Innovative funding options can keep Indian universities on the go
While Western varsities bank on endowments and alumni funds to survive, Indian colleges attract very little philanthropy. Even the Tatas, despite their contributions to nation building, preferred to cater to the Harvard Business School than an IIM.
Funding patterns in primary, secondary and tertiary education space in India are varied and nuanced. School education in India has been served well by government schemes such as Sarva Shiksha Abhiyan and Mid- Day Meal programme to the extent that primary enrolment levels are almost at par with that in developed countries.
However, as one moves up to secondary, higher secondary and tertiary education, our enrolment rates lag behind the rest of the world. For instance, in tertiary education we have an enrolment rate of barely 27 per cent ( school leavers enrolling in colleges as a per cent of the relevant age cohort) while the corresponding figures for China, the UK and the US are close to 50 per cent, 60 per cent and 80 per cent respectively. There is significant room for improvement in our college enrolment levels and the twin factors of demographic dividend and economic growth are set to propel our enrolment rates in higher education over the next decade. The demand for college seats is set to grow dramatically but our higher education system does not seem to have the capacity to absorb such large numbers. A key constraint is the lack of financial resources.
When the US and Europe developed their higher education sectors in the 1960s and 1970s the expansion was helped by generous government support — a factor that is on the decline in India due to the weakening fiscal space and lack of political intent. An interesting contrast between the current global model of funding of higher education and the Indian model is our high dependence on student fees as the major source of revenues.
Top Western institutions are majority funded through large philanthropic grants and income from investing their endowment funds. In contrast, the dependence of Indian institutions on student fees limits their ability to grow, as fees cannot be increased much due to a mix of regulation and market factors. But, without an increase in fees, the necessary infrastructure cannot be created to enhance capacity. Other sources of income have been traditionally very hard to generate.
Ironically, even rich Indian benefactors have preferred donating to Western institutions but not to Indian colleges. For instance, the Tatas preferred to give money to a cash- rich Harvard Business School rather than an IIM.
Even if some of those donations come our way, we may not be able to meet the scale of endowment funds of Western institutions where there is a long- standing culture of philanthropic contributions in the education sector. However, there are several other financing options for Indian institutions that have not been sufficiently explored.
In the globalised world, we have exported many Indian students to foreign colleges but have effectively ended up importing education as brain drain leads to a huge outflow of capital. However, we have not been able to sufficiently internationalise ourselves to the extent that large numbers of foreign students would consider India as a destination for college education.
If that happens, foreign students can be charged significantly higher fees, as indeed Western institutions charge from their own international students. With growing interest in India, rising college fees in the West and India being looked upon as an aspirational destination by many Asian and African countries, there is no reason why foreign students cannot become an important source of revenue.
Indian institutions need to acknowledge that reskilling, continuous education and a lifetime of learning are going to be the norms in the near future where the course syllabi will tend to become outdated in no time. In such a scenario Indian institutions need to embrace executive education not only to meet the growing demand from working executives but also for the opportunity to innovate by developing expertise in new areas such as Internet of Things, Artificial I n t e l l i g e n c e , Blockchain and the kind of cutting- edge knowledge that would interest working executives. Such courses may range from very short term to online and even practitioner research degrees. Pedagogies will also undergo change from classroom delivery to technology driven and from information transfer to knowledge co- creation. Working executives would of course have higher affordability for such new age courses thus adding to revenues.
India has traditionally lagged behind in academia- industry partnerships. The move towards executive education will also enable different dimensions of the relationship to blossom that may include industry funding for research, consulting and even joint ventures.
Finally, Indian institutions have not been proactive in tapping their alumni networks, which can be sources of contributions that individually may not match the scale of monetary gifts in the West but may collectively become significant support for alma maters.
Government support for higher education in India has come down over the years while the private sector does not yet have the capacity to serve the growing demand at desirable levels of quality. Yet there are increasing pressures on all higher education institutions — public and private — to feature in international rankings and qualify in global quality evaluations. In sum, the funding has dried up just when there is an increasing need to scale up and pressures to excel are higher than ever before.
The best option
Indian institutions to create innovative for is models for funding in collaboration with industry. Apart from industry academia partnerships Indian higher education has to become more entrepreneurial in promoting and exporting Indian and indigenous knowledge in a way that can be useful to the contemporary world.
Prof. Chatterjee is Director and Prof. Sensarma is Dean ( Internationalisation) at the Indian Institute of Management Kozhikode
As much as commodification of education sounds an oxymoron, it is here and each country grapples with it. Education left to the market forces, its commodification and monetisation is the consequential outcome. The fact that each country is the best critic of its own educational system is a good thing.
