Rethinking the funding of tertiary education

In the presence of severe constraints on public expenditure and the generally accepted importance of education in social development and economic growth, the issue of funding education is one of the key issues that the newly elected administration will face in January.

The demand for tertiary education in Jamaica is on the rise because education is a key means of social mobility and access to wealth. The complaint from many is that tertiary education is expensive and so many qualified and deserving persons are unable to access higher education in Jamaica. While the Government has been a main source of funding for those who desire post-secondary education, given the tight fiscal constraints under which the Government is operating, there is little hope of an increase in the Government's ability or willingness to fund tertiary education. Indeed, there has been a contraction (adjusted for inflation) in government expenditure on tertiary education between 2008 and 2009.

Historically, government support for tertiary education was skewed towards the University of the West Indies (UWI), Mona, which was Jamaica's leading institution for tertiary education for many years. Notwithstanding some criticism of UWI's role, its performance has been creditable in many areas, providing in large the management cadre for the labour force. With the emergence of other institutions of higher learning, the increasingly global nature of higher education, and concerns with UWI's performance, calls have been made for the reconsideration of the funding model. A strong argument is that a more competitive and diverse market for higher education can only be beneficial. However, a more market-based approach runs the risk of further excluding the poor from access to tertiary education.

Some Key Findings

According to CaPRI's 2009 report, Funding Tertiary Education in Jamaica, there are three competing imperatives relevant to the funding of tertiary education.

First, the funding model is failing to achieve its primary objective of helping poor households to afford higher education. Since the household income of university students is higher than the national average, the neediest persons are not the beneficiaries. Further, the typical student borrower from the Students' Loan Bureau also comes from a home with above-average household earnings. Such findings have to stand alongside anecdotal information of university students suffering deprivation towards completing their degrees. This indicates that the current funding model results in some getting more assistance than they need, while many of the neediest get no help.

The second consideration relevant to the debate around a funding model is that as many as four out of five university graduates migrate. This degree of brain drain is topped by only three other countries in the world. This means that Jamaica's education funding model is, in effect, subsidising the economies of the USA, Canada, and Britain, which receive the majority of Jamaica's educated migrants. The example of the USA is particularly striking - the Caribbean population with university degrees living there is more than twice the number at home.

The third imperative derives from the realisation that the future growth of the Jamaican economy depends on industries that are knowledge intensive.

Consequently, the labour force needs to include more tertiary-level educated persons. Cutting public funding for tertiary education is likely to impact this goal negatively. Similarly, a wholly privately funded higher education system is not the best option as this will risk marginalising Jamaicans from poorer backgrounds who have made it into tertiary education through hard work and talent.

Furthermore, government maintains an interest in research, not just teaching, which is essential for the country's economic competitiveness, innovation in various fields, cultural well-being and sound policy formulation.

An Alternative Approach

A possible way of reconciling these competing imperatives is with a funding model that separates teaching from research while shifting the burden of the cost of teaching to the principal consumers, the students, in a fashion that enhances access and expands higher education. Since research has external effects that benefit, not only the recipient of the education, but also the wider society, the Government has an interest in promoting as much of it as possible. This could be done, not by directly funding tertiary education, but by making grants available on a competitive basis to researchers and the institutions at which they work.

The administration that starts a new term in January should set broad, transparent policy goals that can be met through the allocation of funds by disinterested granting agencies. These goals should go beyond simply economic efficiency, in order to incorporate areas such as a vibrant literary culture, developing critical reasoning and promoting ethical formation. This would mean that some tertiary institutions would be able to attract significant portions of their budgets from research grants, and could then support teaching functions with private funding. This would not mean that students will suddenly have to assume the full expense but would inevitably lead to a substantial increase in tuition fees.

Enabling students to absorb this increased expense while increasing the number of students who participate in higher education would require the newly elected government to provide additional funding for the student-loan scheme. The Government would need to continue to upfront the cost of students' education, paying all interest for the duration of studies, including postgraduate, and for a brief transitional period after graduation. This transitional period would need to be increased from the current six months. Similarly, the loan repayment would need to be extended beyond the current maximum 10 years. At the same time, the Government still needs to keep graduates from migrating. Means of inducing them to remain at home or to repay the loan funds once they migrate are essential. A credit bureau would need to be created to monitor and enforce loan repayment once graduates are employed. This will prove somewhat more difficult for overseas migrants as it will be difficult to pursue repayment once they are abroad, unless the local credit bureau can liaise with overseas credit bureaus and flag graduates with outstanding loans in Jamaica.

Caribbean Policy Research Institute (CaPRI) is a not-for-profit public-policy think tank. CaPRI works to promote evidence-based dialogue on issues critical to socio-economic development in Jamaica and the region.