1、The Economics and Politics of Cost Sharing in Higher Education: Comparative Perspectives D. Bruce.Johnstone I Cost- Sharing in Higher Education The term cost-sharing, in reference to higher education, begins with an assumption that the costs of higher education in all countries and in all situations
2、 can be viewed as emanating from four principal parties: (1) the government, or taxpayers； (2) parents； (3) students； and/or (4) individual or institutional donors.1 The governement. Most economists in market-oriented economies prefer to view the source of public revenue not as “government,” but as
3、people who pay taxes. Taxes can be paid by most citizens directly and visibly, as in taxes upon earnings, property, retail sales, general consumption, or special goods such as gasoline, cigarettes, alcoholic beverages, in line travel, or imported goods. Or, taxes can be paid indirectly and largely i
4、nvisibly. Such indirect taxes, largely invisible to the average citizen, may originate with taxes on businesses or enterprises that are passed on to consumers in the form of higher prices on the products they eventually buy-not unlike any other kind of retail sales, or special excise, taxes. If pric
5、es are governmentally controlled, as used to be the case in most Socialist systems, and if the enterprises are therefore unable to pass along their taxes in the form of higher prices, these enterprise, or value added, taxes must instead be borne by employees in the form of lower wages and salaries.
6、Finally, the government may take purchasing power from citizens not by taxation at all, but by merely printing money, thus shifting purchasing power to the government via deficit-driven inflation and the resulting erosion of the actual value of wages and assets. (Governments may attempt to tax only
7、the rich, or only the large multinational corporations, or only their export earning extractive industries. But such taxation is very difficult, and in the absence of enormous oil or other mineral earnings to confiscate and/or tax, most governmental expenditures are borne, in the end, by the average
8、 citizen / taxpayer.) Parents. The second party to cost-sharing is the parents, who may pay some of the costs of higher education through payment of tuition, or bear some of the costs of student living, sometimes by keeping the student at home. Parents can cover these extra costs from their current
9、income, or in part from past savings, or even in part through borrowing-that is, drawing on future earnings. Grandparents or other members of an extended family, or even members of a village or a church, can also be “parents” hen it comes to supporting a student. Students. The third party to share t
10、he burden of higher educational costs is the student, who can bear some of the costs through term-time or summer vacation earnings, or through loans. The loans, in turn, can be paid back when the student has graduated and is employed, like any regular loan, in monthly installments, or repaid through
11、 deductions that the employer removes from the graduates pay (like the withholding of income taxes, or contributions to an insurance or pension fund) and forwards to the lender. Repayments can also be income contingent, or limited to a certain percentage of earnings. Or in very similar fashion, the
12、graduate can repay the loan (assuming the loan was borrowed from, and therefore owed to, the government) through an income surtax, or additional tax on income until the loan has been repaid, including the contracted percentage interest. In all casesconventional equal installment, installments gradua
13、ted over time, or income contingent-what is most critical to the student (or at least ought to be in an informed and rational world) is not the form of the loan or of the repayment obligation, but (1) the discounted present value of the total anticipated payments and (2) the number of years to repay
14、-which, in association with #1 defines the monthly repayment burden. Individual or institutional donors. The last party to cost-sharing is the donor, whose contributions may go either toward improving the quality of the university (and thus presumably the educational experience) toward the overall i
15、nstitutional budget, thus reducing the amount that must be passed on to parents and students directly, or toward some students, in the form of grants or scholarships, presumably in substantial measure based on the students financial need, or the students and/or their parents low income. These donors
16、 may be long since deceased but whose substantial past gifts to the university have been preserved as endowments (as is common in the US), with only the income earned spent for scholarships or for the current operating budget to reduce the need for other sources of revenue. These donations, in effec
17、t, go on in perpetuity. Or, donors may be individuals or foundations giving currently, thus lowering the higher educational costs that would otherwise have to be borne by one or more of the other parties in our cost-sharing paradigm. The university itself may seem to be a donor as it grants special
18、need-based scholarships to able students from poor families. But the actual donors in such instances are more likely to be the parents of wealthier students, who may be paying more than would otherwise be required to meet the institutions real average instructional costs, but who may perceive the un
19、iversitys ability to give some need-based scholarships as essential to enhancing the quality and prestige of the institutionand thus as a legitimate institutional expense. II Forms of Cost-Sharing The term cost-sharing as it has come to be used in higher educational finance, and as used in this pape
20、r, refers to the shift of at least some of the higher educational cost burden from government, or taxpayers, to parents and students. Cost-sharing is most associated with tuition and with fees or “user charges,” especially on governmentally- or institutionally-provided room and board. However, a pol
21、icy shift in the direction of greater cost-sharing can take one or more of seven main forms: 1. The beginning of tuition (where higher education was formerly free). This would be the case in China in 1997, for example, or Britain in 1998, or as most recently announced (in November 2000 to begin in 2
22、0002) in Austria. 2. The very sharp rise in tuition (where public sector tuition already exists). A shift in the direction of greater cost-sharing requires that the rise in tuition be greater than the rise in institutional costs generally in order for the governments, or taxpayers, share to be lesse
23、ned, and the parents and / or students shares to rise commensurately. This has been the case recently in the US, where many state governments have failed to maintain their former “shares” of public university expenses and as public university tuitions have been increased very rapidly to “fill in” th
24、e gaps left by the withdrawal of state government funding. 3. The imposition of “user charges,” or fees to recover the expenses of institutionally provided and formerly heavily subsidized residence and dining halls. This has been happening in China and in most countries, including African countries
25、where subsidized living costs were said by the World Bank to absorb the bulk of many countrys higher educational budgets. In the Nordic countries of Sweden, Norway, Finland, and Denmark, for example, where higher education remains “free,” the expenses of higher education are exclusively the costs of
26、 student living, which are very high in those countries, and which are “shared” neither by the taxpayer nor (at least officially) by the parents. They are thus borne entirely by the students, largely in the form of student loans (which are indirectly shared somewhat by the taxpayer in the form of re
27、payment subsidies). at were once part of the former Soviet Union 4. The diminution of student grants or scholarships. This is sometimes accomplished sometimes simply by “freezing” grant or loan levels, or holding them constant in the face of general inflation, which then erodes their real value. Thi
28、s happened to the once very generous grants in Britain (which were later abandoned altogether), and has happened to the value of the maintenance grants in Russia and most of the rest of the former Soviet republics, and in Eastern and Central Europe. 5. This can be accomplished through a diminution o
29、f the subsidies on student loans (similar to the diminution in the value of non-repayable grants), and might be accomplished through an increase in interest rates, or a reduction in the length of time that interest is not charged, or through a reduction in the numbers of loans for which the repaymen
30、ts, for any number of reasons, are forgiven. Or the effective cost recovery might be accomplished through a tightening of collections, or a reduction in the instances of default, with no change in the effective rates of interest paid by those who were repaying anyway. 6. The limitation of capacity i
31、n the low or tuition free public sector together with the official encouragement (and frequently a public subsidization) of atuition dependent private higher education sector. A number of countriesnotably Japan, Korea, the Philippines, Indonesia, Brazil, and other countries in Latin America and East Asia-have avoided much governmental expenditure on higher education by keeping a limited public sectorusually elite and
