CERD Working Paper No. 10

International Workshop on
Challenges of Higher Education Governance andFinance Reform in East Asia

Higher Education Reform
Finance and Student Aid

2019

Center for Research and Development of Higher Education,
the University of Tokyo

1

Foreword
This report is based on the presentations given at the international workshop held at theCenter for Research and Development of Higher Education, the University of Tokyo on
November 21 and 22, 2018.
One of the missions of the center is to exchange academic activities, in particular focusing on
observations of trends in higher education in various countries. To accomplish this mission,
we have thus far held several international symposia and workshops.
In 1999, a symposium organized jointly with the National Center for University Management
was held on the theme of Higher Education Finance. The symposium in 2006 was on Student
Financial Assistance Policies in six countries. Two further symposiums were devoted to theHigher Education Reforms in the UK and Japan, in 2012, and Student Financial Aid in four
countries, in 2015.
While the sizes of the international workshops are smaller, we were delighted to invite
distinguished scholars from China, the United States, and Australia and engage in intensive
discussions with them.
The outcomes of these international conferences have been published as publications of ourcenter.
The purpose of this workshop is to hold intensive discussions on higher education reform andfinance in East Asia. We have therefore invited two distinguished scholars from China andKorea: Professor Wang Rong, Director of the Chinese Institute for Finance of Educational
Research at Peking University and Professor Sin Jung Cheol of Seoul National University.
We are also very fortunate to be able to invite Professor Roger Geiger, who is currently
resident at our university. He is extremely well known not only as an expert on higher
education history but also as a researcher in higher education finance and governance.
We sincerely welcome the three distinguished guest speakers and look forward very much toholding fruitful discussions with them.

iHigher education in Japan, China, Korea, and the United States has been changing very
rapidly. The common characteristics of higher education in these countries are decreasing
governmental financial support and increasing tuition fees. Comparing the experiences ofeach country is very useful, considering the differences in cultural, social, and politicalbackgrounds.
Professor Motohisa Kaneko is the most famous and important expert on higher education. I
underline the fact that he was the first director of our center. He discusses the relationshipbetween economic growth and higher education during the emerging “the capital market.”He criticizes the development of Japanese higher education for its heavy dependence on
student loans since the 1990s. These observations indicate that since the 2000s, factors related
to the financial market have begun to play significant roles in higher education, causing
significant shifts in macroscopic resource flow.
In Japan, National Universities are undergoing reform. One of the reforms is known as the“Distinguished National University.” Both the University of Tokyo and Tohoku University
have been designated Distinguished National Universities, and Professor Yonezawa of
Tohoku University will give a presentation on this timely topic. He was the first assistantprofessor of our center.
Professor Tanaka, Professor Nagase, Dr. Wang Jie, Professor Akabayashi, and Professor
Kobayashi, will all give presentations on student financial aid. In Japan, two brand new student
financial aid programs have just been established, and the government will establish anothervery big program in 2020. This is therefore a very controversial and important issue. I verymuch appreciate the contributions from these scholars.
Finally, we hope everyone interested in this topic will find much fruitful information and many
useful suggestions in these reports.
February 2019
Masayuki Kobayashi
Professor, Center for Research and Development of Higher Education,
the University of Tokyo.

iiInternational Workshop on
Challenges of Higher Education Governance and Finance Reform in East Asia

Contents
Opening Remarks ······················································································································· 1
Osamu Sudoh

Keynote Speech: Slowed Economic Growth and Higher Education- Emergence of the Capital Market ······················································································ 5Motohisa Kaneko

Japan: World-Class Universities for Social Innovation:
Ask Not What Your Country Can Do for You… ··························································· 23
Akiyoshi Yonezawa

Higher Education Funding in the Contexts ······································································ 29
Jung Cheol Sin and Jin Kwon Lee“The Commanding Heights” Revisited: the State and Higher Education in China-Towards a Synthesis of the Theories ················································································· 36
Wang Rong

Income Contingent Loan Scheme and Gender Income Gap in Japan: WillWOMANONICS Work to Close the Gap? ····································································· 42
Nobuko Nagase

What are the Effects of Student Loan Repayment on Youthʼs Lives: Findings from
JHPS 2nd-Generation Follow-Up Survey ············································································ 56
Wang Jie and Hideo Akabayashi

Political Economy of “Free Higher Education” Scheme in Japan -Focusing on
Decision-Making Process- ······································································································ 63
Hideaki Tanaka

Higher Education Finance and Student Aid in Japan···················································· 67
Masayuki Kobayashi

List of Participants ····················································································································· 79

1

Opening Remarks
On behalf of all the staff of the Center for Research and Development of Higher
Education at The University of Tokyo, I would like to extend our sincere welcome
to you on your visit to our Center.

Our center is one of the smallest centers in our university, but it has many missions
and activities.

One of the missions is to promote the evolution of education at the University ofTokyo from university-wide perspectives. The Center collects and analyzes

information on educational activities throughout the University, supports thedevelopment of curricula and the implementation of learning environments for its
education, and is building a new university-wide educational infrastructure
utilizing information and communication technology (ICT).

Thus, one of the missions of our center is to engage in academic exchange
activities, in particular, regarding observations of trends in higher education invarious countries. To accomplish this mission, we have held international
symposia and workshops several times.

While the sizes of the international workshops are smaller, we were delighted toinvite distinguished scholars from China, the United States, and Australia andengage in intensive discussions with them.

The outcomes of these international conferences have been published as
publications of our center.

The purpose of this workshop is to hold intensive discussions on higher education
reform and finance in East Asia. We have therefore invited two distinguishedscholars from China and Korea: Professor Wang Rong, Director of the Chinese
Institute for Finance of Educational Research at Peking University and Professor
Sin Jung Cheol of Seoul National University.

1We are also very fortunate to be able to invite Professor Roger Geiger, who iscurrently resident at our university. He is extremely well known not only as anexpert on higher education history but also as a researcher into higher education
finance and governance.

We sincerely welcome the three distinguished guest speakers and look forward

very much to holding fruitful discussions with them.

Higher education in Japan, China, Korea, and the United States has been changing
very rapidly. The common characteristics of higher education in these countries

are decreasing governmental financial support and increasing tuition fees.
Comparing the experiences of each country is very useful, considering thedifferences in cultural, social, and political backgrounds.

Not only our university but also our center is under rapid reform. Our center has
several missions. One of them is institutional research and observing the trends ofhigher education reform, as I mentioned. Another important mission is tofacilitate teaching methodologies through the use of MOOCs and otherinformation technology such as ICT.

We have drawn up a plan to reform our center in the age of AI.
Iʼd like to talk about the discussions in the Council for Social Principles on
Human-centric AI organized by the Cabinet Office of the Government of Japan.
I am the chair of this council.

The importance of education is also discussed at this council. Allow me tointroduce the main points to you.

In a society based on AI, education must be provided to make appropriate andprompt AI deployment possible and not to produce divisions among people. In
particular, it is thought that the following points are important.
 Society must provide equal opportunities for education to acquire thenecessary AI literacy and skills so that all people understand AI correctly andreceive benefits from it.
 This AI literacy education needs to be an educational system in which
everyone can acquire knowledge on AI, mathematics, and data science. At the2same time, the literacy education should have sufficient content to allow
everyone to recognize the characteristics of data and to understand thecharacteristics and limitations of AI.
 In addition, the education system should place importance on the training ofcreativity, reasoning, and problem-solving abilities so that everyone can utilize
AI and demonstrate their abilities.
 The recurrent education system should be enriched so that AI will enablepeople to be relieved from simple or heavy labor and engage in work withhigher creativity and productivity.
Finally, I hope you will all enjoy this workshop and your stay in our center.
Osamu Sudoh

Professor and Director, Center for Research and Development of Higher
Education, The University of Tokyo

3

Slowed Economic Growth and Higher Education- Emergence of the Capital Market Motohisa KANEKO
Tsukuba University

At around the turn of century, economic environment surrounding higher
education shifted significantly in OECD countries. On one hand the rate of
economic growth slowed down, and on the other the narrative of changes inhigher education started involving the term “Marketization.” What are thestructural shifts behind it, and how are they affect the future of higher education?
These are the questions that I wish to address in this presentation. In thefollowing, I will consider various factors surrounding higher education in aconceptual framework (section 1), outline how each factor contributed to thechanges in higher education in Japan and how the financial market has emerged
as a significant player since the turn of the century (Section 2), and discuss what
the macroscopic picture implies to future direction of policy (Section 3).
1. Higher Education under Slowed Economic GrowthHigher Education and Economic Growth
The relation between higher education and economic growth drewattention for the first time in the late 1950s and 1960s. The economies in theOECD countries were about to start the phenomenal postwar economic growth.
At the same time higher education was about to expand. The momentum of
massification of higher education in combination with economic growth continued
into the 1970s, to propel the move of higher education from the “Elite stage” to“Mass stage.” This rendered the picture of higher education in the late twentiethcentury.
Corresponding to these changes in economics was the development of
Manpower theory, and subsequently the Human Capital theory. A new field of
inquiry was thus formed as the Economics of Education which was built upon theconcept of Human Capital Theory. In retrospect one may argue that they played
the role of justifying growing expenditures to expand higher education.
By the end of the 20th century, however, the picture changed significantly.
Economic growth lost its momentum in many OECD countries, as the economies
grew gained maturity (Figure 1). Meanwhile, participation in higher education
institutions kept expanding, leading to what may be called the stage ofuniversalization. The narrative of development has changed also. Now what istalked about has become “Marketization” of higher education.

6

12.0
US
Japan
UK
Germany
France

10.0
8.0
6.0
4.0
2.0

00
20

90

80

19

70

0.0

Figure 1. Changes in GDP Growth Rate - 1970 to 2012
Source: OECD Factbook 2010: Economic, Environmental and Social Statistics

These observations raise a series of questions.
Why have theparticipation rates kept increasing despite slowed economic growth? What does
the concept of marketization signify? Why has it become a popular term when
the permutation between development of higher education and economic growthshifted? In order to answer these questions, one has to expand the scope ofthought to various factors by which higher education is affected. Also it requires
macroscopic viewpoints. It may be recalled that human capital theory originally
started as a macroscopic theory explaining how much the society benefits frominvesting on education, even though it soon became the theoretical basis toanalyze individual behavior on education and training. In a way, one has to returnto the original perspective on how higher education is related to economic
development of the whole society.
Markets in Higher Education
Set in a social and economic perspective, the relation between higher
education and society involves various intervening factors. Besides government,
which of course plays significant roles, one can conceive three economic functions

7

that mediate economy and higher education. First is the Higher Education
Market, the market of opportunity of higher education that relates the demandand supply of higher education opportunities, with the price (tuition) and the sizeof enrollment as major parameters. Second is Labor Market, which relates thegraduates to employment opportunities, or the outcome of higher education to
production. In consequence, it affects the choices of higher education. The
third, and arguably of increasingly significance, is the Financial Market, which
relates the accumulated monetary assets in the society to investment on higher
education in various forms. I laid out a conceptual framework relating higher
education and national economy, government and market (Figure 2).
Consumption/ Investment
Savings
AssetsInterest

Production

Taxatio

National
EconomyGovernment

IncomeStudent AidHouseholds

Loans

DirectSubsidy
Giving toEndowmen

Expected return

DemandHigher
Education
MarketFinancialMarketIndustrial
Structure

SupplyHigher
Education
Institutions

Figure 2. Markets and Higher Education

8

Labor
Market

In this diagram, the demand for higher education derives from aggregatedchoices of households, each of which is determined by prospective cost andbenefit from college education. The cost includes tuition and foregone
income; and the benefit comprises expected wage differential to be gained in
the Labor Market, non-pecuniary benefits. Meanwhile, available resources
consist of family contribution, available student aids and loans. These
factors are correlated with academic ability of individual students, but inaggregate they remain constant.
The supply consists of the sizes of enrollment available at different prices(net tuition). Each university determines a particular combination of enrollment
and tuition under institutional constraints including government subsidies,incomes from endowment and other factors.
Both the supply and demand are affected not only by government policies,
but also by Financial Market. The Government, through taxation, divert anamount of national income into higher education through subsidies to higher
education institutions and through student aid programs. At the same time tax
regime creates incentives for household to choose higher education and forindividuals and corporations to contribute to higher education institutions
Financial Market has become a significant player in recent years as weshall see in the next section. It taps the accumulated wealth of the national
economy into higher education through student loan schemes, under condition
that the rented amounts will be repaid to the lenders. It should be also
remembered that even without considering student loans, Financial Market
provides funds to higher education indirectly when the government runs deficit –the deficit is most likely financed by borrowing form Financial Market. At theinstitutional level, higher education institutions borrow from the market for
construction and other purposes, and deposits the endowment for financial gains.
Thus, higher education institutions, government, and three markets,
together with flow of resources and information, constitute a very complex picture.
I call macroscopic structure of higher education financing. The configuration ofthis structure vary substantially from a country to another. Also, the structure
evolves over time with the changes in economic and political environment. It
implies that policy issues in higher education should shift accordingly.

92. Evolution of the Structure
We now turn to the process of development in higher education from theperspective laid out above. After recovering from the damage of WWII, Japanesehigher education started development in the 1960s. The historical path sincethe 1960s can be divided into two major phases, each of which consists of two
sub-phases stretching over ten to fifteen years (Figure 3).
Phase I: Massification.
Thirty years from 1960 to 1990 can be called the period of massificationin higher education, consisting of the sub-phase of the great expansion and theensuing sub-phase of stagnating enrollment.
Sub-phase Ia was a period of a great expansion of higher education.
Participation rate of 18 years old in four-year institutions of higher education
leaped from less than ten percent in 1960 to 36 percent by 1975 – an increase ofalmost 20 percent-points in fifteen years. Moreover, the increase took placewhen the size of population at college-going age increased substantially.
The increase in enrollment was lead mainly by the increase in demands
for higher education, which was propelled by the unprecedented increase inhousehold income under rapid economic growth. Since the beginning of the
1960s to 1980, disposable income of typical household increased rapidly - almost
three times in real terms. It implied that each year, a typical household wasgiven as much as 7 or 8 percent of additional income. Since higher education
was the major channel for securing social ascendance, families were willing tospend additional resources for availing their off-springs higher education.
On the supply side, private institutions of higher education increased thesizes of student intake, as a number of new institutions were established. It wasmade possible by relaxation of University Establishment Standard, which
regulates minimum levels of educational conditions such as student/teacher ratio.
This policy was the result of political pressure arising from the popular demands
for higher education. Meanwhile, the extra tax revenue brought about by the
economic growth was spent to increase the number of students in natural sciencesand engineering in national institutions to train necessary manpower for the rapid
economic growth.

10

80

2

70
60
50
40

1.5

Postseconda
4- and2-year1

18-yearold(righthand
axis)

30
20

4-yearr

0.5

1001960 65

70

75

80

Ia

85

Ib
ⅠMassification90

95 2000 05 . 10

IIa

15

20

25

30

0

IIb

Ⅱ
Universalization

Ⅲ

Figure 3. Changes in Participation Rates and 18-year Old Population
Source: Ministry of Science, Culture, Science and Technology, Schools Basics Survey,
Various Years.

This regime of financial flow proved to be effective in satisfying the
popular demands for higher education, while enabling the government toconcentrate investment on national institutions of higher education to train
strategic manpower for economic development. Consequently, it created a large
sector of private institutions characterized with relatively poor educational
conditions that remain to this day.
In sub-phase Ib, the participation rate dwindled to 24 percent towards
1980. This is attributable mainly to the restrictive government policy on the
supply side. Provided with the achievement of rapid growth, the government
gradually shifted from growth towards welfare policies. In higher education it

11took the form of government subsidy to private institutions of higher education
under the scheme of Current Cost Subsidy to Private Institutions that started in
1976.
While the policy was aimed at reducing the financial burden on students’families to pay tuition, it in fact created unexpected consequences. In order toreceive the subsidy, institutions were required to control the size of enrollment
within specified range above that indicated by the University Establishment
Standards. In response, major private institutions reduced enrollment, and at
the same time raised tuition levels. It can be interpreted as a strategic move todifferentiate themselves from less selective institutions.
On the demand side, latent demand should have kept rising, given thecontinued growth in family income. Moreover, the size of 18-year old population
increased towards the end of 1980s, with the arrival of the second-generation of
baby boomers at college. Given limited supply, these factors forged frustrated
demands, which was translated into intensification of competition to get in college.
It eventually induced criticisms against excessive regulation on higher education
Phase II: Universalization.
Since the beginning of the 1990s, participation rate started growing again.
The growth eventually extended into the 2010s to reach at the level of 50 percent.
We call this a Universalization period. However, the mechanism that brought
about the increase was distinctively different from that of Phase I
Sub-phase IIa, stretching over the 1990’s, saw a steady increase inparticipation rate, which can be partly accounted for by the pent-up demand
accumulated through the previous period (Ib) of restrictive policies on the supply
side. Meanwhile, disposable income of household was still growing, albeit atmuch lower rates than before, that kept pushing up the demand
On the supply side, the restrictive policy was reversed under the shift
towards government deregulation in early 1990s. Some of the requirements
stipulated in University Establishment Standards were relaxed.
Existing
institutions were allowed to expand their prescribed enrollment capacity, and asubstantial number of new institutions, many of which had been two-year private
institutions or high school, were created. This allowed increased numbers ofstudents to be admitted. With the declining size of 18-year old population, thesefactors collaborated to augment participation rate.
In Sub-phase IIb, participation rate kept increasing, but the driving force
behind it changed significantly. In retrospect, the increase was perplexing

12

considering that, because of slowing rate of economic growth, disposable family
income stagnated, and eventually started declining marginally due to the increases
in contribution to pension and health insurance (Figure 4).

