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Knowledge-based economy needs more Uni education financing

By Gerald Giam

FINANCE Minister Tharman Shanmugaratnam announced in his 2008 Budget Speech that the Government will increase the CDC/CCC-University Bursaries for students from the lowest 20 percent of households from $1,000 to $1,600. This is a step in the right direction.

Unfortunately, the increase is probably not enough to cover the 7 to 20 percent hike in tuition fees recently announced by Singapore's three publicly-funded universities. Singaporean students will now have to fork out between $6,360 and $18,230 a year for undergraduate courses.

The ever-increasing cost of tertiary education is a cause for worry.

Many experts believe that education is the best socio-economic leveller. One of the most important ways to facilitate social mobility is education, and tertiary education in particular.

The Government has taken pride in its self-proclaimed "meritocratic" system, whereby anyone, whether rich or poor, can climb the social ladder to join the ranks of the elites in society if they achieve excellent grades in school and get awarded scholarships to study in university. However, the success of a country should not be judged solely by the achievements of the elite.

The former president of Japanese multinational Matsushita remarked some years ago to the then-Economic Development Board (EDB) Chairman Ngiam Tong Dow that our educational structure had some brilliant individuals perched like eagles on high peaks, but the average education level of the rest was not high. He advised that Singapore should concentrate on educating the masses to raise the average level and not just focus on the top scholars. He said that to advance as a nation, we need "high broad plateaus, not solitary peaks".

Singapore already has a very good education system at all levels — primary, secondary, technical and tertiary. However in the present economy, it is tertiary education (i.e. universities and polytechnics) that will make the difference between those who break into the middle-income group and above, and those who will remain in the struggling-to-survive group.

Singapore needs more knowledge workers to power our economy. If companies can't find these workers locally, they will have to hire foreign talent, as they are already doing. The globalisation train is steaming ahead, and there's nothing we can do to stop it. Most manufacturing jobs and even technical jobs will be shipped out to China, India or Vietnam sooner than we think. No amount of labour protectionism will save these jobs.

More foreign talent or more education?

To prepare our young for the knowledge-based economy, the Government needs to give as many students as possible the opportunity to study in tertiary institutions.

It doesn't make sense for the Government to constantly carp at the lack of local knowledge workers and import wave after wave of foreign talent, when it should be putting in place more long-term solutions by providing more opportunities for Singaporeans to complete their tertiary education. Human capital development is an investment with an almost guaranteed return.

In his Budget speech, the Finance Minister pointed out that in centres for innovation like Austin, Texas, over 44 percent of their population hold college degrees. But currently in Singapore, a mere 23 percent of each primary one cohort enters university. The Government plans to increase this to just 30 percent by 2015.

This, in my opinion, is not enough. It is unfortunate that many parents spend fortunes to send their children overseas to study due to lack of places in local universities. I understand that one of the Government's concerns is that the job market may not be able to support a higher proportion of degree holders, should the economy head south in the future.

The question to ask then is will these Singaporeans be better off if they didn't have a degree? Probably not. They might still be able to find well-paying jobs overseas with their qualifications, just like many Filipinos do. Not so for the non-degree holders, who will have far fewer career options, whether the economy is doing well or not.

Tertiary education and the lower income group

Students from low-income households often have to overcome numerous odds just to perform well in their studies, let alone finance their tertiary education. For these students, continuing on to tertiary education after secondary school entails not just tuition fees and other school-related expenses (stationery, books, etc). It also presents an opportunity cost. This is because many would be under pressure to start working as soon as possible to contribute to the household income, often to see their younger siblings through school.

Furthermore, the lower value that many poorer parents place on higher education is another factor that might be holding down university enrolment among low-income students. I have a good friend who qualified for junior college after secondary school, but her parents discouraged her from continuing on in JC after the first 3 months because they felt it would be a stretch to pay for her university education. She went to polytechnic instead. (Fortunately she took up a professional degree after she started working.)

This would probably not have happened had her family been wealthy enough to pay for her university education. In fact, all of my peers from high-income backgrounds eventually completed university, even those with average academic ability. Those who didn't do well enough to enter local institutions completed their studies overseas. Is it fair, then, for someone to miss out on a university education just because her family is not rich?

