In my previous post, I argued that making higher education affordable for the masses is the best form of public welfare as it gives all students, including those from low income families, an opportunity to graduate from university, which will give them the necessary headstart in Singapore’s knowledge-based economy. This will not only greatly improve the employment opportunities and social mobility of the low income students, but it will alleviate Singapore’s shortage of knowledge workers and hence reduce the need for such large numbers of foreign talent.
There are many challenges students face in completing their university studies, including financial difficulties, low family expectations, lack of effort and weak academic ability. This article will focus on the financial aspect, as it is the probably only factor that could prevent a student from completing university even though he or she has overcome all the other factors.
The Ministry of Education (MOE) has always claimed 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 the full tuition costs. The annual tuition fees in local public universities range from $6,100 for arts and engineering, to $17,500 for medicine and dentistry (including 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 $900 to qualify for an $800 MOE bursary.) The bursaries usually prohibit students from concurrently holding other bursaries or scholarships, and require them to re-apply every academic year.
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 payment even after factoring in the bursaries. They 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 $2,000 bursary. 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.
In his Budget 2007 speech on 15 February, Second Finance Minister Tharman Shanmugaratnam announced that all Singaporean children aged 7 to 20 will now have a Post-Secondary Education Account (PSEA). The PSEA of children of lower income families will be topped up annually with between $200 and $400. While laudable, a simple calculation will show that a child who gets a $400 top up every year from ages 7 to 20 will only have $4,400 their PSEA. This is not enough to pay for even one year of university tuition. In fact, by the time a 7-year old (in 2007) reaches university age, the tuition fees would probably have increased to much more than the current $6,100 a year.
An August 2006 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 low income students. 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 low income junior college (JC) student who is deciding whether to spend $15,000 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.
Financial pressure may compel low income students to abandon university plans, enter the workforce and start contributing to family income. One of my friends did well enough in her O levels to get into JC several years ago. However her parents told her plainly that they did not have enough money to sponsor her through university. As a result, she left JC after her first 3 months and went to a polytechnic, which is cheaper than the JC-and-university route. 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?
Singapore‘s economy will continue to rely more and more on knowledge workers. It is therefore imperative for the percentage of university graduates to increase to meet this demand. To improve access to university education, it is time for the government to consider developing a new educational funding structure to fully fund the university education of all students from families with incomes in the bottom 30th percentile. The payable fees could be slowly increased from the 31st percentile until the 90th percentile, with the latter paying full tuition fees.
In my next article, I will outline some of the ways in which this new funding structure could be implemented, even without the need to increase MOE’s overall budget by much.
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