Figure 4. Changes in Disposable Income – Households with More than Two
Persons
Source: Household Income Survey, various Years.
What substituted the decline of disposable income was the use of student
loans. Until the late 2000’s, the proportion of students who used the Japan
Association for Student Support (JASSO) loans had remained at the level ofslightly greater than ten percent. It started increasing in the end of 1990s,
evetually to reach the 35 percent line by 2010 (Figure 5) . That implies that not
only the families that accounted for the marginal increase in participation rate,
but also the families that used to depend on family income, started to resort toborrowing necessary cost for college.
It should be noted that since the mid-1980s market interest rates had
started declining, eventually down to one to two percent by 2000s (Figure6). Theinterest rate to student loans came down accordingly to about 1 percent.
Meanwhile, the internal rate of return (IRR) to four-year university education,13

according to my own estimation, remained at the levels as high as 6 to 7 percent.
That implied that going to college should pay off economically even if required
costs were financed through loans. Subsequently, the spread between the return
to higher education grew rapidly over this period.

Figure 5. Proportion of Students Who Used JASSO Loans
Source: JASSO Annual Report, various years.

Figure 6. Internal Rate of Return to Higher Education, Interest Rate to Student
Loans and Market Interest Rate
Source :Author’s estimation, and Bank of Japan

14

These observations indicate that since the 2000s, factors related to
Financial Market has begun to play significant roles in higher education, causing
significant shifts in macroscopic resource flow.
Slowed Growth and Higher Education
One can argue that borrowing from financial market for financing higher
education had already started in early 1980s in a disguised form. At that period,
the national budget started incurring significant deficit, which was financed byborrowing from postal savings and by issuing National Bonds. That implies that,as a part of national budget, governmental expenditures on higher education
derived indirectly from the capital market. The increase of student loans impliedthat the borrowing from the capital market was made more explicitly by theindividual beneficiary.
The other side of the story is the existence of available funds for student
loans at low interest rates. This fund consists of monetary assets accumulated
by households and business firms, which was made possible through the pasteconomic growth, in combination with relatively high savings rate and low tax
burden. Those savings were deposited at banks, which in turn were not only
invested in enterprises, but also lent to the government in the form of nationalbonds. A significant proportion of the assets was lent to financial institutions
overseas. As of 2018, the total amount of household assets is estimated at morethan 1,800 trillion Yen, which is about three times the size of GDP, or about 18
times the size of national budget.
One may recall that the role of financial market in higher education has
been salient in the United States particularly since the late 1980s. With the
backdrop of economic stagnation and stagnating size of population at collegegoing age, various private institutions went on to raise tuition, together withadmission policies to distinguish themselves. Use of student loans started
expanding dramatically. This point will be discussed later. This mechanism
rendered a basis of transformation of American higher education in the past three
decades.
3. Policy Implications
Provided with the observation above, what can one argue about how higher
education would change, or how it should change? I shall discuss it from theperspective of equity, efficiency and the structure of higher education institutions.

15EquityIn the past few years, equity in the opportunity of higher education drew
renewed social attention. All the political parties included in their platforms for2017 general education some measures concerning this issue. The ruling Liberal
Democratic Party won the election with a proposal for “Free Higher Education.”
Subsequently Abe administration has been working to build concrete measures,
but the details are still to be seen
There are several factors behind this renewed concern. Fist, as four-year
higher education has reached the universal stage where a half of the youths at
eligible age enter college, college education has become to be conceived not a
choice, but rather a necessity, the lack of which is regarded to result in
considerable disadvantage. Securing the opportunity has become a serious
concern for any parents.
Second, the concern of social deprivation has been spread widely. Ifchildren from lower income families and prohibited from the opportunity ofhigher education for economic reasons, it would constitute a serious impingement
on social justice.
Third, as increasing number of students borrow loans, there areincidences where the graduate fall in difficulty in repaying the loans. Especially,college graduates faced with glut in labor market in the few years until 2010. A
substantial number of students were unable to secure employment at the time ofgraduation.
As the principle of permanent employment still dominates
employment practices, the failure in entering the career path at the time ofgraduation often results in unstable employment over life-time. These graduatesfell in serious difficulty in repayment, sometimes resulting in dire hardship. As
those cases were reported by the media, latent weariness rose to the surface of
public conscience.
The observations above indicate that the concern on equity in higher
education has been constructed through various incidences and interests.
Naturally, discussions about necessary policy would not result in clear-cut
conclusion. The critical issue in this context would be whether, or how, thegovernment should play a role in responding these social concerns.
The most straight-forward solution would be to increase government
expenditure on higher education to the extent that effects of parental income areremoved entirely. Currently, the government finances the national institutions

16and provide subsidies to private institutions. By augmenting the subsidies, one
would hope that the tuition levels will be decreased, thus lessening the influencesof family income. However, private institutions may not lower tuition levels
despite increased subsidies. Moreover, various surveys show that the differencesin the chance of enrollment are related with family income through academic
achievement before getting in higher education.
Another approach is to provide direct subsidy to low-family income
students in the form of grant. A basic problem of this approach lies on themechanism to select the target. Budgetary constraint rules out implementing
any large scale expenditure for this purpose. On the other hand, it will bedifficult to limit the target too narrowly for it will not only cause various technicalissues in defining and identifying the target, but also cause conflicts between thebeneficiary and others.
These discussion boils down to how effective a marginal increase ingovernment spending can rectify inequity in a wider context. It is true thatvarious surveys show that the incidences of participation in higher education aresmaller among children from low-income families (Kobayashi 2009). A survey
shows, however, that the difference in participation rates by family income aremuch smaller among students who showed high academic achievement in highschool education. Those students would expect high returns from higher
education, and find ways to circumvent financial constraints. Student loans are
effective in this sense. The difference by family income becomes more salient
among students with low academic achievement.
In this sense, the lower rates in college participation among youths fromlow family families derives from the low level of academic achievement createdprior to entrance to higher education. In fact, there seem to be a universal
agreement that resources can be used more efficiently by investing at primary oreven at preschool levels of education (Heckman 2008).1
Then, what can the capital market approach do with respect to equity?
It seems to be trivial that student loan schemes cannot eradicate intergenerationaltransmission of income inequality. After all, the students who borrowed loans
will have to repay the debt after graduation, which implies that the net income
after graduation should be less than those from wealthier families who did notborrow.
1

See https://heckmanequation.org/

17

Nonetheless, loan schemes would make it possible for students withlimited means the chance to get higher education and subsequently higher income,with a degree of benefit after paying off the debt. To the extent that the Internal
Rate of Return remains higher than the interest rate of loan, this would amountto a substantial gain in net income. Moreover, student loans allow individual
choices on higher education. This is the classical argument drawn by Milton
Friedman (1980).
Nonetheless, loan schemes have their own problems. One risk aversion.
It is sometimes claimed that low-income families tend not to use loan because
they tend to avoid the possibility to be unable to repay the loan. However, there
is not much empirical ground for this claim. Data from our survey on high school
students does not indicate such tendency.
It is nonetheless important that student loan entails risks for recipients,
and it discourages students from using it.
It was stated above that theincidences of serious problem in repayment caused concerns. After all, the useof loan, instead of governmental expenditure, implies the choice should be madeby individuals and the consequences should be born by the individual. However,extreme penalty should be avoided. It is rather here that government shouldplay a critical role.
Efficiency
Another critical viewpoint is the how the national wealth can be usedefficiently for future growth.
It was stated above that the internal rate of return (IRR) to higher
education is estimated at around 7 percent. To be precise, this should figure be
adjusted for income-tax to derive private rate of return, or for government
expenditure to derive social rate of return. In either case, however, theadjustment does not make differences more than one percent point. They are
far above the returns to alternative investment.
Meanwhile, the interest rates for national bonds and bank savings havedeclined significantly since the 2000s. To an extent this reflects international
trend, but it is particularly pronounced in Japan. It is partly due to the monetary
policy to stimulate the slowed economy. At the same time, it shows the shifts inrelative position of demand and supply of capital. On one hand, the pasteconomic growth accumulated a vast expansion of savings. It is estimated thatthe total monetary asset in 2017 amounts to 1800 trillion Yen, which is three times
the size of GDP, or eighteen times the government expenditure in 2017 (Bank of18

Japan 2018). Meanwhile, investment opportunities have not grown accordingly.
Consequently, the excess supply sought opportunities of investment overseas.
Currently the net monetary asset of Japan invested in overseas amounts to morethan 300 trillion Yen, which is the highest in the world.
One can argue from these considerations that the investment on higher
education should be beneficial not only for individuals but for the society as awhole. On the ground that the social rate is higher than the ongoing interest
rates, Yano (Yano et al., 2007) argued that the government should spend moreresources on higher education.
This conclusion, however, is not necessarily
trivial.
For one, the high return implies that the whole society can be better off
by investing on higher education, but it does not that the government should
increase its expenditure on higher education through subsides to higher education
institutions. Provided with the large deficit that the government runs every year,
it would be unrealistic. An alternative is to tap the accumulated wealth in thenational economy through financial market. In fact, it has already become oneof the significant channels for higher education finance.
Innovation in Higher Education and Markets
The use of financial market, however, requires a critical condition thatthe investment on higher education pays off. It should be recalled that theinternal rates of return to higher education are calculated from the present wage
structure of college and high school graduates. If there should be any significant
changes in future, the actual (ex-post) rate of return will either increase or
decrease. And the latter may well be the case.
So far in Japan, the productivity underneath the wage levels has beencreated through accumulating and sharing of needed skills and knowledge inworkplaces made possible by life-time employment. A large proportion ofcontribution by college education was in identifying young population with properbasic competency on which the informal training at workplace can build. Thismechanism is now faced with significant challenges. New industrial fields are
emerging, and they require different knowledges and skills. At the same time,
corporate organizations keep reforming themselves. Under fierce international
competition, corporations have lost the long-term perspective to invest on
workforces. All these factors make the existing mechanism of productivity
obsolete quickly.
Higher education is asked to inculcate knowledge andcompetencies relevant to fill the gap.

19

Nonetheless, higher education institutions so far have not responded tothese challenges. Business firms recruit students not by what they learnt inuniversity, but how well they did in entering selective institutions. Since
universities are set in a sharp hierarchy of selectivity, they have not had muchinterest in improvement of education.
Meanwhile, many private institutions are still plagued with poor
educational conditions, such as high numbers of students per faculty numbers.
It is not unusual to see a school of social sciences in large-scale private institutions
at the order to 30 or more. The physical conditions are critically undercutting
innovative efforts. On the other hand, many large- and small-scale private
universities have tried since the 1990s to expand their enrollment. It isinterpreted as the means to secure financial basis while adding new program
catering to new academic fields that attract students. In other words, the markets
and the government policies have created little incentive to raise tuition to
improve educational condition. At the same time, the decline of 18-year old
would not allow any institutions keep expanding.
From this perspective, it is interesting to observe what happened in the
United States since the 1980s. Over this period, many private institutions
admitted fewer students to raise selectivity, while raising tuition to compensate
for it. becoming (Geiger 2004, Kirp 2004, Hoxby 1997). The higher level oftuition could be financed by federal and other student loans. At the same time,
institutions provided academically excellent students with grants to cancel thehigh level of tuition. The grants could be financed by incomes from endowments,
which was important to defend against the criticisms that the grants were diverted
from the tuitions levied on other students. It should be also noted in this nexus
that the federal government under Reagan administration initiated significant
changes in tax regime. Significant deduction in value appreciation of monetary
assets was made possible. This created a significant incentive to private giving
to higher education institutions when stock prices kept rising in the later periods.
The changes created through this mechanism have been criticized formany reasons. The tuitions have more than doubled over two decades, and thefinancial burden on students to repay loans have ballooned accordingly. On theother hand, it seems to have created an environment where universities competewith each other in recruiting able students and in innovating education. It canbe argued that in that way, leading American institutions succeeded in achieving
high achievement, and that induced other institutions to follow.

20

Conclusion
Since the turn of the century, the role of financial market has emerged asa significant player of higher education under slowed economic growth. In thisregard, there are similarities between the United States and Japan. The
mechanism in which it plays in higher education, and its consequence, aredifferent in various ways. The critical factor is how institutions behaved in thesecircumstances.
Will similar change take place in Japan? What are the necessary
conditions for that to take place? Will it be desirable with respect to equity or
efficiency? Will it induce necessary change for Japanese higher education?
These are questions that we are to answer when we are faced with the
choice for future direction of higher education in Japan.

21

References
Bank of Japan, 2018. Flow of Funds Accounts (3rd Quarter 2018)Friedman, Milton, and Friedman, Rose, 1980. Free to Choose. New York:
Harcourt Brace Jovanovich.
Geiger, Roger, 2004. Knowledge and Money: Research Universities and theParadox of the Marketplace, Stanford University Press
Heckman, James J. 2008. “Schools, Skills, And Synapses,” Economic Inquiry Vol.
46, No. 3, July 2008, pp.289–324.
Hoxby, Caroline M. 1997. “How the Changing Market Structure of U. S. Higher
Education Explains College Tuition.” NBER Working Paper 6323.
Kaneko, Motohisa.2013b.
“ Japanese Higher Education and the State inTransition,” in Roger Goodman, Takehiko Kariya and John Taylor eds.
Higher Education and the State, 2013, Oxford: Symposium Books, pp.171198.
____. 2011. “Higher Education Policies and Development: Approaches to Funding
Higher Education in Japan,” Armstrong, Shiro and Chapman, Bruce eds.
Financing Higher Education and Economic Development in East Asia.
Canberra, Australian University Press. p.107-142.
____ 1987. Motohisa Kaneko, Enrollment Expansion in Postwar Japan, 111 pages,
R.I.H.E., 1987.
Kirp, David. 2004. Financing American Higher Education in the Era of
Globalization、Harvard University Press
Kobayashi, Masakazu, 2009. Daigaku Shingakuno Kikai. (Opportunitys ofHigher Educaton) University of Tokyo Press.（東京大学出版会、2009 年）
Zumeta,William; Breneman, David W.; Callan, Patrick M.; Finneye,Joni E. 2013.
“Financing American Higher Education in the Era of Globalization,”
Journal of Higher Education 84(3):446-448.
Yano, Masakazu et al., 2016 Kyouiku Retsui Shakai. Society (Low Priority on
Education in the Japanese Society) Iwanami-Shoten

22

Japan: World-Class Universities for Social Innovation

Ask Not What Your Country Can Do for You…1
Akiyoshi Yonezawa

Akiyoshi Yonezawa is professor and vice‐director of the International Strategy Office at
Tohoku University, Japan. E‐mail: akiyoshi.yonezawa.a4@tohoku.ac.jp.
1This article is originally published at International Higher Education: 96, 21-23. DOI:
https://doi.org/10.6017/ihe.2019.96.10779

Abstract
A new world-class university policy called the Designated National University
scheme was introduced in Japan in 2017. Six national universities are now givena distinguished legal status, differentiating them from all other national
universities, and are expected to be competitive with leading universities
worldwide. However, the government expects the selected universities to becapable of generating their own income. In light of the uncertainty surrounding
the highly complex mechanism linking knowledge activities at universities andindustrial commercialization, this appears to be a risk-taking policy.
Keywords: Japan; World-class university policy; Institutional strategy;
University‒industry relationships; Innovation

A new world-class university policy was introduced in Japan in 2017. The
government selected six out of 86 national universities to be DesignatedNational Universities, all with long research traditions̶this list includes the
University of Tokyo, Kyoto University, Tohoku University, the Tokyo Instituteof Technology, Nagoya University, and Osaka University. These chosen
institutions have been given a “distinguished” legal status, different from allother national universities that already experience significant advantages innational government funding̶ they are quite distinct from the 90 local public
universities and 604 private universities in Japan. Designated National
Universities are expected to be competitive with leading universities worldwide.
What then can the national government do for them and what are these selected
universities expected to do?
Not the First AttemptThis is not the first attempt at creating world-class universities in Japan. In fact,
Japan is recognized for having been actively engaged in world-class university
policy through a series of governmental projects and excellence initiatives: forexample, 21st Century Centers of Excellence（2002‒2009), Global Centers of

Excellence (2007‒2014), Global 30 (2009‒2015), and Top Global Universities(2014 onward).
In contrast with emerging institutions in neighboring China, Singapore,and South Korea, Japanʼs flagship universities have gradually slipped down in the24rankings over the last two decades. Two reasons are always highlighted: the slow
pace of internationalization of universities and society as a whole and theshortage of financial investment. While the two first Centers of Excellence
projects mentioned above were funded by direct investment to research clusters,
impact was not significant, partly because the basic infrastructure of science andtechnology at Japanese universities had already been established before thelaunch of these projects, namely, in the 1990s after the economic culmination of
the country. From 2007, the World Premier International Research Centre
Initiatives targeted only a few research institutes with much more concentrated
investments. It is still too early to measure the exact impact of these initiatives
on research and universities and on the country as a whole.
The Global 30 project ultimately supported 13 universities because ofpolicy changes after the financial crisis of 2008. The Top Global University
project now supports 13 universities in their efforts to be globally competitive,
and another 24 universities as leading examples of internationalization. These
projects are not funding research excellence but are enhancing theinternationalization of universities through key performance indicators such as
employing international researchers and enhancing the English language
proficiency of students and staff.
When the Top Global University project was launched in 2014, thegovernment declared that the policyʼs goal was to propel 10 Japanese universities
among the top 100 in world rankings. Indeed, the profiles of flagship universities
in Japan, for example in terms of the proportion of international students andstaff, appeared low in global university rankings, and remain poor even now. The
slow internationalization of Japanese universities largely reflects the slow
internationalization of the whole education system and of the labor market
within this country.
At the Core of National Innovation Policy
The Japanese government is now trying to use research universities as a key
driver of national economic development and promotes an integrated economic
and financial policy linked with industrial innovation. Top research universities
are now attracting attention not only from the ministry of education, culture,science, and technology, but also from cabinet office departments such as theCouncil for Science, Technology, and Innovation and the Council on Economic
and Fiscal Policy.