A report by the Education Policy Institute in Canada titled "Grants for Students" found that grants are an effective way of increasing access to higher education for students from low-income households. The research revealed that grants tip the cost-benefit ratio of higher education in favour of the "benefits" by offsetting tuition costs and foregone income. In other words, a JC student from a low-income family who is deciding whether to spend $20,000 to complete university or start working immediately no longer has to make that decision if he knows that his university education will be covered entirely by grants.

Are current bursaries enough?

The Ministry of Education (MOE) has stated that no student will be denied a university education because of financial difficulties. It claims that all cases of genuine financial need will be met by bursaries.

Unfortunately, bursaries don't cover all the tuition costs, let alone the other expenses of higher education. The annual tuition fees in local public universities range from $6,360 for arts and engineering, to $18,230 for medicine and dentistry. This includes the MOE tuition grant, which is given to all students, even foreigners. Most bursaries are valued between $800 and $2,000 per year, based on the level of financial need.

One needs to have a gross monthly per capita household income of less than $1,000 to qualify for an $800-a-year MOE bursary. Furthermore, the bursaries usually prohibit students from concurrently holding other bursaries or scholarships. They are also required to re-apply every academic year.

The National University of Singapore's (NUS) Student Financial Aid Unit states on their website that the financial aid package is a "partnership involving the student, his/her family and the University". While this co-payment approach sounds reasonable in theory, in reality many students from low-income families still won't be able to meet the balance of payments even after factoring in the bursaries. Many would still have to fork out several thousand dollars each year for tuition fees, books and other living expenses, even if they receive the maximum amount in bursaries.

Part-time work could make up for some of the shortfall, but the money earned may be needed to supplement family income or support siblings, rather than pay their own tuition expenses. In addition, since bursaries need to be renewed every year, the student has no assurance prior to entering university that his or her expenses will be adequately covered for the duration of the 3 or 4 year course.

A tuition loan may be an alternative, but it does not reduce the net price of education (in fact it increases because of the interest) and it saddles the student with debt even before he or she has begun working.

Therefore, I propose that the bottom 30 percent of households (according to per capita income) should be given full tuition grants and grants to cover other expenses like textbooks and board. The payable fees could be slowly increased from the 31st percentile until the 90th percentile. Students from middle income households should have access to a combination of grants, low-interest loans and “work-study” to cover all their tuition fees and expenses. Those in the top 10th percentile should pay close to full tuition fees.

Financial Assistance for Continuing Education and Training

The Finance Minister has announced that the Government will now provide subsidies for part-time degree programmes at NUS, NTU, SMU and UniSIM. The Government will meet 40 percent of the cost of these programmes. This is an excellent but long overdue measure. Many adults who take up these part-time degree programmes do so because they couldn't afford to do their degrees after secondary school. They deserve to be given equal access to subsidised tertiary education just like their full-time peers.

Keeping Education Costs Down

According to NUS, 70 percent of their budget goes to paying salaries. In their quest to ascend to the top of the world university rankings, our public universities are paying increasingly large salaries to attract "top-notch" professors to come to Singapore.

I question the value of this strategy.

The rankings of a university are dependent more on the quality and amount of research by its faculty and post-graduate departments than the quality of instruction. This is because many top researchers and professors choose universities for their research opportunities and funding. In this regard, a highly-ranked university may not necessarily be the best in terms of teaching quality, and thus beneficial for those seeking higher education. I once had a physics professor who was a decorated US government scientist but couldn't teach for nuts!

I wonder if our universities are wooing all these top professors, paying them top dollar and then passing on the cost increases to students, who may not enjoy any significant improvement in the quality of their education.

Conclusion

Many well-to-do Singaporeans would have welcomed the 20 percent income tax rebate and the abolition of Estate Duty. While I personally have no complaint about this, it presents a huge revenue loss for the Government. Couldn’t this money be put to better use by investing in education rather than giving it away to Singaporeans who don't really need it anyway?

Singapore has done well as a whole in educating our people, earning praise from may quarters. Nevertheless, with increasing competition from India, China and the ASEAN region, the need to improve access to higher education has taken a much more urgent imperative. This need can be met to a large extent by increased financing for university education for Singaporean students, particularly those in the low-income group.

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