Institutional Tuition Fee Discounts: Cost Sharing Without Loans

Abstract

In developed and developing countries around the world, one of the most hotly debated higher education topics is whether to increase cost sharing by instituting or raising the tuition fees charged at public institutions. A common argument made by advocates of greater cost sharing is that higher tuition fees increase the resources to improve the quality and scope of the enterprise, including providing more access by adding more seats. Another argument for greater cost sharing is that higher fees can introduce greater equity into the system by having students pay amounts closer to their and their families’ abilities to pay for higher education. A third argument is that higher fees will more nearly reflect the private benefits that college students are likely to receive in the form of higher incomes throughout their lifetime However, all of these arguments for greater cost sharing depend critically on more student aid being provided to help those students and families who cannot afford to pay the higher fees. More student aid is the only means by which access and equity objectives can be advanced through higher fees. Put another way, without sufficient student aid, higher tuition fees will reduce the demand for higher education, especially among students from lower-income families, who will have the most difficulty paying the higher fees.