25Compared with previous excellence initiatives and internationalization
schemes, the selection of Designated National Universities focuses much more
on an institutionʼs capacity to set a vision and plan and implement changes thatwill enable it to achieve world-leading status. Applicant universities were asked
to present a self-assessment of their strengths and weaknesses; of theirachievement of goals based on benchmarks within good practice andperformance measurement; of their strategies to implement leading research andhuman resource development; and of their contributions to the economy and tosociety by addressing global and national challenges. The guidelines stipulated
that the universities cover topics such as human resource acquisition anddevelopment, improvements to research capacity and university governance,
strengthening financial foundations, international collaboration, and links to thewider society.
…Ask What You Can Do for Your Country
Takeshi Sasaki, chair of the Designated National University project review
committee, has expressed concern about the vulnerable financial foundation ofeven top research universities in Japan. His wish is to see public support
expanded and assistance from society significantly increased, in particularthrough donations from the business community and individuals, with backing
from the government.
However, in reality, the new “designated” status does not automaticallyguarantee drastic financial advantages. The amount of public funding directly
linked to the scheme constitutes only a small portion of the universitiesʼ runningcosts, at around 0.2% of their annual income. Rather, the government expects
the selected universities to engage more actively in income generation from
nongovernmental sources, for instance from philanthropic donations anduniversity‒industry cooperation. The underlying message is that developing
management capacity within universities is the only sustainable pathway forthem to achieve world-class status, and that institutions are required tocontribute directly to the development of the national knowledge economy.
Here, the governmentʼs message to the universities seems to be, “Ask not what
your country can do for you; ask what you can do for your country,” as stated by
US President John F. Kennedy in his 1961 inaugural address. In that respect, theproposal and implementation of this particular scheme has stimulated a systemic
discussion about how a university can establish, and contribute to, a virtuous

26

circle between its development and its socioeconomic impact.
In contrast to the officially expressed vision, cabinet level support for thepolicy appears to strengthen governmental intervention in university governanceand management̶adding contribution to economic development throughindustry relations and innovation to education and research as a core function ofa university. This new challenge for aspiring world-class universities -- theexpectation of generating their own income -- appears to be a risk-taking policy,
in light of the uncertainty surrounding the complex mechanism linking longterm knowledge activities at the universities and industrial commercialization.
Of particular note: the Japanese business environment is largely under thedominance of global enterprises typically based in the United States. It is
becoming apparent that universities will have to struggle and fight to gain theirfinancial autonomy and, ultimately, define their new identity.
DOI: http://dx.doi.org/10.6017/ihe.2019.96.10779

27

29

Functions (pp.45-58). Springer.

Teichler, U. (Eds.), The Future of the Post-massified University at the Crossroads: Restructuring Systems andSource: Shin, J. & Kim, Y. (2014). Economic Crises and the Post-Massification of Higher Education. In Shin, J. &

 Pure/(Applied) vs. (Applied)/Development Research Undergraduate Program vs. Graduate Program Education (Teaching) vs. Research

1.1. Perspectives on Higher Education as Public Goods

1. Perspectives on Higher Education

CRDHE, The University of Tokyo, Nov. 21-22, 2018

Jung Cheol Shin & Jin Kwon Lee(Seoul National University, Korea)

Higher Education Funding
in the Contexts

Higher Education Funding in the Contexts:
The Case of South Korea

Functions (pp.45-58). Springer.

Teichler, U. (Eds.), The Future of the Post-massified University at the Crossroads: Restructuring Systems andSource: Shin, J. & Kim, Y. (2014). Economic Crises and the Post-Massification of Higher Education. In Shin, J. &(e.g., Japan, Korea)

 Education as a Channel for Social Mobility (Confusianism) Social Welfare (Socialism) (e.g., France, Sweden) Human Resource Training(Capitalism) (e.g., USA, UK)

1.2. Perspectives on Higher Education across Social System

1. Perspectives on Higher Education

5. Cost Sharing or Cost Transfer?

4. Student Tuition and Financial Aids in S. Korea

3. Funding Policies for Higher Education in S. Korea

2. Funding Investment across System

1. Perspectives on Higher Education

CONTENTS

30

Low
Confusianism

Socialism
Not much

Not muchVery activeHigh

No (or minimal)High

Student Tuition

High

No

High

Financial Aids

systems.

Source : UNESCO (2018)

SlovakRepublic

NorwaySource : OECD(2018)

0

5000

10000

15000

20000

25000

2.2. Student Tuition Fees for Higher Education

2.1. Public Investments for Higher Education

Japan

Australia

PublicKorea

PrivateUnitedKingdom

UnitedStatesNetherlands

New
Zealand Annual average tuition fees charged by HEIs (Unit: PPP$)

2. Funding Investments across Systems

Shin, J. (2015). Mass Higher Education and Its Challenges for Rapidly Growing East Asian Higher Education.

Shin, J. & Kim, Y. (2014). Economic Crises and the Post-Massification of Higher Education.

2. Funding Investments across Systems

Shin, J. (2015). Mass Higher Education and Its Challenges for Rapidly Growing East Asian Higher Education.

CanadaShin, J. (2013). Higher education development in East Asian countries focusing on cultural tradition and economic

High

High

Capitalism

Resource attraction
from private sectors

Source:Public Goods

Confusianism

Low

Mid

Public Investment
per student

Shin, J. (2013). Higher education development in East Asian countries focusing on cultural tradition and economic
systems.
Shin, J. & Kim, Y. (2014). Economic Crises and the Post-Massification of Higher Education.

Public Goods

Socialism

Mid

Willingness to Pay

1.3. Funding Policies across Systems

1. Perspectives on Higher Education

Source:Semi-Public Goods

Capitalism

Public Goods

1.2. Perspectives on Higher Education across Social System

1. Perspectives on Higher Education

31

2009

2010

2011

2012

2013

2014

2015

2016

50,0002008

60,000100,000

Source : Korea Advanced Education Institute (2018)

The actual HE financial support size

Total HE support

Assessment-based support

Education, and Korean Education Development Institute (each year)

Source : Compiled data from different sources such as Korea Advanced Education Foundation, Ministry of-

20,000National Student Aid

10,00040,0000

20,00060,00030,00040,00070,000120,000

80,00080,000140,000

90,000100,000

 Assessment-based Funding (Unit: KRW 100 million)

3.3. Assessment-based Funding

3. Funding Policies for Higher Education in S. Korea

 Project-based & Student aid focused funding (2013 - ) Formula-based funding (2008-2012) Assessment-based funding (1995-2007)

 Student head-count based funding allocation ( -1994)

3.1. Changing Government Funding Policies

3. Funding Policies for Higher Education in S. Korea

160,000

180,000

 Higher Education Finance and Student Aid (Unit: KRW 100 million)

3.2. Financial Aids and General Subsidies

3. Funding Policies for Higher Education in S. Korea

Source : UNESCO (2018)

2.3. Education vs. R&D Investment

2. Funding Investments across Systems

32

2011

2012

2013

2014

2015

2016

2017

othersGovernment subsidies

unusedTransfer & Endowment Incomes

Tuition Fee & Lecturing Fee Incomes

colleges and universities. Review of Higher Education, 29(2), 213-237.

Source : Shin, J. & Milton, S. (2006). Rethinking tuition effects on enrollment in public four-year Growth in enrollment and tuition (public four-year colleges) (U.S.)

4.1. Students’ response to tuition increasing

4. Student Tuition and Financial Aids in S. Korea

Source : Korea Advanced Education Institute (2018)

0%

2007

2008

Personnel Expenses

2010

2011

2012

Management & Operating Expenses

2009

2014
Scholarship & Aids

2013

2016
others

2015

factors in explaining enrollment growth.

Financial aid and unemployment rate were not significant

factor in explaining the growth in enrollment.

The wage premium to college graduates is an importantthe growth in enrollment.

Competitive tuition levels are significant factors in explaining

growth in enrollment.

Tuition change is not a significant factor in explaining thecolleges and universities. Review of Higher Education, 29(2), 213-237.

Source : Shin, J. & Milton, S. (2006). Rethinking tuition effects on enrollment in public four-year









 Students’ response patterns in general (Shin & Milton, 2006)

4.1. Students’ response to tuition increasing

2017
unused

4. Student Tuition and Financial Aids in S. Korea

Source : Korea Advanced Education Institute (2018)

0%

10%

20%

30%

20%

2010

40%

30%

2009

50%

40%

10%

60%

50%

60%

2008

80%

80%

2007

90%

90%

70%

100%

100%

70%

3.5. Changes in University Expenditures

3. Funding Policies for Higher Education in S. Korea

3.4. Changes in University Revenues

3. Funding Policies for Higher Education in S. Korea

33though tuitions are increased.

Once students choose their college, they are less likely to transfer• Income Contingence Loan (ICL) (2012)• Establishment of Korea Student Aid Foundation(2009)• Government’ Guaranteed Loan program(2005)• Small scale student aid programs ( - 2005)

 Policy Development for Financial Aids

4.2. Student Tuition and Financial Aids in S. Korea

4. Student Tuition and Financial Aids in S. Korea

Empirical grounds for a cost-related tuition policy. Higher Education, 55(6), 719-734.

Source : Shin, J. & Milton, S. (2006). Student response to tuition increase by academic majors:

significant in modeling enrollment.

Engineering, where the tuition or tuition increase was not• Tuition elasticity is different across disciplines, especially in•increases.

• Enrolled students are elastic to tuition level, but not to tuition

 Students’ response by academic discipline (Shin & Milton, 2007)

4.1. Students’ response to tuition increasing

4. Student Tuition and Financial Aids in S. Korea

2014

2015

2016

Source : Korea Student Aid Foundation(2016)

amountcase

0500,000

500,000
2013

1,000,000

1,000,000

2012

1,500,000

1,500,000

2011

2,000,000

2,000,000

2010

2,500,000

2,500,000

2009

3,000,000

3,000,000

2008

3,500,000

3,500,000

2007

4,000,000

4,000,000

04,500,000

4,500,000(Unit: KRW million, Case) Grants & Scholarship4.2. Student Tuition and Financial Aids in S. Korea

4. Student Tuition and Financial Aids in S. Korea

Source : Shin, J. & Kim, H., & Choi, H. (2014). The evolution of student activism and its
influence on tuition fees in South Korean universities. Studies in Higher Education, 39 (3), 441454.

 Annual tuition fees of universities (dollars)

4.2. Student Tuition and Financial Aids in S. Korea

4. Student Tuition and Financial Aids in S. Korea

34

High

High

Policy goals

Student motivation

Delivery cost

2003

2005

2009

Source : Shin, J. & Kim, H. (2013). Tuition rising in competitions for a world-class university: Cost sharing
or cost transfer? Asia Pacific Journal of Educational Development, 2(2), 1-11.

University development fund

2001

External research fund

1999

Government appropriation

1997

Tuition & fees

1995

or cost transfer? Asia Pacific Journal of Educational Development, 2(2), 1-11.

1993

Source : Shin, J. & Kim, H. (2013). Tuition rising in competitions for a world-class university: Cost sharing

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

 Expenditure and Tuition Fees by Disciplines (Shin & Kim, 2013)

5.3. Cost Sharing or Cost Transfer?

5.3. Cost Sharing or Cost Transfer?

 Changing Share of Revenues (SNU case) (Unit : %)5. Cost Sharing or Cost Transfer?

humanities/social sciences• Disciplinary balances between sciences/engineering and• Growing size of graduate education (especially, doctoral education)• Growing emphasis on research performance• Growing Competitions for Global Rankings between Universities

5.2. Global Competition and Rising Costs

5. Cost Sharing or Cost Transfer?

5. Cost Sharing or Cost Transfer?

2007

Low

2011

• Minimizing student
burden• Stable state contribution• Maximizing resource
generation• Minimizing public subsidy
Moderate

Public goodPrivate good

Low tuition &Low aid

Higher Education :Public/private goodHigh tuition &High aid Two competing policy approaches

5.1. Policy Perspectives on Tuition

5. Cost Sharing or Cost Transfer?

35

Gaps in Funding and Tuition by Under and Graduate (Shin & Kim, 2013)

or cost transfer? Asia Pacific Journal of Educational Development, 2(2), 1-11.

Source : Shin, J. & Kim, H. (2013). Tuition rising in competitions for a world-class university: Cost sharing

5.3. Cost Sharing or Cost Transfer?

5. Cost Sharing or Cost Transfer?
Korea Advanced Education Institute (2018). University finance information service. Downloaded on Nov. 10, 2018from http://uniarlimi.kasfo.or.kr
Korea Student Aid Foundation(2016). Korea student aid foundation statistical yearbook 2016. Downloaded on Nov. 10,2018 from http://www.kosaf.go.kr/
Ministry of Education, Republic of Korea & Korean Education Development Institute (2018). 2018 Statistical yearbookof education. Downloaded on Nov. 10, 2018 from https://kess.kedi.re.kr/index
OECD(2017). OECD statistics. Downloaded on Nov. 10, 2018 from https://stats.oecd.org/
Shin, J. & Kim, H. (2013). Tuition rising in competitions for a world-class university: Cost sharing or cost transfer? Asia
Pacific Journal of Educational Development, 2(2), 1-11.
Shin, J. & Kim, H., & Choi, H. (2014). The evolution of student activism and its influence on tuition fees in South
Korean universities. Studies in Higher Education, 39 (3), 441-454.
Shin, J. & Kim, Y. (2014). Economic Crises and the Post-Massification of Higher Education. In Shin, J. & Teichler, U.
(Eds.), The Future of the Post-massified University at the Crossroads: Restructuring Systems and Functions(pp.45-58). Springer.
Shin, J. & Milton, S. (2006). Rethinking tuition effects on enrollment in public four-year colleges and universities.
Review of Higher Education, 29(2), 213-237.
Shin, J. & Milton, S. (2006). Student response to tuition increase by academic majors: Empirical grounds for a costrelated tuition policy. Higher Education, 55(6), 719-734.
Shin, J. (2013). Higher education development in East Asian countries focusing on cultural tradition and economic
systems. In Neubauer, D., Shin, J., Hawkins, J. (eds.) (2013). The Dynamics of Higher Education Development inEast Asia: Asian Cultural Heritage, Western Dominance, Economic Development, and Globalization (pp.11-27).
Palgrave Macmillan.
Shin, J. (2014). Restructuring university systems: Multilayer multiple systems. In Shin, J. & Teichler, U. (Eds.), The
Future of the Post-massified University at the Crossroads: Restructuring Systems and Functions (pp.217-227).
Springer.
Shin, J. (2014). University Teaching: Redesigning the University as an Institution of Teaching. In Shin, J. & Teichler, U.
(Eds.), The Future of the Post-massified University at the Crossroads: Restructuring Systems and Functions(pp.85-100). Springer.
Shin, J. (2015). Mass Higher Education and Its Challenges for Rapidly Growing East Asian Higher Education. In Shin, J.
C., Postiglione, G. A., Huang, F. (eds.) (2015). Mass Higher Education Development in East Asia: Strategy,
Quality, and Challenges (pp.1-23). Springer.
UNESCO (2018). UNESCO institute of statistics. Downloaded on Nov. 10, 2018 from http://uis.unesco.org/

REFERENCES

36

I. I. The commanding heights: the state and higher
education in China

Yang Po, Graduate School of Education, PKU

Wang Rong, China Institute for Educational Finance Research （CIEFR）, PKU——Towards a Synthesis of the Theories

the State and Higher Education in China“The Commanding Heights” Revisited:• Project initiated by Professor Martin
Carnoy of Stanford in 2008, and joined
by CIEFR, and colleagues from HSE of
Russia and NUEPA of India.

