Response to Austerity

A standard nostrum for higher education economists, consultants, and policy advisors is the recommendation that universities and other higher educational institutions (especially but not exclusively in the less industrialized countries) lessen their revenue dependence on governments, or taxpayers. The prescription is easy to rationalize, and is theoretically — and even practically — virtually unassailable. However, there are also significant limitations in a revenue diversification policy, especially in the less industrialized world where the need for such a policy may be most compelling. These limitations go far beyond the ideological distaste that many have for the neo-liberal economic medicines of cost sharing and privatization, and extend to certain technical and strategic dilemmas that confound even the staunchest believer in tuitions, privatization, and student lending. This paper will discuss some of these technical difficulties, especially of making cost sharing and student lending work in developing countries, and provide some "cautions" and a few recommendations.