore for the Department of School Education and Literacy, the main department dealing with primary education in India. Within this allocation, a major share of `21,000 crore is for the flagship programme ‘Sarva Siksha Abhiyan’.

A high allocation is required to implement the recent legislation Right of Children to Free and  Compulsory Education Act, 2009. It is a great idea to progressively increase expenditure on education to around six percent of the  GDP but such an effort probably also leads to an imposition of an education cess.

There is no optimal funding model that one can use. Goals to be achieved and the model of higher education system that we would like  to promote needs to be matched. We need to optimise the public funding the development of research, quality of education and, lastly  the access to education.

Some of the concerns here are the degree of autonomy of individual institutions in their functioning and budgeting versus the direct  control of the state, the relative contribution of the state and of the students to the funding of higher education and the relative  importance of the educational and research mission versus. the model with research-intensive institutions alongside teaching-only institutions.

We have several desired characteristics and outcomes for state higher education funding models, which include equity, adequacy,  stability, and flexibility.

Creating endowments and corpus need to be explored. An endowment is a way for a donor to make a statement, honor a friend or  loved one, or to recognise an organisation. An endowment is significant in that it provides financial support for the university and, at  the same time, it becomes a permanent resource within the institution.

We also need to look at new models like non-profit organisations transferring assets to the university foundation to create a permanent  endowment fund. Other donors also can make contributions directly to the fund. The university becomes the fund’s sole beneficiary.

Advantage of having an endowment is obviously financial stability and oversight where an endowment provides a steady income  stream for the university to offset operations, fund risk ventures like new or innovative programs, tuition assistance, etc.

It is a good idea to even create an operating reserve like a designated fund which may act like an endowment because a university may  choose not to touch the principal. Principal, however, will be available to meet emergency needs.

Institutions need to realise that there would be no free boarding anymore and need to make the internal systems count to create  realistic funding models. Public funding and state funding would always be in short supply.

Hence, a pragmatic approach would be to  source alternate funding methods like optimising resource allocations, conduct new programs, promote hybrid learning  methodologies to reduce cost of education, invest in research for returns on quality, and invest in publishing.

Hence, we need to encourage augmentation of resources for covering a larger portion of cost of higher education. The government  would certainly look to provide higher resources moving from higher to primary level of education and with good reason.

RTE is  singularly a very important piece of legislation and would need funds. This, however, cannot be at the cost of subsidising higher  education and a possible full cost recovery from students. Cost recovery cannot and should not be through student fees but  necessarily be through other means as enumerated above.

We need a finance corporation set up with public and private funds to create a corpus that has the potential to fund a large population  who otherwise cannot fund their education. This is all the more important when we consider that 65 percent of our population would  be below the age of 35 years in the next 20 years.

We also need almost double the institutions we have today to accommodate the  aspirations of a young population. Where would the funding come from? Like the Hon’ble Minister, HRD Shri Kapil Sibal said, the  present loan structure of the government was not conducive for either student taking loan or bank offering loans.

“We need to actually  liberalise the whole structure.” A bold thought indeed. In this context, he had suggested that financial institutes should have a flexible  lending policy when extending loans for setting up educational institutes. In fact, the banks must be asked to give long-term loan to  educational institution paid over period of 20 to 25 years.

To set up an education institution, nobody is going to borrow at 12 percent  or16 percent and set up an institution where the time to return the loan over period of seven years is neither really workable nor  practical.

Finally, great resilience in this country would see the hurdles pass and see good economic sense would prevail in days, months and  years to come, for no country has ever had to regret its spending on education.
Indeed, like Aristotle said, “All who have meditated on  the art of governing mankind have been convinced that the fate of empires depend on the education of youth”. 

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