University Expansion: in a Changing Global
Economy• I. The commanding heights: the state and higher
education in China• II. Chinese-styled federalism in economic growth: aliterature review• III. The commanding heights revisited: towards a
synthesis of the theories

Outline

37• Wang, Rong. 2014. The Commanding Heights: The state andhigher education in China. In Fan, Shenggen, Ravi Kanbur,
Shang-jin Wei, and Xiaobo Zhang (eds.). The Oxford Companion
to the Economics of China. Oxford University Press.

• The past several decades after economic
reform witnessed a transition of the strategy
by the state, which is from the control-all
strategy to the commanding heights strategy.

• What I would argue, however,Analytical frameworks of higher
education development (Carnoy et al,2013):• Institutions driven• Globalization driven• Market forces driven– In persuading his suspicious colleagues, Lenin
at a convention in 1922 proclaimed that thereforms were rather modest, and the new
Soviet state would always retain its control
over what he called the “commandingheights” of the economy.

– which included permitting profit-making
enterprise in some areas of the economy.

• Commanding Heights was first used by
Lenin as a defense of his New Economic
Policy– The legitimacy of the Chinese state isrooted in its ability to maintain economy
growth, of which human capital isincreasingly an important determinant.
The expansion of higher education in
China is a state-led process, which by
design primarily serves the politicalobjective of sustaining the state legitimacy.

• China: the developmental state story

From a comparative perspective,

38• What are the center-local relations in China’s
higher education?

• Where are the local incentives from?

• China higher education expansion depending on
local public higher education institution in China

II. Chinese-styled federalism in economic
growth: a literature review– To loosen grip on the mass of HEIs anddecentralize towards local governments– To prioritize support/control towards elite
institutions• How the expansion in China has beenachieved?

• In contrast, in the economics literature,
local autonomy and behavior in China
remains a focal point of analysis.

• Research very limited.

China: Spending per Student by Type ofInstitution, 1994-2009 (2008 Yuan)(includes 3 and 4-year degree granting
higher education institutions)4. Composition of the central ruling elite (shifting from centerdominated to provincial dominated, according to Liu Mingxing(2013))

5. “Vertical elite networks” mechanism and rent-seeking (Krug etal, 2014)

•

•

1950

1970

Year

1980

Source: Liu Mingxing (2017)

Ratio of Local Fiscal Expenditure to National Fiscal Expenditure
Ratio of Local Fiscal Revenue to National Fiscal Revenue
Ratio of Extra-Budget Revenue to National Budget Revenue

1960

2000

3. Regional tournament competition

•

1990

2. Decentralized economic governance combined with centralized
political governance•

Evolution of Fiscal System of China from 1953 to 2001

1.“Market-preserving federalism”: economic decentralization as
the driving force of economic growth in China (Qian and Weingast,
1997)

Five strands of the Chinese-styled
federalism literature

•

100

50

0

39

• State and sectoral institutions (HEI): the financing
commitment of the state to HEI is rather noninstitutionalized and fluctuates over time to time.

What are the central government strategies?

• Central and local: the intergovernmental division of
duty and expenditure responsibility is rather
ambiguous and fluctuates over time to time.

Higher education development– Public budgeting, without the Congress-styled
politicalized process– Government incentives for growth and public
service, without elections– Policy advocacy and engineering process, without
voter-pressure groups– Center-local relations, without constitution-based
guarantee• Fundamental questions are the same for both
economic domain and education (social
development) domain:40(1) centralized control over allocation of talented students to various
institutions through enrollment quota and the function of a rigid
higher education hierarchy;(2) centralized control over institution and program accreditation
through Ministry of Education and the State Council;(3) centralized control over elite research universities; and(4) centralized control over research funding through national
excellence programs managed by MOE.

•

•

•

•

• State and sectoral institutions (HEI): the financing
commitment of the state to HEI is rather noninstitutionalized and fluctuates over time to time.

What are the sectoral authority’s strategies?

• Central and local: the intergovernmental division of
duty and expenditure responsibility is rather
ambiguous and fluctuates over time to time.

Higher education development

The central government strategy: centralized control combined withintergovernmental transfer programs

•

•

•

– Form a political coalition with elite institutions to advocate for the legitimacy ofworld-class university construction in China. Once the project-based funding
mechanism for research universities (such as Project 985) came into being,
government support for individual institutions was no longer primarily
determined by their own performances, no longer primarily comprised ofroutine budgetary appropriations, but rather depended on the success or the
failure of the Ministry of Education-led mobilization campaign for hugecategorical grant projects, plus the collective performance of elite universities.
– The political coalition with elite research universities transforms Ministry of
Education from a marginalized central agency to a leading ministry with directconnection with knowledge production and innovation. This new position
increases its legitimacy and credibility as a sectoral authority. Thus, it is able tolobby for large-size intergovernmental transfer programs for regions, such as
operational subsidy for regional 4-year universities, financial aid for students inregional institutions, and categorical grants for discipline/major construction inregional colleges and universities.

MOE (sectoral authority) as leader of sectoral coalition and sectoral
overseer (Wang, 2014b):– From 2006 to 2014, Ministry of Finance and Ministry of Education jointly
invested more than RMB 4.7billion for a major construction projects which
covered 788 majors in 200 National Demonstrative and Key Vocational Colleges(China Financial and Economic News, 2016). These large-scale transfer
programs bring the state back to higher education arena at provincial level

The third type of transfer refers to earmarked discipline or major
construction projects.

– MOE provides both need-based and merit-based financial aid. These programs
are available for regional university and college students. In 2013, the state
allocated RMB 57.4 billion for college student aid and the aid increased to RMB
71.7 billion in 2014 (China National Center for Student Financial Aid, 2016).

Support for college student financial aid is another type ofintergovernmental transfer.

– For instance, Ministry of Finance and Ministry of Education announced aprogram to subsidize regional 4-year universities: for provinces who’s perstudent fiscal appropriation is under RMB 12,000 per student per year, central
government shall provide supplementary fund to reach that amount. In year
2013, central government allocated RMB 25.3 billion for this program.

••Since the late 1990s, the state has utilized three transfer programs tofacilitate regional institutions’ growth.
The first is a direct subsidy for regional HEI’s operational budget.

•

41

•

•

•

•

•
•

•

Qian, Yingyi, and Barry Weingast. 1997. “Federalism as a commitment topreserving market incentives.” Journal of Economic Perspectives 11 (4): 83-92.
Riker, William H. 1964. Federalism: origin, operation, significance. Boston: Little.
Shih, Victor, Christopher Adolph and Mingxing Liu. 2011. “Getting Ahead in theCommunist Party: Explaining the Advancement of Central Committee Members in
China.”Xu, Chenggang. 2011. The fundamental institutions of China’s Reforms andDevelopment. Journal of Economic Literature, 2011, v. 49 n.4, p.1076-1151
Wang, Rong. 2014. The Commanding Heights: The state and higher education in
China. In Fan, Shenggen, Ravi Kanbur, Shang-jin Wei, and Xiaobo Zhang (eds.). The
Oxford Companion to the Economics of China. Oxford University Press.
Weingast, Barry R. 2009. “Second generation fiscal federalism: The implications offiscal incentives.” Journal of Urban Economics 65(3): 279-93.
Wildasin, D. E., 2005. Fiscal Competition. Institute for Federalism andIntergovernmental Relations Working Paper. No. 2005-05.

– policy advocacy– Funding mobilization against competition forfiscal revenues– Control over sector-specific resources of scarcity• Sectoral governance versus local governance• Sectoral governance (leader of sectoral
coalition and sectoral overseer) :• Chinese-styled federalism in social andeconomic development

In summary

rwang@ciefr.pku.edu.cn
Wang Rong
China Institute for Educational Finance Research (CIEFR)
Peking University

Thank You!

• Bardhan and Mookherjee, 2006, Decentralization andlocal goernance in developing countries: a comparative
perspective,Cambrudge: MIT Press• Carnoy, Martin, Prashant Loyalka, Maria Dobryakova,
Rafiq Dossani, Isak Froumin, Katherine Kuhns, Jandhyala
B. G. Tilak and Rong Wang. 2013. University Expansion: ina Changing Global Economy. Stanford California: Stanford
University Press.
• Jin, Hehui, Yingyi Qian and Barry R. Weingast. 1999.
“localal Decentrlization and Fiscal Incentives: Federalism,
Chinese Style.” Stanford University (mimeo). ?
• Krug, Barbara, and Alexander Libman. “Commitment tolocal autonomy in Non-demoracies: Russia and China
Compared.”

References

42

6. Possible Moral Hazard

Possible Limitation

5. The Estimation of Different Scheme of Income Contingent Loan using Japanesedata, using the knowledge and scheme of ICL conducted in UK and Australia

Result4. Income Dynamics Controlled

3. Quantile Income Regression of Males and Females

Method

2. Increase in Student loan in Japan, Hardships on Repayment

1.Deterioration of Youth Labor Market after School Graduation

Background

Will Japanese HECs Work?

OCHANOMIZU UNIVERSITYNOBUKO NAGASE PH.D,

Nov 21th 2018, University of Tokyo
International conference on Challenges of Higher Education
Governance and Finance Reform in East Asia

Income contingent loan scheme and genderincome gap in Japan: Will WOMANONICS
work to close the gap?

Backgroundhttps://onlinelibrary.wiley.com/doi/full/10.1111/aepr.12202

III Has WOMENOMICS worked? Based on Nagase(2018) “Has Womenomics
Worked”, Asian Policy Economic Journal vol.13 Issue 1 pp68-101.

II Armstrong, S., Dearden, L., Kobayashi, M. and N. Nagase(2018) “ Student
Loans in Japan: Current Problems and Possible Solutions ”, to be printed on
Economics of Education Review

http://www.ier.hit-u.ac.jp/Common/publication/DP/DPS-A668.pdf

Ⅰ Dearden and Nagase(2017) “Getting Student Loan Right in Japan:
Problems and Possible Solutions” Hitotsubashi Discussion Paper No.668

Based on Three Papers

Contents

0%

20%

40%

60%

80%

100%

1988

out ofworkforce
unemployedselfemployed
otheremployee
part-time,arubaito
dispatched

Female Seishain
↓

0%

20%

40%

60%

80%

100%

termed &otherRegular, or
Seishainout ofLabor Forceunemployedselfemployed
part-time,arubaito
dispatched

Non-Married Females underAge of 35

1988

Males under Age of 35

1993

Source))MHLW Basic Survey on Wage 2008

1992

Youth employment has deteriorated after 1997 and the deterioration has
not stopped in 2000s.

1998

Male Seishain →1996

Strong increase of non-standard workers among youth and women.

2003

HourlyWage
In Yen2000

Large wage gap in Permanent contract regular workers and non-standard
workers2004

1. Deterioration of Youth Labor
Market After School Graduation

2008

Employment :Seishain
Wage of Seishain vs TermedContract Worksers

2008

43

44

40
Male ed 14 yrs

Non married female ed 12 yrs
Non married female e 16 yrs

Male ed 12 yrs

Male e 16 yrs

Non married female ed 14 yrs

Source) Nagase(2017) using Labor Force Survey 2002-2015

Ratio of Female Seishain Workers,
1st to 12th years after graduation
Graduates of 2002 and 2009出所）永瀬（2018）、労働力調査より作成

50

60

70

80

90

100

Percentage of long term employees
below age 35, by educational attainment,
women non-married

1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017

Education, and Student Loan,
Increase in Hardship in
Repayment

Source) Nagase(2017) using Labor Force Survey 2002-2015

Ratio of Male Seishain Workers,
1st to 12th years after graduation
Graduates of 2002 and 2009

45

34%

35%

48% 49%female univ

male univ
20%

30%

40%

interest levied

Increase in Type 2 loan

higher grade requirement

non interest leviedType 1 loan

0

200

400

600

800

1000

JASSO LOAN EACH YEAR

200420052006200720082009201020112012201320142015

billion1200

1.32 million students totaling to 1 trillion yen in 2015

Type 1 Loan

Type 2 Loan

in 2015, 38% of university students has JASSO loan (up from 23.5% in
2004)

JASSO LOANJASSO Loan
Increase of Type 2 loan

Source:

42%

17%

28%
25% 24%
22% 21%21%
21%

35%

39%

45%

34%
32% 31%
29%

48% 47%35%

41%41%
39%

49%

52%

43%
43%

55%
53%

45% 46%

51%
47%

51%
48% 49%56% 56% 56% 56% 56%

Those withstudentloan(JASSO
study)

female univ

male univ

589

82
90

privateprefectural public

national

Tuitionlower fornational andprefectural
public, around$30,000 for
four years, vsprivate around$42,000 for
four years

Private universities
have 70 percent ofshare of universties.

Type of Universities in Japan

Student loan according to JASSO study Gakusei Seikatsu Chosa ,student going to 4 year univ day course

0%

28%

32%

39%

43%

45% 46%

47%

50%

60%

0%

21%

25%

42%

49%

56% 56% 56% 56% 56%

10%

17%

35%

39%

45%

48% 47%52%

55%

And Rising Percentage ofStudents with Student Loan

10%

20%

30%

40%

50%

60%

Rising percentage of students
entering university

46

53%

11%

Houseold income

26%

Private universities

2.36 million yen ( around $30,000 )

20%

40%

60%
National universities

61%

Source : JASSO Home Page

Minimum Wage Japan vs Australia 10.6 $ (848 yen) vs 18.93 $ about double in AUST

Repayment 16270 yen/ month for 20 years ($203 /month)

For Type 2 , monthly loan of 80000 yen,(1000 Aust Dollar/ month)

Repayment 14400 yen/ month for 15 years ($180 /month)

For Type 1 , monthly loan of 54000 yen (675 Aust Dollar/month),

Repayment Model Case

3.43 million yen (around $43,000 )Type 2 Loan (with interest rate levied, standard score required)

0%

54%

49%
51%

45%

45%

42%
48%
43%

39%
41%
35%

Prefectural public universities

Living at Parental Home

Living at University Dormitories

Private Apartment House and Other
Arrrangement

all housing arrangements

Type 1 Loan (Without Interest rate, higher grades required)

2016

46%

Percentage with JASSO loan by univerity type andliving arrangements

Average JASSO Debt

66%

Percent with JASSO Student Loan

Average outstanding debt

70%
60%
50%
40%
30%
20%
10%
0%

66%

Lower income households
are more likely to have
JASSO loan

Prefectural public universities and thoseliving away from home are more likely tohave JASSO loans

Who has JASSO student loans?
Using JASS 2014 student survey

80%

National

Prefectural public

Private0%10%

Female

20%

Male

30%

JASSO Loan by Gender

No difference by gender

40%

44%

43%

42%

40%

JASSO Loan by Gender

50%

49%

48%

60%

Household income was highest for National Universities : two peak at ～8 million and 9-12 million yen. (in thegraph Shown as ～800 and ～900 to ～1200).
Peak household income was 401-600 (4 to 6 million yen or 30000 to 50000 Aus$ ) for Prefectural or Private
universities. Private universities also has small peak at 9-12 million yen.

