The Hindu Business Line : Reforming policies towards higher education

IT WAS a tough battle for Mr Tony Blair, Prime Minister of the UK, to finally get his Education Bill through Parliament, end-January. Under the new programme, students pay more than twice the fees compared to the old, but they now pay it after they graduate and get a job instead of before. This makes the student responsible for the cost of his education and connects the re-payment to his earning capacity (which presumably is connected to his education). This is the closest to a money-back guarantee that you can get in education.

There are several other interesting elements to the new plan. The graduates pay the tuition debt as part of their income tax with a prescribed limit. The payments are interest free, with a ceiling at 9 per cent of the income. Thus, those earning less need not be overly burdened by the cost of the loan. Moreover, students from low-income families get a waiver for up to about 30 per cent of their tuition. The average graduate would pay off his or her loan in about 13 years. If your skills and the market situation is such that your earnings are low, no matter. The unpaid debt is wiped out after 25 years.

British universities have been suffering for some time now. Though the premier institutions of Oxford and Cambridge have been relatively insulated due to their self financing colleges, the rest of the university system has been strained from the burden of insufficient resources due to tight budgets, an expectation from the public for subsidised education, and falling quality with the best professors moving out to the US in search of better facilities and higher compensation.

Similar problems afflict many other European universities. Once considered among the best in the world, they are all facing a crisis arising from reduced funding from the government combined with restrictions on their ability to charge appropriate tuition. This has put the squeeze on quality. Many of the best students often leave for greener pastures. And so does the faculty. In an effort to boost the quality of education in the country, the German chancellor recently proposed the creation of 10 new elite universities. But unless the whole structure of higher education is revisited, this is not likely to change the situation.

Although higher education is free in state universities in France and Germany, several new private institutions have, for example, started offering MBA programs charging high tuition fees and are not facing any shortage of students. Studies have shown that even among the poor in India, parents prefer to pay fees and send their children to Christian missionary-run schools instead of free corporation schools. The lesson is the same. People can recognise quality and are prepared to pay for it.

Countries find it difficult to balance several objectives when it comes to higher education. Trying to provide high quality at a low cost is as contradictory as when you hear the pavement vendor selling his ware as being `cheap and best.' Though it is widely accepted that primary education should be free for all to ensure a minimum literacy level in society, it is increasingly becoming difficult to justify free higher education given all the other demands on the budgets.

The US model, while not flawless, is the one that continues to be emulated by many other countries. Though state universities in the US are also going through a funding crunch with reduced state budgets, there are several features of the educational system which ensure that the higher education is kept relevant and pursues excellence. (Local bodies fund schooling through property taxes which is free up to high school.)

The most important feature is that higher education is highly decentralised. There is no ministry of education in the federal government or in the states to regulate the quality or functioning of universities. It is the prerogative of the university (whether private or state-supported) to set its own admission standards, fix tuition rates, and decide on programs and courses. Accreditation of universities is in the hands of voluntary, non-governmental, self-regulating regional bodies. Professional disciplines have similar agencies for their professional programme certification which maintain rigorous standards. Thus, universities and colleges seek to fit themselves to the environment and constantly adapt with programmes and policies to ensure their survival and growth. The continuing flood of students from around the world to study in US universities is a testament to this. Before tinkering with policies, reformers of higher education should take a closer look at the needs of the customers, namely the students and society in general. A fundamental question to focus on is why a student would wish to go to a university.

sqA student would like a learning environment that is relevant. This would mean that courses and programmes keep pace with the developments in their respective fields and provide the facilities required in the classroom that create a conducive learning environment. A student would like the education to provide the knowledge and skills that would be useful for a career.

More specifically, a student would like to be able to pursue a study of the discipline of his interest and would also like the flexibility in changing his preferences from one program of study to another with relative ease. A student would like to be able to afford the path of education he chooses. The only way one can even begin to satisfy these `customer needs' from a policy perspective is to push the decision-making down to the lowest level possible. That is very difficult to do when a system has grown up in the belief that bureaucrats and policy-makers in power have all the answers. But just as the command economy system has failed to deliver the goods when it comes to economic development, the system of directives must be given up when it comes to education too.

Rather than a system of physical controls, a support system of help and incentives can ensure progress towards society's goals without compromising quality and excellence.

The US has been slowly giving up the system of preferences and quotas for weaker sections (called `affirmative action'). Physical controls rarely work and distort distributive efficiencies apart from sending the wrong signals. Instead, a set of fiscal controls must be set up to ensure help for the less privileged which do not compromise on the quality of education. For instance, instead of lowering admission standards, an institution's solution may be to provide remedial classes and subsidised loans to secure opportunities for the under-represented, while still setting high standards. An important lesson in higher education for the student is to realise the value of it. That cannot be achieved by blanket subsidies artificially keeping the price low for everyone. It should be dealt with by targeted assistance to those who need it.

Policies towards Indian universities are also ripe for reform. However, while the Centre is moving towards liberalising and loosening controls on industry, it appears to be moving in the opposite direction and tightening controls and micromanaging education. The controversies regarding re-writing of history textbooks and interference in IIM admission, testing procedures, and fee structure are examples of, at best, confused thinking.

It is impossible to devise a one-size-fits-all policy when it comes to higher education. Each discipline has its own dynamics and the institution must be left to pursue its own goals subject to appropriate governance procedures. Some may want to pursue excellence in teaching while others may be research focused. It is important for the state to recognise the importance of setting broad goals and provide the incentives to achieve them, without micro-managing the delivery.

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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