Public Higher Education and Tuition: The Russian Case

I today’s Russia, tuition plays an important role in the economics of public higher education. Many public institutions have become dependent on tuition revenues as the second major source of income after state allocations. Some view tuition as a potential mechanism, when coupled with means-tested financial aid, for rendering higher education more equitably accessible an the increasingly incomedifferentiated Russian society. Tuition policy remains, however, a highly sensitive public issue that adds to the already significant social costs brought about by the postperestroika reforms and reduction in the public safety net. The new private (nonstate) sector of higher education presently accounts for 6.9 percent of the nation’s tuitionbased enrollments. The overwhelming majority of students who pay for their studies are enrolled in public universities and colleges, where 84 percent of students are not yet charged tuition. Students who do pay tuition were either admitted for a second degree or had scores that fell just below the cutoff point for passing the entrance exams. Tuition payments are provided either from individual resources or by sponsoring prospective employers. After a 1993 drop in enrollments in the public sector, admissions to state higher education institutions rose by one-fifth in five years. Close to three-fifths of this growth was accounted for by the increase in admissions with tuition charges in state higher education institutions. Over this period not only the absolute numbers but also the rates of increase in admissions with tuition were higher in state institutions than in nonstate ones. Instruction on a fee-paying basis is geared to the market value of a program and the prestige of the institution rather than to the actually incurred costs. Since the most demand-driven programs—such as those in law, economics, management, and foreign languages—are relatively inexpensive to provide, the tuition revenue is used to subsidize costlier programs and general university operations. Because of fluctuating inflation, instruction is priced on a semester-to-semester basis, making financial planning more difficult for students and parents. Some prestigious institutions require an up-front fee for the first three years of instruction. Others have developed more flexible schemes, offering students several options of tuition payment. Yet another smaller group of institutions has introduced prepaid tuition schemes, in which payment is collected over a short period of several months before admission. Affordability of higher education programs is primarily a function of individual incomes and savings, which are difficult to estimate in today’s Russia. According to official statistics, real disposable incomes have continued to decline in the past two years; 22.5 percent of the population fell below the poverty line; and the incomes of the richest 10 percent of the population were 13.2 times greater than the incomes of the poorest 10 percent. At the same time, experts estimate underreporting of incomes by 40 percent in the nonstate sector, mainly in reaction to the pressure of abusively high tax rates. The total recorded savings rates are low, and the amount of cash kept outside banks can only be estimated. The evidence of an increasingly stratified society calls into question the very existence of a stable and healthy middle class in Russia today. Some 37.5 percent of the employed population have jobs in the public sector, where salary arrears have continued to accrue over the past four years. In 1998, the average salary in education and related fields was half of that in public administration and industry, and a third of that in banking. Public-sector employees include doctors, teachers, social workers, and others who by tradition place great value on advanced education. Recently they have found it increasingly difficult to afford higher education for their children.