Private University Grey line
higher tuition,($47,000 in four years)
however, parental income is notnecessarily higher.
(Source) MEXT for Tuition
Cf. Student Contribution for economics
2018
ANU $ 10,754X4=$43,000 full load)

Prefectural University Red line

more competitive to get inparental income is higher though tuition lower

National University Blue linefrom the 2014 JASSO student Survey by University Type

Parental Income Distribution

47

私立大学

Income Dynamics Use KHPS/JSPS 2004-2016 and estimate t-copula function
JASSO loan outstanding use Gakkusei Seikatsu Chosa 2014

93% of spouses were matched. Some could not be matched because we did not acquire the flag thatshows two couples in the household.

spouse of household head.

Match Husband and Wife by Household ID and Tsuzukigara, that is, household head, andWe have 29 months up to 2017 May

Use tokutei chosa hyou, the 4th visit, the long form

3. Use t-coupla function that is, use t to t+1 income change to estimate
dynamics in the earnings prediction. → This is not yet done.

2. Use interval regression for banded data

1.Estimate Smooth quantile regression by age to estimate future
earnings.

Lorraine Dearden (2018) “Evaluation and Designing student Loan
Systems: an Overview of Empirical Approaches”

Following the method of

公立大学

Statistics Office, Labor Force Survey of 2015 Jan - 2017 May

国立大学

3. Those who started Type 1 loan(about 11% of university students) from 2017 canchoose ICL, 9% of taxable income, and 2000 yen per month if no income. The
amount to be repaid will be linked to last year income.

2. Decrease monthly RP to half or one third 2015: 180,000

2015 : 150,000

criteria of economic hardship 3 million yen annual income

can go up to 5 years ⇒ from 2012, can go up to 10 years

1.Deferral of repayment

JASSO measurement

Method

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Peak of those with RP 3 months late :210,000

guarantor system: about half of students use this hardship of guarantor

2004 ⇒ 2009

3 DataThe distribution is most often 0.51-0.6
million yen per year . However, forthose at Private universities, one infour has 0.8-1.25 mil yen.
That is, nearly 5 million yen debt infour years

orange national red prefectural brown private

Yearly JASSO loan

Increase in Bad Loan Repayment
and the Measurement of JASSO• An interest rate of 1% real which is assumed to be the same as theassumed government discount rate 1%• We compare the situation where the loan is written off after 25 years
or where it is never written off• ICL with 5% marginal repayment rate above 1.5m yen and 10%
marginal repayment rate above 3.0m yen.

• Debt of 244.8 (type 1 loan away from home)〇 interest rate and discount rate assumption〇ratio of repayment to income,〇the threshold〇 Marginal or non-marginal over thethreshold as to base repayment〇 Write-offs yes or no

ICL Scheme

4. Then using the estimated income profile with age in each deciles,
estimate the cost of ICL using various parameters, and the size ofstudent loan.

3. Then do first stage and second stage smoothing with respect to age.

2. Predict income within upper income limit and lower income limit tomake continuous income tragectory with wage .

1. Do interval Regression

4. Quantile Regression of
University Graduated Males andFemales

23 26 29 32 35 38 41 44 47 50 53 56 59 62 65

RIF60_m

600

0

150

300

450

600

750

900

1050

1200

1350

1500

23 26 29 32 35 38 41 44 47 50 53 56 59 62 65

Annual Income
10,000 yen

1

2

3

4

6

7

9
No Write-off

8

10

All

1

2

3

4

6

7

8

9
No Write-off

Decile of lifetime income

5

Females

Write Off

Assumption:No Dynamics, people stay in same
quantile

Write Off

Decile of lifetime income

5

Males

10

All

RIF90_m

RIF80_m

RIF70_m

RIF60_m

RIF50_m

RIF40_m

RIF30_m

RIF20_m

RIF9_mAge

By Quantile, how much will be
repaid by ICL, by using slide 26

0

Age

RIF90_m

300
150

RIF80_m

450

RIF70_m

RIF50_m

RIF40_m

RIF30_m

RIF20_m

RIF10_m

By each decile

750

900

1050

1200

1350

1500

Annual income
10,000 yen

3. Quantile Regression of University
Graduated Males and Females age 2365 --a very large gender gap

10080
Per cent repaid
40
60
20
0

100
80
Per cent repaid
40
60
20
0

48

800

Annual income
400
600

200

0

20

40

Married, spouse BA
Single(mean) rf30_h_0_2

30

Male

Age

50

Married, spouse no BA
rf30_h_0_1(mean) rf30_h_0_3

6070male BA
married to
non-BA
female20

30
30Bottome
percentile
percentile,

30

40

FemaleAge

BA married to BA,BA married to non-BA, and Single

3 Types of Households
each by Quantile,
Bottome 30
percentile,
female BA
married to nonBA male

Make household income, do income smoothing, and do quantile
regression

3. Singles (males and Females)

2. BA married to non-BA (males and femles)

1. BA married to BA (males and females)

3 Type of Households

5. Quantile Income Regression ofHouseholds( Husbands and Wife
Combined)

1000

70

20

20

40

50
Married, spouse no BA
rf30_h_0_1(mean) rf30_h_0_3

6070Married, spouse BA
Single(mean) rf30_h_1_2

5060
Married, spouse no BA
rf30_h_1_1(mean) rf30_h_1_3

2040Married, spouse BA
Single(mean) rf30_h_1_2

30

Female

30

40

Male

Age

50

60

percentile,
male BA
married to BA
femaleMarried, spouse BA
Single(mean) rf30_h_0_2

Married, spouse no BA
rf30_h_0_1(mean) rf30_h_0_3

702030Bottome
percentile
30

40
Married, spouse BA
Single(mean) rf30_h_1_2

30

FemaleBA married to BA,BA married to non-BA, and Single

Age

Bottome 30
percentile,
single maleBA

3 Types of Households
each by Quantile,

Married, spouse BA
Single(mean) rf30_h_0_2

30

Male

30 percentile

Age

Age

BA married to BA,BA married to non-BA, and Single

3 Types of Households
each by Quantile,

200
0Annual income
400
600
800

800
Annual income
400
600
200
0

800
200
0

Annual income
400
600

1000
Annual income
400
600
800
200
0
1000
Annual income
400
600
800
200
0

49
50

50

Married, spouse no BA
rf30_h_1_1(mean) rf30_h_1_3

60

Bottome 30
percentile,
female BA
married to BA
male

Married, spouse no BA
rf30_h_1_1(mean) rf30_h_1_3

60

Bottome 10
percentile,
singlefemale BA

7070

Bottome

20

30

40

Male

Age

50

60

70

Married, spouse no BA
rf10_h_0_1(mean) rf10_h_0_3

40Married, spouse BA
Single(mean) rf10_h_1_2

30

50

60
Married, spouse no BA
rf10_h_1_1(mean) rf10_h_1_3

20 25 30 35 40 45 50 55 60 65
Age

Males

Married, spouse BA

Married, spouse no BA

Single20 25 30 35 40 45 50 55 60 65
AgeFemales

Estimation falling into 3 categories
using LFS
In the future, there will be more
BA BA marriage for males as wellAge

BA femalemarried to BA
male
FemaleSome low income females married may belong
to relatively stable income households.

Married, spouse BA
Single(mean) rf10_h_0_2

20

10 percentile

BA married to BA,BA married to non-BA, and Single 10percentile

3 Types of Households
each by Quantile,

600

Annual income
200
400

0

1

.8

Proportion
.4
.6

.2

0

70

800
Annual income
400
600
200
0

40

Married, spouse BA
Single(mean) rf20_h_0_2

30
Age

50
Married, spouse no BA
rf20_h_0_1(mean) rf20_h_0_3

60

70

20

married to BA
male

40
Married, spouse BA
Single(mean) rf20_h_1_2

30

FemaleAssuption about family
formation

20

Male

20 percentile
femalenon-BABA married to BA,
BA married to non-BA,
Bottomeand Single
20percentile

800
Annual income
400
600
200
0

600

Annual income
200
400

0

1

.8

Proportion
.4
.6

.2

0

50

Age

50

60
Married, spouse no BA
rf20_h_1_1(mean) rf20_h_1_3

70

Let’s consider income
dynamics

Males

Rho used in simulations

Age
CI

Age
Estimated rho

20 25 30 35 40 45 50 55 60 65

20 25 30 35 40 45 50 55 60 65

Females

Estimating Income Dynamics using
t-coupla function, income
variation from to to t+1 smallerwith higher 𝝆𝝆𝝆𝝆
1

.9

.8
.7
.6

Rho

1

.9

.8

Assumption about Scheme

When Levied on Households,
the results are much better

Rho

.7
.6

51

MalesDegrees of freedom

8

6

4

CI

df used in simulations

Age

Estimated df

20 25 30 35 40 45 50 55 60 65

Age

2

0

11%of males and 48%oof females have morethan 18% of annual
income repayment forover 5years.

With Income dynamics,
40% of malesand 75%
of females have
repayment over 18% ofannual income morethan once.

0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Numberof yearsof excessive
RBs > 18%

73.21
7.84
5.67
2.41
1.61
0.68
0.73
0.52
0.50
0.19
0.33
0.35
0.19
0.17
0.45
0.19
0.38
0.02
1.75
0.00
2.83

No dynamics

Males

58.02
14.30
8.31
4.87
3.23
2.25
1.71
1.38
1.17
0.77
0.47
0.77
0.44
0.47
0.42
0.33
0.42
0.35
0.19
0.05
0.09

Dynamics

58.54
0.76
0.85
0.50
1.70
0.85
2.06
1.18
1.56
2.56
2.41
1.18
2.88
2.38
1.82
1.62
0.50
1.32
4.73
0.26
10.34

No dynamics

Females

25.28
7.93
6.09
6.48
6.00
5.26
5.70
4.49
4.19
3.83
3.62
3.30
3.33
2.76
2.47
2.20
1.72
1.43
1.40
0.74
1.78

Dynamics

Number of years with more than
18% of income used for time
based repayment

Degrees of freedom

8

6

4
2
0

20 25 30 35 40 45 50 55 60 65

Females

0.74870.82480.9067

Simulations

0.79630.83240.8821

JHPS/KHPS Panel

1

2

3

4

5

6

7

Males

8

9 10All
No dynamics

Decile lifetime earnings

1

Females

0.76770.83890.9159Simulations

3

4

5

6

7

Females

Dynamics

8

9 10All

Decile lifetime earnings

2

students will repay 93% of
total borrowing as to 86 % if
income dynamics notconsidered.、For time based
payment,93%
96% will rbe
repayed by86%
students(Government
interest rate of 0.33%)

2000 yen are to be repayedWith Income dynamics,

0.7683

3

Males

86%

93%

Estimation of present JASSO Type 1
Income contingent Loan Repayment
Estimation
Repayment of 9% to after tax income, even if after tax income is zero,

0.88560.8241

1

JHPS/KHPS Panel2

Lag

Income dynamics well estimated from t-coupla function when comparing
the income correlation of t+1、t＋2 with actual

60
40
20
0

Estimating Income Dynamics
income variation from to to t+1
smaller at tails with lower 𝝂𝝂𝝂𝝂100
80
% of loan repaid

100

40

60

80

% of loan repaid

20
0

52

53

With income
dynamics 96
percent
repayed,without
incomedynamics, 79%
repayed with
15 percent
surcharge.
Whenincomedynamics is
considered,
repayment
is madeoverbottome30% forfemales.

Repayment Estimation of our ICL
scheme with loan scale of Type 2

15% sur charge （This is similar to Australian case. This means if you pay
upfront, tuition will be 15 % lower. ）Repayment directly from monthly income, not after tax income basedon last year income which is JASSO’s present planInterest rate 0

From 3million and over, 9% repayment

1.44 million to 3 million, 5% repayment
Males
99%

81%

Our present scheme wasestimated to be totally
repayed by students.If we do
not consider income
dynamics,government will
Females
repay 19%

Dynamics

Decile lifetime earnings

Decile lifetime earnings
No dynamics

1 2 3 4 5 6 7 8 9 10All

1 2 3 4 5 6 7 8 9 10All

81%

99%

If we introduce household based ICL, some uncertainty as to whether husband
and wives agree on taking the mutual student loan burden after marriage—may
not work as to reduce problem of delayed marriage and child-rearing, as some
may not want to take burden of spouses.
Possible Problem of individual based ICL: Moral hazard on the side of worker,
especially females that they might choose not to earn income over threshold
Individually based ICL will subsidize more females than males.
Moral hazard of ICL on the side of educational institution—eager to get students
but may not provide adequate teaching. We do not have enough research on thequality of education of the private universities, which consists of the majority of
our university system.

4.
5.
6.

If we introduce ICL, it may increase family formation and child-rearing, which isneeded in Japan. Some youth are said to delay marriage and childrearing due tothe loan.

2.
3.

If we introduce ICL, it will Benefit to reduce financial burden of students

1.

Possible Benefit and Problem

Onaverage109% willberepayedby malesand 84%byfemales.
60

Repayment zero below annual income below 1.44 million yen

100
80% of loan repaid

20

Our paper’s Income
Contingent Loan

Estimation of repayment of our
ICL scheme with loan scale ofabout Type 1

60

0

40

100
80

% of loan repaid

40

20
0

54
Gender wage gap decreased
among married, andincrease in female wage
contributed to the closing of
the gap, though the gap isstill enormous.

Gender wage gap decreased
among never married, but
mostly through drop in thewage of single males.

Work Hour of Long Term Employee, Seishains, Age 25 to 39

Annual Income Average, Gender Gap, Male and Female Age 25-39

Work hour decreased
substantially for married female
seishainWork hour decreased somewhat
for male seishain

Has Work Hour Decreased,
especially for Males? -- yes

Source) Nagase(forthcoming) using Labor Force Survey

Deterioration for nevermarried high school
graduate.

Much improvement for
female with a young child,especially, university
graduate

Women Seishain ratio among all women by education and marital status
age 25-39: Ratio of Seishain of University Graduates with one child 0-3
increasing, whil HS graduate deteriorating

Has Females in Pipeline Increased?
Differences by Education

Has Gender wage gap Decreased?

Has Abe’s policy worked?

So closing gender wage gap is very important for student loan and also
J-Hecs to work well.

Has Abe’s WOMANOMICS
Worked?

55

of children. Perhaps to keep
child care facilities, infantcare was enlarged

6%
10%
Population Declining Prefectures
Wakayama
5%
6%Growth rate of 2 yearTottori
old
6%
5%
from 1990s to 2007 relatively
Shimane8%5%high due to declining number
Akita
7%
4%

Chiba

16%
24%
40%
42%
31%

11%
6%
5%
9%
0%

41%
62%
75%
63%

30%

Growth rate of 2 year
old low despite low
Growth Rate
Child Care Places tosupply in early 2000s
2002 ⇔20072008⇔2012 2013⇔2015
Child Population
because these
Densely Populated Prefectures
2002
2015
municipalities had
additional cost as Tokyo
3%
10%
17%
26%
35%
many child care wasKanagawa
10%
14%
16%
13%
29%
publicly run .
Saitama
8%
9%
12%
14%
28%

Ratio of Growth in Registered Child Care Places for Age Two

Growth high evenwhen two-year-old
supply ratio washigh
Ratio increased due
to strong increase in
the provision of childcare places.
Ratio increased only
because infant
population decreased

Growth rather
modest, in area withhigher needs, despite
low index in the twoyear-old supply ratio.

Ratio of Two-Year-Old child care places to child population can
increase when population decrease. Therefore, growth rate of
infant care should also be added as child supply index
The policies are surveyed, and the effects are estimated using
microdata from the Labor Force Survey combined with data at theprefectural level on day care provision. A difference‐in‐difference (DD)method is applied to uncover the impacts of the Abe Cabinet's policies.
The rapid increase in the provision of infant care, especially in the urban
area, has contributed to a strong increase in the labor participation of
mothers with young children. In addition, DD method estimates show astrong increase in mothers with infants staying in permanent‐contract
regular employment. A significant shortening of work hours of workers,
especially of parents with infants, is observed, which enabled working
mothers to maintain their employment status. A change in the genderwage gap in the Japanese labor market is observed, but much progressis still required to close the large wage gap.

The Main Result

56
30

20

10

3,000

2,000

1,000

0

40

4,000

0

50

60

70

80

90

5,000

1996 1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

The supply
increase of type2 loan, 12%

7,000

6,000

Number of users of Type 2 scholarship loan (right axis)

Number of users of Type 1 scholarship loan (right axis)

Type 2 scholarship loan amount (left axis)

Type 1 scholarship loan amount (left axis)

8,000

9,000

Ten thousand people
100

1

3

Note: Until 2003: Loan amount of
the Japan Scholarship Foundation.
Since 2005: Only implementationby the Japan Student Services
Organization, excluding grants
transferred to prefectures fromhigh school scholarship projects.