Since 1980s free market forces have swept the planet and did not spare education of the citizens of their respective countries. Education as a public good, therefore to be supported by the public, quickly faded away. Left to the forces of free market, education turned to be a sport for management gurus to introduce lean and mean practices in the name of efficiency. The driving question became “what is the value of education?” Here “value” took on a distinctive industrial meaning; industry practices took over the administration of the educational institutions. Quantification of every aspect of education is the norm. Universities began to deliver human resources to the industry, instead of well- educated members for society. As a “requirement” for competing in the marketplace, educational institutions transformed themselves in country clubs with dazzling technology, often as eye- candy, without much educational value. “Being trained” is more important than being educated.
How to finance education in the marketplace? This is a perennial anxiety- inducing question and at the same time a quotidian reality, which drives every move a university makes in the process of delivering “good education” to its students. The growing privatisation of public higher education system has created enormous challenges as private interests take over the public good of education.
Departments of Institutional Advancement, a fancy name for fundraising, and marketing, at every university and college in the USA is a high- tension operation, under the close scrutiny of the President, a fund raiser- in- chief, and of the board of trustees of the university.
Elite educational institutions have significant endowments with robust mechanism for generating vast streams of revenue other than tuition. For elite schools, money generates money, and moneyed people in general can afford high- price educational institutions and they are welldisposed to support elite institutions. These institutions operate in a different universe.
Most of the non- elite educational institutions, which educate the majority of students, are tuitiondependent, and thus are in a perennial anxiety about generating “a diverse stream of revenue.” The accelerated decrease of government funding has driven universities to explore all kinds of revenue generation streams, including questionable private partnerships across the world. By following the industrial model, and in the name of “efficiency,” universities have outsourced what they perceive as “non- core” activities to market forces, and allowed “consultants” to run the academia. Revenue generation is at the heart of every deliberation and decision in managing academics institutions.
The management of universities is in the hands of management specialists with MBA qualifications, who apply business models at every level of functioning of the university.
The USA federal student tuition aid keeps the financing of the education enterprise; 44 million students take student loans and spend their lifetime to pay them off.
Forbes analysis gives a sobering picture of the cost of the education https:// www. forbes. com/ sites/ zackfriedman/ 2018/ 06/ 13/ student- loandebtstatistics- 2018/# 669ab9d97310 According to American Student Assistance, 12 million ( 60 per cent ) students annually take the federal student aid loans. The corporatisation of universities has become an accepted model of “delivering”
education, where mortgaging the commodity of education is the new normative. In the battle of the political ideologies in the USA some State public universities are getting out of the “business” of education, while other state public universities are funding the education to its residents, albeit with significant conditions. Universities, private and public, are in search of more students who can pay full tuition. Recruiting foreign students has become a critical priority because, in general they pay the “sticker price.” Universities have been practising a disingenuous marketing ploy, which has gained legitimacy, of using high “sticker price” to signal the prestige of the institution, but, actually, offers significant tuition discount to a large number of students.
The diminishing school/ college age demographics in USA compel universities to look beyond their borders; however, the national political disposition towards international students creates uncertainties. Moody’s Investor Services gave a negative outlook to US higher education system for 2018. It concerns that growth will slow for most revenue streams, the rate of expense growth will outpace softening revenue growth, and the uncertainty at the federallevel continues to contribute to potential sector volatility.
Financial experts assess that only 500 or so of more than 4,000 colleges/ universities in the US are financially in good standing. Most colleges/ universities struggle to meet demands of ongoing technology upgrade, while being buffeted by changing demographics and economic forces.
The free marketeers have almost successfully argued that education is not a public good, rather a need for industry success. The neoliberal position on education is that it is a private benefit, measured in terms of economic and social attainment. Whereas, the education as a public good is understood, where benefits spread across society in terms of employment, economic prosperity, health and social cohesion; and as Unesco stated, where “individuals, especially women, aspire to live healthy, meaningful, creative and resilient lives. It strengthens their voices in community, national and global affairs. It opens up new work opportunities and sources of social mobility.”
While the debate over education as public good or a commodity continues, higher education in the United States is at a tipping point. It is difficult to define and measure value; compulsions and obsessions to focus on the core, reduce costs, outsource and monetise assets, and develop online and lower- cost programmes will grip us. “Disruptive innovations” will change the landscape within higher education, and the value proposition, economics, marketing and recruiting, outcomes and assessment will have to be adjusted continuously.
Harvard University has reported a fifth consecutive budget surplus, nearly an increase of $ 200 million. Harvard Management Company chief executive N. P. Narvekar’s financial wizardry ( smart endowment investments), despite sharp restraints on distributions from endowment, helped the university to prosper.
The author is Associate Professor in the Department of Mass Communication, and Director of the Graduate Programme International Communication at St. John’s University, New York