University tuition fee reform and good governance (Part I)

CONTINUING government cutbacks in higher education worldwide have meant that universities have to look elsewhere for funds. And an easy way to provide a substitute for public funding is increasing tuition fees. There may very well be merit in this approach, and it should happen if that merit exists. Nevertheless, have universities also looked elsewhere to substantively improve funding, even if it means combining that funding with increased tuition fees? Many universities in the developing world have had minimum engagement with the private sector, either for curriculum development or for funding purposes. 
In addition, there is the presence of miniscule strategies and efforts at attracting consistent corporate fundraising at developing countries’ universities; the whole question of cost-efficiency measures not embedded into strategic planning and management creates questions in people’s minds about the governance structure at these universities. People would hardly want to provide funds for any entity if they harbour doubts about the possibility and quality of the delivery of goods and services.

“And talking about tuition fees increases conceals the real management problems and at the same time defers the solutions to such problems. The governance structure has to be in place first before we can disseminate the good image of the university in seeking partnerships, whether for funding or other purposes. What is even of greater importance is to have a strategy in place prior to developing a structure, as structure follows strategy.”

And talking about tuition fees increases conceals the real management problems and at the same time defers the solutions to such problems. The governance structure has to be in place first before we can disseminate the good image of the university in seeking partnerships, whether for funding or other purposes. What is even of greater importance is to have a strategy in place prior to developing a structure, as structure follows strategy.
There are too many people with opinions on what university tuition fees should be, opinions clearly devoid of evidence-based information. Therefore, in some universities’ frantic rush to set tuition fees, some significant policy questions do not appear on the radar for such discussions and decision-making. I outline Stager’s (1989) policy questions, but with some revisions.
First, how do tuition fees impact student accessibility to higher education? Second, how should education costs be shared among governments, students and their families? But answers to these questions require answers to two other questions: should total education investment per student be modified?  What should governments try to achieve for higher education in its income distribution for the economy? 
Third, should there be variable tuition fees to reflect differences in costs and benefits for different programmes? Four, how should tuition fees be funded? Five, who would be the ultimate decision makers to determine the level and structure of tuition fees? Most people would agree that this final policy question may be the most strategic under challenging political and economic conditions.
In most U.S. public universities, the university governing councils set the fee structure (SHEEO, 1988). In 29 U.S. States, the State Budget Office considers estimated tuition fee revenue in determining State grants.
In 15 U.S. States, public universities deposit their tuition fee revenue to a special fund in the State Treasury, from which the State makes appropriations to the universities. In 25 U.S. States, tuition fees for public universities are set only after the universities know the level of expected government funding.
In 12 U.S. States, market forces play a huge role in determining public universities’ fees, and in these States, State appropriations are largely insignificant. Still, in another 12 U.S. States, statutes determine the fee as a  percentage of instructional cost.
Chapman in The Economic Journal (1997) argued that since the abolition of free tuition fees in Australia in 1974, the institution of the Higher Education Contribution Scheme (HECS) has become internationally the only one of its kind, impacting several other countries’ tuition fee structure. The HECS stipulates that the student obligation is income contingent.
And Australia’s HECS happened because general taxation financed increasing demand for higher education; near universal secondary education produced even greater demand for university places; financing higher education from taxation was hugely regressive in income distribution; substantial fiscal frugality that questions the rationale of government spending in even the most important sectors of the economy; and to ensure that economically-disadvantaged students are not denied access to higher education.
Under HECS, students can choose to pay their fees upfront at the time of enrolment, in which case they would receive a 25% discount on their payment, or they may decide to incur a debt, that is, to take a loan; in which case loan repayment would not start until the student is earning what Australians obtain as taxable income at $27,675; that was in 1996.
In that same year, HECS was modified to introduce three tiers of fees, reflective not only of teaching costs; and in 1998, a further change indicated that Australian universities from 1998 could institute any upfront fees for 25 % of their enrolment. 
Chapman concluded that “…the Australian experience with HECS reveals strongly that even a radical movement away from a no-charge system can be instituted without jeopardising the participation of disadvantaged potential students; this is all traceable to income contingent repayment. The political disquiet surrounding the introduction of HECS has gone. Those originally opposed to the scheme seem now to accept it as fair, with it being very clear that none of the dire consequences predicted at the time has come about.”
At any rate, underlying the policy questions on tuition fee reform is the governance structure at universities. The recent massive budget cuts in higher education in the UK identified governance and accountability concerns that triggered a number of senior executive level resignations at British universities.
Amid this financial turbulence, Lord Browne’s Report (2010) on Securing a Sustainable Future for Higher Education in the United Kingdom focused on these governance and accountability concerns. The Report recommended, inter alia, the setting up of baseline standards of quality, and that students receive quality information in the choice of courses.
The Browne Report added that families should not be burdened with upfront costs for education; especially to make certain that students from working-class families, are not denied access to higher education because of cost; the British Government agreed to issue loans to students to access higher education. Then students would utilise their loans to pay fees, etc.; and students would not have to commence loan repayment until they graduate and are earning £21,000 per year. And British universities now can increase fees, but there is a ceiling on any tuition fee increase.
Happy New Year!

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