The number oftype 2 loanusers increased
more than 8times, 37%

Expansion of the use of JASSO scholarship loans

Billion yen
10,0001.1

November 22, 2018 Workshop at the University of Tokyo

WANG Jie, The University of Tokyo
Hideo Akabayashi, Keio University
Masayuki Kobayashi, The University of Tokyo
Shinpei Sano, Chiba University

FINDINGS FROM JHPS 2ND-GENERATION FOLLOW-UP SURVEY

WHAT ARE THE EFFECTS OF STUDENT LOANREPAYMENT ON YOUTHS’ LIVES:

Outline2

Distribution diagram of youth student
loans repayment, estimated for the 2030 years of age population
1. Young people who havenot taken out any studentloan

2. Young people whohave completed
student loan
repayment
4

3. Young people
who arerepaying
student loans

However, this does not benefit young people in their twenties and thirties. In the future, young people using
student loans may decrease, but the situation where many young people become recipients of and debtors tostudent loans will continue.

• Benefits Scholarship started in 2017. Tuition Aid and Benefits Scholarship will be enlarged from 2020.

“In the past 5 years, there were 15,000 self-bankruptcies. In nearly half of the cases, the guarantors were parents
and relatives.” Asahi Newspaper, Feb 12, 2018)• Increase in student loan debtors; severe life of debtors; overdue repayments; student loan bankruptcies

1.2 Increase in scholarship loan recipients has led to social problems
and previous research

３. Summary and discussion

2.5 Estimation of prescribed factors of those who have paid off the loan

formation

2.4 Relationship between student loan repayment status and youths’ social lives, family

2.3 Focus on use and repayment of student loans

2.2 State of samples receiving scholarships and student loans

2.1 About our survey and the samples targeted in this study

２. Empirical research based on JHPS second-generation follow-up survey

1.3 Purpose of this study

1.2 Increase in scholarship loan users has led to social problems and previous research

1.1 Social background and state of rapid increase in scholarship loan users

１. About student financial aid in Japan

57

Society

Purpose of this study

What is the situation of young people who have to repay student loanscompared with people in the same generation who did not receive a student
loan? Are they in an unfavorable situation in the transition from school to the5labor market or in their social life?

Highereducation
institution

7

Based on the above, in this report we will use data from the "SecondGeneration Survey on Learning and Work" carried out by the Grant-in-Aid for
Scientific Research(S) “Investigation of the long-term causal effect of economic
inequality on educational inequality based on longitudinal survey andexperiments of parent-child pairs and international comparison" (Hideo
Akabayashi, Keio University) to analyze the situation of student loan use andrepayment by young people, differences in family formation and living
conditions due to repayment status of student loans.

1-3High school

Studies on scholarship loan
use in Japantargets

New

Requested
new survey
forsecondgeneration(4695 cases)
through first
generation
2415 families

Confirmationof intention ofparticipation• Continuation
target : 784
persons• New target:
2309 persons

Investigation

1128 persons

Distribution:

Sample8Workers: 771

HE
students:
188

High school
students: 47

university entrance examination, burden of educational expenses, use and repayment of student
loans, employment situation, income, psychological state, temporal preference, marital status,
number of children, connections with family and others, donations and volunteer experiences.

• Questions: Education history, utilization of out-of-school education, participation situation of(JHPS) conducted by the research group of Keio University, and conducted a questionnaire
survey for their children of 18 years and over.

• Targets: We took the data for the first generation of the Japanese Household Panel Survey• Survey response format: Mail or WEB• Survey period: March 2017

2. Empirical research based on JHPS second-generation
2.1 About the survey
follow-up survey

An Internet survey covering 1,600 people aged 25 to 44 years nationwide. Compared with those who did not take out ascholarship loan and those who have already paid back the loan, the young people in repayment have fewer children,and the age of marriage and house purchase tend to be delayed. The results were only published as an article in the
Asahi Newspaper. No paper available.

Internet survey conducted by Associate Professor Kawada, 2017

Sampling from workers. Effective recovery count is 13,342, recovery rate is 74.2%. At the age of 34 and under, half ofthe participants used the scholarship loan system. On average, the total amount borrowed was 3,129,000 yen. For nonregular employees / staff, 56% of them answered that repayment was very tight. About the effect of repayment on life
design, approximately 30% of them answered that there was some effect on "marriage" and “acquiring real estate“.
These results were based on the subjective judgment of respondents.

Questionnaire Survey on Student Loans, National Council of Workers’ Welfare, 2016

Extracting samples from general users and users in overdue repayment, 5 to 6 thousand respondents a year in recent
years, the recovery rate is low. In order to improve the collection of scholarship loans, staff compare the information
gap, the type of graduated school, the main users, living conditions between general loan debtors and loan debtors in
overdue repayment, and analyze the cause and reasons of overdue repayment. However, loan recipients who havealready paid back their loans are not subject to this survey.

Attribute Survey on users of Scholarship Loans, JASSO

Investigations on living conditions of student
loan debtors in Japan

58

9.3%

86

15.1%

139

24.4%

3.0%

41

7.2%

58

10.2%

％

Sample％Sample

％

71

99

148

22

20

162

23

JASSO Type 2

JASSO use

JASSO combined use

Eduction loan, etc.

Student loans, etc.

Benefits Scholarship

Frequency

JASSO Type 1

n=569

22.8%

130

14.6%

83

8.3%

47

16.3%

93

9.7%

55

6.7%

38

14.1%

80

9.1%

52

4.9%

28

12.1%

69

6.7%

38

5.4%

31

4.0%

28.5%

3.5%

3.9%

26.0%

17.4%

12.5%

50,000 yen
7 million yen

Minimum value
Maximum value

Since the influence ofoutliers is large,
detailed analysis will
be a subject for the
future.

2.5 million yen

2.839 million yen

Median144

Average value

Student loans total
amount received
Frequency

Receipt rate

9100.0%

569

62.4%

355

37.6%

214

Total

11

505,000 yen

1,500 yen

15,000 yen

29,231.8 yen

86Monthly repayment
amountState of samples receiving scholarships andstudent loans

53

17

Sample2.2

Analysis
samples

FemaleMale

20-24 yrs 25-29 yrs 30-34 yrs 35-39 yrs 40-44 yrs 45-49 yrs• Distribution of analysis samples by age and by gender

Respondents over their 50s and those whose final academic background is below high school are
excluded due to a very low scholarship receipt rate.

• We principally analyzed 569 samples aged 20-49 years old who had received higher education.

771 workers participated in our follow-up survey.

Analysis targets

Data bias

20-24 y/o25-29 y/o30-34 y/o35-39 y/o40-44 y/o45-49 y/o2015 Population Census

25-29 y/oAll samples

20-24 y/oAnalysis samples

30-34 y/oFemale40-44 y/o

1045-49 y/o2015 Population Census

35-39 y/o

All

40s

30s

20s

0%

10%

20%

40%

50%

89.2%

60%

70%

80%

16.8%

17.2%

26.5%

Those who have paid off their student loan

Those who are repaying a student loan

Those who did not receive any student loan

30%

71.9%

67.0%

64.3%

100%

ｘ2＝42.145

90%

11.3%

3.4%
7.4%

15.8%

9.2%

ｐ＜.000

28.1%

10.8%

33.0%

35.7%

12

Approximately
40% ofrecipients have
paid backReceipt rate

2.3 Student loan use and repayment by generation

Analysis samples

0.0%
All samples

20.0%

0.0%

40.0%

60.0%

20.0%

40.0%

60.0%

80.0%

100.0%

100.0%
80.0%

120.0%

120.0%

Male

Comparison with the unmarried rate in the 2015 Population Census• Low recovery• The ratio of people living with parents and the unmarried rate is probably high.

(2005-2017), the proportion with an annual income of 3 million yen or less is 5.6 to 12.4%, theproportion with an annual income of 10 million yen or more is 21.2 to 25.6%.

• Low proportion of low-income group: In the household income of the parent generation

59

0%

10%

20%

40%

50%

60%

70%

Those who have paid off their student loan

Those who are repaying a student loan

80%

15.6%

18.9%

14.6%

21.4%

Those who did not receive any student loan

30%

73.1%

28.6%
25.4%

7.1%

90%

100%

11.3%

11.3%

3.3%7.8%

3.4%6.9%

14.6%

17.9%

10.3%

31.3%

47.4%

Living withparents

35.7%

46.9%

Number ofchildren0.24 person

82.8%

Mainly working

80.0%
0.76 pers on
73.4%
0.72 pers on

0.255

0.321

18.5%

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

11.5% 7.8%

13.5%

1.5%

5.0% 13.8%

25.7%

39.5%

34.3%

Unmarried

42.6%

Number of children

0.42 pers on

0.81 pers on

80.0%

Mainly wo rking

73.7%
67.6%

Those who have paid off their student loan

Those who are repaying a student loan

Living with parents

29.7%

68.4%

0.297

0.345

14

19.2%

33.6%

1.5%

18.8%

23.2%

39.2%

33.3%

36.9%

Annual income (tenmillion yen)

0.282

Differences in living conditions due to repayment status ofstudent loans (30’s age group only) 1.03 pers on

Those who have paid off their student loan

Those who are repaying a student loan

Those who have paid off their student loan

15

8.3%
11.1%

11.6% 11.6%

20.1%

20.7%

22.2%

28.6%

Those who did not receive any student loan

Annual income(ten million yen)

0.287

0%

80.6%

66.4%

98.5%

81.3%

76.7%

Those who did not receive any student loan

College, Junior College, etc.

University and Graduate School

College, Junior College, etc.

University and Graduate School

College, Junior College, etc.

60.7%

66.7%

College, Junior College, etc.
University and Graduate School

63.2%

University and Graduate SchoolStudent loan use and repayment by generation andhigher education experience
Receipt ratio

Those who are repaying a student loan

Those who did not receive any student loan

Unmarried

51.0%

82.1%

13

30.2%
26.9%

10.3%
11.1%

39.3%
29.2%

2.4 Differences in living conditions due to repayment
status of student loans (all analysis samples)

Female

69.8%

88.9%

Female

Male

89.7%

70.8%

Male

Female

60.7%

64.3%

Male

64.3%

Male

FemaleReceipt ratio
35.7%
35.7%

Student loan use and repayment by generation and gender

20s

30s

40s

All

20s
30s
40s
All

16

60

Those who are repaying a
student loan
Those who have paid off
their student loan

student loan

Those who did not receive any

Those who are repaying a
student loan
Those who have paid off
their student loan

60.0%
25.0%

84.6%

24.7%

26.7%

16.7%

39.2%

53.1%

58.0%

50.0%

51.1%

30s

66.7%

22.5%

50.0%

25.0%

40s

40.0%

56.4%

34.5%

16.7%

35.0%

37.8%

All

Female

Male

0.05

0.00

0.12

0.06

0.23

Those who are repaying a student

Those who have paid off theirstudent loan

Those who did not receive any

Those who are repaying a student
loan

Those who have paid off theirstudent loan

student loan

loan

0.00

Those who did not receive any
student loan

20s

1.10

.53

.91

.93

.29

.63

30s

1.14

1.33

1.41

.50

.00

.88

40s

0.83

0.30

0.82

0.65

0.16

0.55

All

Repayment status of student loans and the number of children
by gender and by generation

FemaleMaleThose who did not receive any
student loan

20s

Repayment status of student loans and the ratio livingwith parents by gender and by generation17
off their student loan

Those who have paid

receive any student
loan
Those who are
repaying a student
loan

Those who have paid
off their student loan

Those who did not

repaying a student
loan

92.3%

90.6%

86.4%

80.0%

100.0%

93.3%

20s

35.0%

65.0%

36.1%

33.3%

72.2%

54.9%

30s

28.6%

33.3%

18.8%

100.0%

32.7%

40s

46.9%

82.1%

51.0%

37.5%

87.5%

58.8%

All

FemaleMale

100.0%

Those who have paid off

their student loan

Those who have paid off

student loan

Those who are repaying aany student loan

Those who did not receive

84.6%

90.6%

84.0%

75.0%

their student loan

93.3%
Those who are repaying a
student loan

any student loan

Those who did not receive

20s

65.0%

55.0%

54.6%

100.0%

94.4%

92.2%

30s

71.4%

66.7%

46.3%

100.0%

100.0%

98.1%

40s

72.5%

76.4%

61.2%

100.0%

85.0%

94.6%

All

Repayment status of student loans and mainly working rateby gender and by generation

FemaleMaleloan
Those who are

Those who did notreceive any student

Repayment status of student loans and unmarried rateby gender and by generation

61

248.6

321.6

267.0

225.6

205.7

Those who are repaying a
student loan

Those who have paid off
their student loan

Those who did not receive
any student loan

Those who are repaying a
student loan

Those who have paid off
their student loan

Constant

Total amount borrowed

Living with parent(s)Mainly parental replayment

Unmarried

Personal annual income

Education (university and above,1)Age

Gender (female,1)

1.159 +

1.117 +

-6.157 **1.156 *

1.406 *

Unmarried（yes 1, no 0）
Mainly parental repayment (yes 1, no 0）
Living with parent(s) (yes 1, no 0）-4.199 *-.007 **

-1.110-1.006

119

1.061

.247
.007 **.075.111 *.005 **

.593

.606

All student loans

Dependent variable: paid off 1, still repaying 0
Other independent variables:

N

296.4

177.2

232.1

414.3

390.2

359.4

30s

360.3

264.0

202.2

465.0

96.0

448.3

40s

274.3

213.0

235.9

401.9

305.4

365.4

All

-5.323 **

.788

.506

-.655

.004 *.257.089 +.966 +

105

23-4.095 *-.005 *

.741

.259

-.656

.005 *.742.072

1.004 +JASSO scholarship loans

2.5 Estimation of prescribed factors of those who have paid
off their student loans

Female

Male

277.5

Those who did not receive
any student loan

20s(ten thousand yen, not including bonuses and overtime allowances.)

Repayment status of student loans and personal annual income

26.6%

３

19.1%
18.8%

Assistance rate from parents

28.1%

Summary and discussion

Those who have paid off their student loan

Those who are repaying a student loan

Those who did not receive any student loan

Assistance rate to parents

19.8%

35.1%

22

・ In the estimation of those who have paid off the student loan, the “total amount borrowed" and“personal annual income" are statistically significant. The former has a negative influence, and the latterhas a positive one. "Mainly parental repayment" and "living with parents" also show significant influence.
“Mainly parental repayment" and "living with parents" can be interpreted as receiving economic
assistance from parents. We can consider that the influence of “total amount borrowed” possibly gives a24further argument to the theory of total amount control.

same trends are shown. It will be necessary to consider reducing the burden on young people who arein the process of repaying student loans.

• ⇒Although there are some differences with the conclusion of Kawada (2017), in several respects thethe group repaying student loans shows a relatively high rate of living with parents, an obviously
higher unmarried rate, and a noticeably smaller number of children. Personal income is also somewhat
lower. There is a gap of more than 30% among the unmarried rates, a gap of more than 10% among
the rates of living with parents, a gap of 0.5 persons in the number of children. When we focus on the
30’s, where family formation is concentrated, the results are generally consistent with the overallsituation. Repayment of the student loans is likely to affect youths' social lives and family formation. In
particular, the influence on those who are repaying student loans is great on men's marriage andhaving children.

• Compared to those who did not receive any student loan and those who had paid off their student loan,

student loans. The median amount received was 2.5 million yen. JASSO scholarship loan receipt rate is
26%. Those at the age of 20-39, whose student loan receipt rates are above 30%, 40% of student loanusers on average have paid off, the payoff rate of the upper generation being higher .

• Twenty-eight percent of samples in the 20-49 age group with experience of higher education took out

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Repayment status of student loans and the ratios of
40.0%
economic
assistance between parent and child62

Main references

25

・The situation of the family is complicated and a more detailed investigation
will be required. For example, in this survey, other loan burdens and family loanburdens are not investigated. More detailed investigation is required.

・Sampling problem, such as 2 or 3 or 4 children of one family participating inthe survey.

With respect to the use of data, we obtained permission from Panel Data Research Center at Keio University .
This is a research result of Grant-in-Aid for Scientific Research(S) “Investigation of the long-term causal effectof economic inequality on educational inequality based on longitudinal survey and experiments of parentchild pairs and international comparison“ (Hideo Akabayashi, Keio University, No. 16H06323). We would liketo extend our sincere thanks to everyone who participated in the survey.
26

Acknowledgments

acquisition tend to be delayed“. August 23, 2017. Electronic edition of the Asahi Newspaper.
(https://www.asahi.com/articles/ASK7S7D4DK7SUPQJ014.html)• Attribute Survey on users of Scholarship Loans , JASSO(https://www.jasso.go.jp/about/statistics/zokusei_chosa/)• Noriko Kawada, "Those who are repaying student loans have few children. Their marriage age and house

・Analysis based on parental generation and form of employment ofrespondents

Shobo, March 2017.

