Bruce Golding | Access to university education | On point

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Prime Minister Andrew Holness called for a public debate on the funding of university education on Wednesday, when he was inducted into the UWI Honor Roll. This happened against the backdrop of the government’s recent decision to provide grants and loans to cover fees owed by 339 UWI final year students who were at risk of being banned from taking their final exams. ‘studies.

It also followed concerns expressed by Pro Vice-Chancellor and Director of Mona, Professor Archibald McDonald, that, while welcomed, the sustainability of such an initiative in the years to come was questionable and, in principle, inequitable, since it does not meet the needs of other students who have financial difficulties to access the final year.

I don’t remember the tuition fees when I attended UWI in the 1960s, but it didn’t seem to stress my father, who had two sons at UWI, and had to cover those costs with his. salary as a member. of parliament, which was then 3,000 pounds sterling or 6,000 dollars a year. Remember, that would equate to $ 6.2 million at today’s values. So much for those who criticize the salary of deputies, which is currently less than $ 3.5 million! At that time, the government covered over 90% of UWI’s expenses, but the number of Jamaican students by then exceeded just over 2,000.

For the 2014-2015 academic year, fifteen thousand nine hundred and five Jamaicans were enrolled at UWI. The government’s budget allocation to UWI was $ 7.4 billion, equivalent to $ 468,116 per student. This does not include the $ 1.5 billion loans and grants of $ 47.7 million that the Student’s Loan Bureau (SLB) gave that year to 4,190 of Jamaica’s 15,905 students.

University education is expensive all over the world. Accessibility therefore depends to a large extent on the share of this cost that the student has to bear. Operating costs in 2014-2015 for the combined UWI campuses with a total enrollment of 47,395 were $ 58.6 billion, or an average of $ 1.2 million per student. However, tuition fees collected amounted to $ 7.4 billion, or 12.5% ​​of operating costs. The remainder was made up of contributions from regional governments (43.3%) and fundraising and revenue projects (38.3%). That left a deficit of $ 3.4 billion (5.8 percent).

MILLION DUES

At the end of the 2014-2015 academic year, the UWI was indebted of $ 13.6 billion (Jamaica’s share, $ 161.3 million) by regional governments and $ 4.2 billion in uncollected tuition fees. This situation occurs with such constant regularity that it has placed the university under serious financial strain, and it is the ingenuity of its leaders and management and the goodwill of a few committed benefactors and alumni who have avoided crises which would have forced it to reduce important academic programs.

Tuition fees for undergraduate programs at UWI vary by degree program and range from $ 276,000 to $ 624,605 ​​million per year. The total fees for an undergraduate degree at UWI, depending on the length of study, can therefore range between $ 828,000 and $ 3.1 million, not including books and living expenses, a cost that most Jamaican families simply cannot afford. Students, of course, complain about tuition fees and protest loudly whenever fees are increased. Yet even if the UWI were able to collect every penny of the fees currently charged, that wouldn’t amount to much more than 15% of its operating costs.

Universities in rich countries benefit from significant public funding. Several European countries offer free education up to university level, but this is only made possible by extraordinarily high income tax rates, exceeding 50 percent in some cases. In the United States, federal, state and local government contributions to universities last year totaled US $ 157.5 billion, an average of US $ 7,800, or over J $ 1 million. per student. Despite this, annual tuition fees at government-funded universities in the United States currently average $ 9,650 (J $ 1.25 million) for state residents and $ 24,610, or J $ 3.2 million, for out-of-state residents. Foreign students are charged a lot more.

U.S. universities also benefit from strong endowments that currently total $ 535 billion, generating some $ 24 billion in annual revenue, and although these funds cannot be applied to tuition fees, they cover expenses in capital and research funding, thus relieving the pressure to increase tuition fees.

The enigma facing countries like Jamaica is therefore twofold:

(a) how to make university education affordable for as many people as possible, which is essential not only for national development, but also for personal development and reducing the population’s heavy dependence on social spending ; and

(b) how to do this without depriving other segments of the education system – basic, primary and secondary – without significant improvement to which the majority of students would not qualify for university admission, even if it was affordable.

The average of $ 468,116 per UWI student that the government provided in 2014-2015 compares strongly with provisions at lower levels of the education system: $ 19,463 (early childhood), $ 100,971 (primary) and 129,309 $ (secondary).

DISPARITY PROBLEM

This is not the first time that the issue of this disparity has been raised, in all fairness to Dr Omar Davies, who, I remember during a budget debate over 10 years ago, called for a discussion on the matter. The Prime Minister has now placed the issue on the national agenda and has clearly indicated the direction of his thinking. He suggested that instead of paying this amount directly to the university, maybe it would be better to provide it as a student loan through the SLB.

The student would now be required to bear the full cost of tuition, but facilitated by a loan to be repaid over an extended period. In this sense, the student is required to invest the borrowed funds in their own educational and professional development with the expectation that the increased market value of their skills will allow them to comfortably repay the loan.

Over time, this would increase the amount available for student loans and the number of students who could benefit from them due to the increased flow of repayments into the revolving fund. In the short term, however, it only redirects the flow of funds through the SLB to the university and does not generate additional funds for student enrollment, nor does it allow those funds to be reallocated to lower levels of the education system. .

If the discussion continues in earnest, the issue of rebalancing government spending on education by allocating a larger share to the basic, primary and secondary levels needs to be addressed. This would, however, require that non-budgetary sources be found to adequately fund student loans.

The broad thinking outlined by the Prime Minister offers interesting possibilities. It is significant that he compared the long-term repayment terms of student loans to a mortgage. Mortgages are marketable securities, and an ever-growing, well-managed mortgage portfolio can be used to leverage long-term investment funds.

Fannie Mae and Freddie Mac in the United States were established as publicly traded companies. SLB has assets of over $ 15 billion that can provide both value and cash flow. Government demand in the local capital market decreases, leaving the market with more liquidity and a greater appetite for investment instruments. The ability of SLB to access cheaper funds from multilateral sources would dilute the cost of funds raised in the market to ensure that student loans remain affordable.

SLB’s loan portfolio, which has a default rate of around 25 percent, is expected to be reorganized, starting with more market-based criteria applied to its loan approvals. Too many students insist on pursuing studies with precarious earning potential and find themselves after graduation unemployed or underemployed and unable to repay their loans while vacant positions in the public and private sectors remain vacant.

A few years ago, when I asked the SLB to allocate part of its loans to studies in rare disciplines, the Student Guild complained that it was a breach of the law. academic freedom. University education is a costly investment, and this investment decision cannot be based solely on intellectual excitement or appeasement. The attitude of certain student borrowers who confuse obligation and law should be curbed.

Other possibilities can be considered, but it is important that the discussion takes place among all stakeholder groups, including, in particular, the students themselves. The Prime Minister, rightly, posed the question in a non-partisan and consultative manner and signaled his intention to engage in discussions with the opposition. Such an important issue deserves the kind of consensus that accompanied the Education System Transformation Agenda launched over a decade ago.

– Bruce Golding is a former prime minister. Email your comments to columns@gleanerjm.com.

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