Financing higher education in Pakistan

Abstract

A recent shift in the allocation of public expenditure towards higher education prompts several questions: Is this allocation economically justified? Are these resources well utilized? Is there significant cost recovery of these expenditures? If not, who benefits from the subsidy these expenditures represent? Are there alternative means of financing higher education? This paper attempts to provide answers to these questions, which can be briefly summarized as follows: Estimates of social rates of returns do not support the reallocation of public expenditures away from primary towards higher education; low retention rates and high failure rates suggest that the internal efficiency in the utilization of these expenditures is low; currently, almost all public expenditures on higher education represent a subsidy; given the tax burden and enrollment ratios by income group, the lower income groups seem to be gaining most from these subsidies; a start has been made at private sector higher education with the opening of two professional universities, but the prospects of general universities currently opening appears to be dim. Pakistan has a well designed loan program in operation although its quantitative impact is currently limited.