• Higuchi Miio and Hagiwara Risa, eds., “Educational Investment and income transfer among generations", Keiso• (http://www.rofuku.net/network/activity_img/tottori20160301101822.pdf)• Questionnaire Survey on Student Loans , National Council of Workers’ Welfare ,2016

・Analysis of total amount of student loan received and repayment balance

Future research topics

63

May: Manifestation on the amendment
constitution, including free education
Oct: Lower House Election

2017

Jun: MOF Report on falsified official
documents relating to Moritomo School

Jun: Ise-Shima G7 Summit Meeting
Jul: Upper House election

2016

2018

Sep: Abe reelected as the head of LDP
National Security Bill

Dec: Lower House election

May: Cabinet Bureau of Personnel Affair

Jul: Upper House election

2015

2014

2013

Apr: Kuroda Governor reappointed
Jun: Postpone the target of fiscal consolidation from 2020 to2025, “Basic Policy for Human Resource Development”

Jun: “Growth Strategy 2017”
Sep: Council to Discuss for 100-Year Life
Dec: “New Economic Package” including free education

Jan: BOJ negative interest rate
Jun: Decision to postpone consumption tax hike2

Jun: “Economic and Fiscal Regeneration Plan”
Oct: Council to Promote Dynamic Engagement of All Citizens
Dec: Decision to introduce lower rate of Consumption Tax

Apr: Consumption tax from 5→8%
Jun: “New Growth Strategy”
Nov: Decision to postpone consumption tax hike

Jan: “Three Arrows”, Economic Regeneration Headquarters,
Competitive Council
Apr: Kuroda Governor of BOJ, Extra-easing monetary policy
Jun: “Revitalization Strategy”, “Economic & Fiscal Basic
Policy” with Fiscal Consolidation Plan

Economics and public financeApproval

Explanation &coordination

Who takes responsibilities of decisions is often
ambiguous, because PM or his office is always behindthe scene when ruling party decides and instructs.

Each division↓
Research Council↓
General Council

On some issues such as
security, sensitive ones

Policy function of LDP

Cabinet decision

Ministries

PolicyCouncils

PM Office

PM, Chief & Deputy
Cabinet Secretary,
Advisors,seconded bureaucrats

Policy function of
the government

The dual system of decision-making in Japanis now changing from LDP-led to PM Office-led

Dec: The second Abe administration

Politics and public administration

Year

2012

3. Governance in Abe administration

4. In short, Abe administration improves the efficiency of decisions, but
undermines consensus building, and the function of verification /assessment/scrutiny. Political neutrality of civil services has also gone.

3. This presentation is to evaluate “governance” in policy-making process of
Abe administration, by focusing on “free education scheme”.

2. Abe administration accomplished some difficult agenda such as national
security, but their policy-making process is questionable in terms ofachieving better policy outcomes.

31

1. The second Abe administration has continued for six years, and this isreally exceptional in Japan. Abe administration is exercising the institutional
capacity of prime minister, which has been strengthened through several
political and administrative reforms since 1990s. It is now called “Only one
big Abe".

1. Issues and theme

2. Six years of Abe Administration

Meiji University
Graduate School of Governance Studies
Hideaki TANAKA
hideakit@meiji.ac.jp－Focusing on decision-making process－Political Economy of "Free Higher
Education" Scheme in Japan

22/11/2018

64

4

1
4
3
9

Education and culture
Local & regional development
National security and foreign affairs
Law and order

5. Hostility towards bureaucrats in the first administration, but
control them through seconded or retired ones in the second adm.

free higher education
6

1. Gradual free early childhood education, 2. Expand grant-type scholarship and ICLs by finding revenue towards

2017 June : "The Economic and Fiscal Strategy 2018" decided by the cabinet
includes free education scheme2017 May : PM Abe proposed to include free education from early childhood tohigher education in the proposal to amend the Constitution in response to
the interview by Yomiuri News Paper

1. Propose the design of ICL 2. A new ICL was introduced in 20172016 Sep : Report "Towards a New Income Contingency Loans" by ICLs
Advisory Committee set up by Ministry of Education

3. It costs about 3.1 trillion yen to make tuition fee free for both public and private universities

1. Gradual free early childhood education, 2. Reduction in individual payments for higher education

2015 Sep : Report "Education Investment and Resource to Strengthen
Education System" by the Advisory Committee to Revitalize Education
set up by Prime Minister Abe

6. Development of "Free education scheme"-1

7. Policy-making by many policy & advisory councils controlled
by Cabinet Secretariat but often their conclusion predetermined

16

1

1

1

0

0

0

0

13

0

Subsidiary

144

9

6

22

15

14

8

0

70

0

Subsidiary

5*Relevant ministries are now developing the detail of the scheme for the implementation72017 Dec : Government's strategy "The New Economic Package" decided by
the cabinet reveals the key design of free education scheme
Dec : the mid-term report by the Advisory Committee Responding to 100-year Life2018 June : The final report by the Advisory Committeein Oct 2019. LDP was against free education when they were the opposition from 2009-12

Reallocation of 2 trillion Yen from the additional tax revenue generated by consumption tax hike from 8 to 10%2017 Oct : LDP's Lower House election manifesto including free education
schemeTo discuss a lot of topics including free education2017 Sep : The Advisory Committee Responding to 100-year Life set up by PM2017 Aug : PM Abe addresses the importance of developing human resource in
the interview after the reshuffling the cabinet ministers

6. Development of "Free education scheme"-2

101

15

19

9

8

12

13

2

15

8

Parent

Ave administration

Source: the author's estimate based on the web site from PM's Office
Notes: Subsidiary councils means organization or committee set by parent's councils

34

5Social welfare and labour

Total

1

6. Govern top & senior officials through appointment system
including the Governor of BOJ and heads of agencies

1

Public administration

3. Senior politicians retired and no rival in LDP
Public finance and tax

6

Regulation, industry and market

4. Fragmented oppositions and LDP’s dominance in both houses

4

Parent

Before Ave adm

General economic policies

Subjects of councils

5. The number of councils by subjects

2. Learn the failures of the first Abe administration and DPJ

1. Using institutional capacity of PM strengthened by the reforms

4. Characteristics of Abe administration

65

Education, Defense
others25.9＋0.8

Education, Defense,
others…

Tax
57.7

Block grant to local
governments
15.6

＋0.3

Block grant
to local…

Tax
58.0

Others5.4
Borrowing
6.1

Social security
32.5（33.3％）＋20.9

SocialDebt service
Security…
14.3

Others2.6

Borrowing
28.3

Debt service
23.5

＋9.2

Trillion Yen
Initial budget※Data from Budget papers from Ministry of Finance Japan
Increase in social security and debt service between FY1990 and FY2017 is nearly equal toadditional borrowing by debt-financing bond (yellow box)

Revenue
97.5

Expenditure
97.5【FY2017】＋31.3

Expenditure
66.2【FY1990】

Revenue
66.2

Borrowing
5.6

9. General Account of Japanese governmenta. More reduction in fees and increase in the amount of scholarships
b. Free tuition fees applied to students from low income family who doesn't pay local individual
income tax
Eligible for students in 4-year and 2-year universities and vocational colleges
National universities: free tuition fees
Private universities: subsidy of national university's tuition fees + some additionalc. Some conditions for students
Good educational performance not only in high school but also in universities
d. Some conditions for universities
・Some teachers having practical business and their classes provided・Some board members outside universities
・Strict performance evaluation for students
・Financial and management information open to public

3. Free higher education / starting in April 2020

a. Free tuition fees for students who go to private school and their annual income is below about
5.9 million Yen

2. Free private high school / starting in 2020

a. Free fees for 3-5 year children using childcare center, kindergarten and certified children centerb. Consider if other relevant private facilities are included as ones qualified for free feesc. Free fees for 0-2 year children which families don't pay local individual income tax

1. Free early childhood education / starting in April 2019 and 2020

7. The scheme by the Package, Dec 2017

10

8

8.6
7.9

14.3
10.1

France

6.0

2.1

1.1

1.3

1.3

1.4

1.3

2.2

2.9

3.6

3.7

0.7

3.8

1.2

2.7

3Family

0.5

0.5

0.2

0.6

0.4

0.8

0.7

0.9

1.4

1.8

0.1

0.2

0.2

0.2

4ALMP

3.9

1.4

1.7

6.0

3.6

6.5

3.8

4.8

5.9

6.8

3.0

4.1

3.8

3.8

5Others

Total A

21.1/21.4

9.3/11.5

23.1/25.4

26.3/23.7

28.6/25.2

22.9/25.6

24.8/24.6

31.5/31.2

27.4/25.3

29.0/25.4

18.8/28.8

21.9/25.0

16.9/20.0

18.1/19.8

Total B

25.4/61.0

12.5/39.3

3.2
4.4

26.3/65.3

3.2

29.8/65.4

32.1/62.8

3.5
3.5

27.4/59.2

28.5/63.9

3.7
4.5

36.1/63.3

32.6/62.3

35.1/62.9

23.0/59.1

26.9/60.1

21.5/53.6

22.0/62.0

4.6

5.2

6.1

4.2

5.1

2012 4.6

3.9

6Education

9

11

41.8

31.8

40.3

45.6

51.1

46.3

44.6

57.0

52.3

55.8

38.9

44.9

40.1

35.5

7GG exp※Data from OECD Social Expenditure and Education Database ALMP: active labour market program
Total A = 1+2+3+4+5, small numbers in Total A=Net total social expenditure (including private spending and taxation)
Total B = Total A + 6, small numbers in Total B=the ratio of spending to general government total expenditure (col.7)

8.7

3.8

2.5
Korea

OECD average

Others

7.8

12.1

6.4

6.8

16.4
12.0

7.9

6.4

Japan

Spain

South Italy
EuropeNetherlands

6.6

10.0

SwedenContinental Germany
EuropeNordic

6.7

10.1

8.0

7.1

6.6
7.0

7.1

6.3

2Health4.5

5.0

1Pension

Denmark

USA

Anglo- Canada
Ameri
can UK

Australia

10. Public spending in 2013, % of GDP

3. The government tries to intervene education in universities by
imposing conditions, but does it undermine the independence?

2. Does the quality of education improves really? Low income
people should be supported, but do they study more harder than
before? Do teachers provide more better educational services?
Free tuition fees mean no additional resources for education andresearch in universities. How can they improve the quality andperformance with it ?

1. Does it really contributes to reducing educational disparity
between the rich and the poor and improving educational
opportunities?

8. Major Issues on the scheme

USA

Denmark

4.00

5.00

4.00

8.00

10.00

12.00

14.00

Compensatory social spending (% of GDP)Japan

France

16.00

Spain

Portugal

Austria

Finland

18.00※Data from OECD Social Expenditure Database
Compensatory = pension + unemployment Social investment = family + ALMP + education

6.00

TurkeySo
Swedenc
10.00
iNorwayaUK
Belgium% ◇Icelandslp 9.00
Irelando eif nn
d 8.00NZv
Luxembourg
G i
e
D n
s
7.00
P g
OECD averagetGermany
Australia Switzerland Netherlands
m
e
6.00
n
◇KoreaCanada
t

11.00

12.00

Italy

12

20.00

11. Compensatory spending vs social investment

(

)

66

3. Japan should invest more in education to develop human resources, but it isregressive to subsidize education in general. Politicians are always reluctant to
tax hike, so additional spending is likely to be financed by borrowing. We need tocome up with more effective ways for education such as ICLs.

2. Great many policy and advisory councils have been set up to discuss these
economic policies, but key issues have already been decided by the government.
So, these councils only played the role of political shows. Major policies andinitiatives such as consumption tax hike postponement and free education wereintroduced without detailed analysis and discussion within the government andruling parties. A few staff including political advisors in PM Office havemaneuvered policy-making on key issues by controlling both ruling parties &
relevant ministries. Senior civil servants looked like "yes-men" to PM.

1. The Abe administration is exceptionally strong, so they can engage instructural reforms that prompt significant objections; as an example, it enacted
the national security legislation. But this event was exceptional; indeed, they are
not interested in urgently needed fiscal consolidation and social welfare reforms,
because addressing these issues will negatively affect their electoral prospect.

12. Conclusion

13

67

Three Views of Cost Sharing in
Education

The University of Tokyo

Masayuki Kobayashi
Center for Research and Developmentof Higher Education

Higher Education Finance andStudent Aid in Japan

2

Cost Sharing in Higher Education:
International Comparison

Source: OECD, Education at a Glance 2017.

•

Three Views of Cost Sharing in Education• Trends in Tuition Fees and Aid Policy• Higher Education Finance in Japan• Tuition Fees in Japanese Higher Education• Background to the Reform of Student Financial
Aid Programmes• Outline of Two Reforms of Student Financial Aid
Programs• New Economic Policy Package, December 2017
• Problem of Information Gap• Challenges and Perspectives

Contents

3

1

68

6

6

Education System in Japan

4

Trends in Tuition Fees and Student
Aid Policy

7

185

9
Specialized
Training
College

2,934

0.4*

52

610

National

Enrollments

25*

4

6.7

150

Publicthousands

622*

2

122

2,100

PrivateNote: A new type of vocational universities and colleges will be established from 2020
Note: * Including high and general programs
Source: MEXT, School Basic Survey 2016

3

51
College ofTechnology

3

324

17
JuniorCollege

600

91

86
University &College

PrivatePublicNational

Control

Numbers

Higher Education System
in Japan 2016

5

7

Cost Sharing, Tuition Fees and Aid
Policy

69

10

8











The Council on University Establishment and School Corporation
University and College Subcommittee of the Central Council on Education

Contracts: Mid-term planning and mid-term objectives (every six years)
Evaluation by National University Corporation Evaluation Committee
Evaluation by the National Institute for Academic Degrees and University
Evaluation

Subsidies through The Promotion and Mutual Aid Corporation for Private
Schools in Japan
Evaluation by the certified accreditation bodies

Data: Research Institute for Higher Education, Hiroshima University

Data: MEXT (Ministry of Education).
10

Changes in Governmental General Subsidies
to Universities, Colleges and Sciences,
Current Yen

8Research Grants from Japan Society for Promotion of Science and MEXT
Student Financial Aid by Japan Student Service Organization



For Private Us & Cs







For National Us & CsFor All Universities and Colleges

The Financial Roles of the Ministry of Education(MEXT) for Universities and Colleges

11

9

•

More than twice the Japanese GDP

At the end of fiscal year 2014, the Japaneseaccumulated government debt reached about one
thousand trillion yen

11various incentives for competitive funds
to universities and colleges.
• COE, the Center Of Excellence
Programs for R&D, etc.
• Global 30• Super Global Universities 30, 2014• GP, Good Practice programs forteaching, student support, and regional
contributions, etc.
• Other initiatives to facilitate reforms• Japanese Government has createdAcquisition of Public Funds:
Financial and Market Driven Reform

9

Very stringent budget policy to improve the deficit• But Japanese society has many financial problems
such as the aging society, increasing social care,
medical care, and education.
• Difficult to increase tax revenue, especiallyconsumption tax (now 8%, rising to 10% in 2020)• We have a serious dilemma between stringent financeand strong demands for public money.
••

Stringent Public Finance

70

14

12

Decreasing public block grants to universities (Onepercent per year for every National U & C)
Increasing competitive grants to universities
Need to acquire external financial resources such as
grants, contracts, and donations

Decreasing governmental subsidies
Decreasing revenue from tuition fees due to the decline inabsolute numbers of enrollments
Difficulty of rising tuition fees National Us & Cs: Cap of up to 20 percent tuition rise Private Us & Cs: Fear of losing applicants

Drastic increase in the number of borrowers of
JASSO type 2 (low-interest loan)Financial difficulties of HEIs







2004 Incorporation of National Us & Cs

Expenditure

Data: MEXT, Ministry of Education, Culture, Sport, Science and Technology

Revenue

14

Annual Revenue & Expenditure of National
Universities, 2013







Changes in HE Policy &Financial Squeeze in
Financing Policy

12

15

13

13

Tuition Fees
Data: National Center for University Finance and Management

External
Funds

Tuition Fees and External Funds in
National Universities and Colleges
2009

Data: MEXT (Ministry of Education)

Changes in Revenue of National
Universities and Colleges

15

71

16

•

•

•

•

•

•

•

•

•

•

•

16

Decreasing youth population
Rising tuition fees
Very stringent public financeDecreasing public subsidies to higher education
Decreasing family income and heavier burden of educational costs
on families
Parents’ very strong willingness to pay the cost of attendance for
their children
Inequality of higher education participation rates by income class
Instability of graduates’ employment
Student loan repayment burden and loan aversion problems
Information gap and financial literacy problems
No major reform of JASSO student loan programs since theirestablishment in 1944

Background to the Reform ofStudent Financial Aid Programs

Source: MEXT

Data: MEXT (Ministry of Education)

Ratio of public
subsides to total
expenditure

Changes in Public Subsidies to Private
Universities and Colleges

18

Metropolitan
areas

Other areas

95% of university
entrants are under 19
years old

Rapidly Decreasing Youth
Population (18 year-old)

19

17

Reform of National University Funding Subsidy allocation differentiated into three types(World class, Strong in special field, Contribute toregion) of National Us & Cs and introduction of
performance funding Reform of university funding system for “DesignatedNational University” to make it easier to acquire
external funds: Tokyo, Kyoto, and Tohoku University
Plan to establish a new type of vocational university tostrengthen the relationship between HEIs and industry
and to stimulate competition among HEIs
Reforms of student financial aid programs

Note: Metropolitan Areas = Tokyo, Saitama, Chiba, Kanagawa, Kyoto, Osaka, and Hyogo







Recent Reforms of Higher
Education Finance72

Source: MEXT
Note: the ratios are the average tuition fees to average monthly disposable household income

22

National

PrivateChanges in the Ratios of Tuition Fees
to Family Monthly Disposable Income

20

Changes in University Tuition Fees:
National Us & Cs in Japan(2005 Constant Yen)

agree

0

5.8

20

disagree

26.5

29.9

33.5

40

80

3.4

100

14.1 2.1

17.7

19.8

strongly disagree

60

57.3

46.6

43.4

Source: Parents of High School Leavers Survey 2016.

strongly agree

Parents should pay all cost ofa�endance

Children should pay all cost byborrowing loans

Won't take out loans%

How Will You Pay the Cost of
Attendance of Your Children?

Source: MEXT

(注）平成24年度

Tuition Fees of Japanese Higher
Education Institutions in 2012

23

21

73

Source: Ministry of Health, Labor and Welfare

Note: Turnover within three years after graduation

Firm size

Changes in the Turnover Rates of
University Graduates by Firm Size
(Number of Employees)

Source: MEXT and JASSO, Student Life Survey

26

24

Changes in the Revenue of National
University Students Not Living with
Parents

42.4%

41.1%

25

0%

40%

50%

15.0%

4.5%

11.6%

60%

1.0%

unnecessary

high family income

30%

11.9%

9.7%

21.7%

ineligible due to academic achievement

20%

42.0%

7.5%

do not know well

10%

32.1%

31.6%

23.6%

5.9%

anxious about repayment in the future

8.9%

70%

80%

36.0%

43.3%

41.9%

43.9%

90%

27

100%

Loan Aversion of Parents Not Applying
for JASSO Loans by income class

Source: Parents of High School Leavers Survey 2016.

〜462

487〜650662〜812825〜10371062〜

family income (ten thousand yen)(source) 2006 CRUMP Survey, 2012, 2013 and 2016 High School
Parents Survey

Inequality of Access to HE by
Income Class: 2006 to 2016

74•

Two cosigners (parents and relatives)

Type I: Totally interest free (not indexed to CPI), both needsbased and merit-based criteria except for students from lowincome families
Type II: Low interest (capped to 3 percent), currently 0.01 to 0.23
percent, for low- and middle-income families
Deferment of max. ten years, if annual income of borrower is lessthan 3 million yen
Penalty fee is 5% of each repayment
Mortgage type (fixed amount of repayment per month) only till2016
New income contingent repayment plan for Type I loans since2017
Two options for guarantee repayment (borrower’s choice)• Guarantee fees (about 0.6 to six thousand yen per month)

Source: JASSO

30

Changes in the Numbers of
Borrowers of JASSO Student Loans

•

•

•

•

•

•

•

Japan Student Service Organization(JASSO)
Scholarship Loans

28





















Widening inequality of HE access among income classes→ Facilitate access of low-income class students
Overall default rate of new borrowers of JASSO loans is 95%.
Tightening financial constraints on higher education →Ministry of Finance requires improvement in default rates
JASSO strengthens repayments collection→ Family burden of repayment is becoming heavier, inparticular among low-income families
Loan aversion among low-income families
Need to mitigate the heavy family burden of higher education
expenditure and make access to HE more affordable
No public grants for undergraduate students except tuition
waivers
Reform of student financial aid programs required

Roots of Growing Concerns about
Student Financial Aid Policy

Source: JASSO

31

29

Current Status of Student Loans
by Japan Student Service
Organization (JASSO) 2014

75

2,000
yen

14,400yen

32

The biggest policy agenda of Japanese Government andpolitical parties.
One is establishment of new income contingent loan
repayment plan.
Ministry of Education established an ad-hoc committee
in April 2015, which proposed a new grant program forundergraduates in August 2016.
The second is establishment of a new grant program forundergraduate students.
Ministry of Education established an ad-hoc committee
in April; it proposed a new grant program forundergraduates in December 2016.
The new programs were established in 2017.

1.44

Deferment if a borrower’s annual
income is less than 3 million yen(maximum ten years)

3

8,900
yen

4

13,500yen

5

18,500 yen

34

Borrower’s
annual Income(million yen)Mortgage type repayment
for borrowers graduating
private university and notliving with parents

New Income Contingent
Repayment Plan for JASSO Type I
Loans
Monthly repayment













Two Major Reforms of JASSO Student Aid Programs

•

•

•

•

•

•

•

•

•

•

•

Characteristics of JASSO ICL

Purpose: For mitigating the loan repayment burden and loan
aversion of low- and middle-income borrowers

Collect as much repayment as possible
Make the scheme as generous to borrowers as possible

33

Type I (no interest) only
Repayment rate: 9% of taxable income
Income threshold: An annual income of about 1.44 million yen(non-taxable income of a single person)
Repayment for borrowers under threshold income is 2,000 yen permonth.
Maximum ten-year deferment if annual income is less than 3
million yen
About 2 to 3 thousand yen per month is required for guarantee
fees (personal guarantees (cosigners) scheme is not allowed)
Conventional mortgage type repayment is available (borrower’s
choice)Mortgage type repayment requires either guarantee fees or35
cosigners (borrower’s choice)••

Trial to reconcile two contradicting requirements under very
severe public budget constraints•

New Income contingent repayment plan for
JASSO type I (interest-free) loan•

Purpose: For students from families facing extreme economicalhardship• Eligibility (1) student from family with non-taxable income(about 2-3 million yen annual income)• Eligibility (2) recommendation of a high school headmasteraccording to the JASSO eligibility criteria guideline
e.g. Academic achievement, excellence in sport or arts
• Amount of grant is 20 to 40 thousand yen per month• About 20 thousand recipients a year by 2020 (it is estimatedthat there are around 60 thousand eligible students )Grants for undergraduate students

Reforms of Student Financial Aid Programs:
Grants for Undergraduate Students

76$54,126

Withholding fromincomeInterest subsidies

Death or disabled

IncomeThresholdCollection
MethodPublicSubsidies

Written-off

•

•

•

•

•

•

0 to 8% of
Taxable income

Repayment

30-yearrepaymentInterest
subsidies

Withholding
from income£2.1 million

9% of(income –threshold)

Tuition loan
andMaintenanceloan

The United
Kingdom

Death ordisabled

None (partly
subsidized)

Checks andothersVariable byfamily size

0 to 15% of
discretionary
incomeIncome based
repayment
and others

The UnitedStatesDeath ordisabled

Cap of 2.5%

Withholding
from income

18.56 million
Won

20% of(income –threshold)Incomecontingent
loans

Korea

Death ordisabled

Interest
subsidies

Withholding
from bankaccount

1.44 million
yen (single
person)9% of taxable
incomeIncomecontingent
scholarship
loan

Japan

38

A huge two trillion yen per year for assistance to families inpreschool and higher education.
There are no tuition fees in public elementary and juniorhigh school.
The tuition fees of public senior high schools have been
waived since 2010.
There are substantial subsidies to tuition fees for privatesenior high school students.
Public financial aid both for preschool and higher educationis very scarce.
Thus the targets are families with children in preschool andhigher education.

Background of New Economic
Policy Package December, 2017

HECS-HELP

Name of ICL

Australia

Income Contingent Loans in FiveCountries

36

Problems of New Economic Policy
Packages: Higher Education

37

Decided by the Cabinet, which means the policy is not changed byother councils and committees such as MEXT’s Central Council for
Education
Student financial aid for very low income families will be allocatedabout eight hundred billion yen from 2020.
This is a truly epoch-making event in Japanese student financial
aid history.
The tuition of national universities and colleges (about fifty-four
thousand yen) are waivered for those families, and an additional
grant for living costs will be provided.
For private HEI students, more tuitions are waivered than national
and public universities and colleges.
New programs for students who have sudden changes in family
situation, such as death or loss of job of parent, will be established.

eligibility of the new grant• (1) Strict evaluation of student academic
achievement• (2) Disclosure of financial statements of
HEIs• (3) At least 20% of executive board
members must be from outside HEIs
• (4) At least some academic subjects must
be taught by “business persons”
39• Four conditions for HEIs to qualify for the

•

•

•

•

•

•

New Economic Policy Package
December 2017

77

•

•

•

•

•

•

•

•

•

•

42

Masayuki Kobayashi and Shiro Armstrong, Financing Higher Education in Japanand the Need for Reform. Mimeo.
Kobayashi, Masayuki (ed.) (2016) Perspectives of Student Financial
Assistance Policies: Lessons for Japanese Higher Education, Center for
Research and Development of Higher Education, The University of Tokyo/
Japan Student Service Organization. http://www.he.u-tokyo.ac.jp/wpcontent/uploads/2014/04/intro-to-conclusion-1.pdf
Kobayashi, Masayuki and Liu Wenjun (2013) Access and Cost-Sharing inJapanese Higher Education: Tuition and Student Financial Aid Policy
updated in 2013. Center for Research and Development of Higher
Education. http://www.he.u-tokyo.ac.jp/wpcontent/uploads/2014/04/CRDHE-working-paper-No.-8.pdf
Kobayashi, Masayuki (2008). Equality and Cost-Sharing in Japanese Higher
Education, in Kobayashi, Masayuki (ed.). Worldwide Perspectives ofFinancial Assistance Policies: Searching Relevance to Future Policy Reform
for Japanese Higher Education, Center for Research and Development ofHigher Education, The University of Tokyo.

English References

Extend student loan recipients• For Type II borrowers• Toward a universal scheme: For all students such as HECS toprevent adverse selection
Introduce a repayment scheme withholding directly from salary or
income related with the tax system using the “My number system”
Introduce a written-off scheme as in the UK
Reform for a more simple and easy-to-understand system
Improve the information gap between knows and not-knows• New initiative: Scholarship Advisors• Facilitate financial literacy of teachers, parents, and students
Facilitate and deepen the dialogue between the “free-of-chargehigher education” proposal and student financial aid, in particular
how to use the expected increasing public money to education

Challenges: Income Contingent
Loans for All Students

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Japanese References 1

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It is difficult for high school teachers and counselors themselves to makemore efforts to give advice and counseling to students.
In Japan, JASSO cannot have ample power to inform high school teachers,
students and parents because of the stringent budget.
There are few advisory organizations on student financial aid. Cf.
CollegeBoard, ACE, NASFAA
Scholarship advisor program was established in 2017 to improve theinformation gap.

小林雅之 2017年「高等教育機会の格差の実状と課題」 『生活協同組合研究』 493, 14-24頁。
小林雅之 2017年「新所得連動型奨学金返還制度の創設」 『生活福祉研究』 93, 29-41頁。
小林雅之 2017年「奨学金制度の転換と大学の課題」 『大学時報』 373, 52-59頁。
小林雅之 2016年「我が国の高等教育の課題 ー特に教育費負担と奨学金の在り方について」 『論究』 第13号, 23-36頁。
小林雅之 2016年「学生への経済的支援制度の転換」 『IDE −現代の高等教育』特集 学生への経済支援 No.588, 4-10頁。
小林雅之 2016年「授業料と奨学金政策の動向・・・英米仏を中心として」『大学マネジメント,』Vol. 12
No. 7, 12-18頁。
小林雅之 2015年「教育費負担と一億総活躍社会」第一回一億総活躍社会に関する意見交換会
https://www.kantei.go.jp/jp/singi/ichiokusoukatsuyaku/iken_koukankai/dai1/siryou3.pdf
小林雅之 2014年「教育投資・財源の検討のために 高等教育の場合」教育再生実行会議第３分科
会第２回
https://www.kantei.go.jp/jp/singi/kyouikusaisei/bunka/dai3/dai2/siryou1.pdf
小林雅之 2013年「大学の教育費負担 —誰が教育を支えるのか」上山隆大他編『大学とコスト』岩波書店。
小林雅之 2013年 「教育機会の均等」 耳塚寛明編 『教育格差の社会学』 有斐閣 53-77頁。
小林雅之・劉文君 2013年『オバマ政権の学生支援改革』東京大学・大学総合教育研究センター 。
43
小林雅之編 2012年 『教育機会均等への挑戦 −授業料・奨学金の8カ国比較』東信堂。

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King, Jacqueline E.(2004) Missed opportunities: Students who do not apply for
financial aid. Report for American Council on Education.
King, Jacqueline E. (2005) Students failing to apply for financial aid. The
Presidency, Winter 2005(27-28).
Kantrowitz, Mark (2009) Analysis of why some students do not apply for financial
aid.
Kantrowitz, Mark (2011) Reasons why students do not file the FAFSA.

There are so many high school students who do not apply for Federal Pell
Grants even though they are eligible.

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Information gap means the disparity between “knows and notknows.”•

Problem of Information Gap

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小林雅之 2008年 『進学格差』 筑摩書房。

小林雅之 2007年「高等教育機会の格差と是正政策」 『教育社会学研究』 80, 47-70頁。

平成23-26年度文部科学省科学研究費基盤（Ｂ）「教育費負担と学生に対する経済的支援のあり方に関する実証研究」

平成25年度文部科学省先導的大学改革推進委託事業「高等教育機関への進学時の家計負担に関する調査研究」

http://www.mext.go.jp/a_menu/koutou/itaku/1347640.htm

平成20-21年度文部科学省先導的大学改革推進委託事業「高等教育段階における学生への経済的支援の在り方に関する調査研究」（http://www.mext.go.jp/b_menu/shingi/chukyo/.../2009/07/.../1281308_8.pdf）

日本学生支援機構・東京大学大学総合教育研究センター 2016年『高等教育の費用負担と学生支援 ー日本への示
唆』

日本学生支援機構 2015年「イギリスにおける奨学制度等に関する調査報告書」

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小林雅之 2009年 『大学進学の機会』 東京大学出版会。

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日本学生支援機構 2010年「アメリカにおける奨学制度の調査報告書」
http://www.jasso.go.jp/statistics/scholarship_us/scholarship_us.html

http://www.jasso.go.jp/about/statistics/student_loan_uk.html

小林雅之 2012年「家計負担と奨学金・授業料」日本高等教育学会編 『高等教育研究』 第15集, 115-134頁。

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Japanese References ２44International Workshop on
Challenges of Higher Education Governance andFinance Reform in East Asia
November 21 - 22, 2018
Center for Research and Development of Higher Education,
the University of Tokyo
Participants of Presentation
Hideo Akabayashi (Keio University, Japan)
Roger Geiger (Pennsylvania State University, USA)
Motohisa Kaneko (Tsukuba University, Japan)
Masayuki Kobayashi (The University of Tokyo, Japan)
Nobuko Nagase (Ochanomizu University, Japan)
Jung Cheol Shin (Seoul National University, Korea)
Hideaki Tanaka (Meiji University, Japan)
Wang Jie (The University of Tokyo, Japan)
Wang Rong (Peking University, China)
Akiyoshi Yonezawa (Tohoku University, Japan)
1

79Contributions from Research Group
Akihoro Ehara (Kwansan Gakuin University, Japan)
Yoshitaka Hamanaka (National Institute for Education, Japan)
Liu Wenjun (Toyo University, Japan)
Kazunori Shima (Tohoku University, Japan)
Kana Yoshida (Hiroshima University, Japan)
Wang Shuai (The University of Tokyo, Japan)
Other Participants
Hu Yuntong (Graduate School, The University of Tokyo, Japan)
Luo Qin (Graduate School, The University of Tokyo, Japan)
Kiminori Nagano (Certified International Investment Analyst, Japan)
Shumpei Sano (Chiba University, Japan)
Kenzaburo Shibata (Tokyo Metropolitan Unversity)
Claire Woo (Australia National University, Austlaria)

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