Tuesday 3 July 2007

Chinese Universities suffer from unpaid loans to students

So Chinese students are not paying their tuition fees to their domestic Universities. In the UK non-payers do not receive their marks and therefore their degree until payment is forthcoming.

This article makes the difference in costs between a UK/US degree and a Chinese degree clear. In the UK a typical masters course cost around £10,000 or $20,000. In contrast the average Chinese tuition fee is £250 or $500. Is the value/quality of a UK degree worth 40 times as much? Do students with a UK degree earn 40 times that of a domestic student? (Admittedly this is a gross simplification of a complex issue).

However, the bottom article also states that even at $500 the cost of education in China means it is close to the top in terms of the cost relative to per capita GDP. It is therefore all the more astonishing that 50,000 Chinese students a year come to the UK for a higher education.

If education is a public good then maybe the Chinese government should be willing to accept a degree of non-payment. In my opinion this ChinaDaliy article suggests that the government has little idea on how to solve this problem (depending on how you define a problem). See article below this one.

Universities owed millions of yuan in unpaid loans
BEIJING -- Many Chinese colleges and universities are owed millions of yuan because students are unable to, or choose not to, pay back tuition loans, the Ministry of Education said on Monday.

"We have found that many universities and colleges have several million yuan of defaulted tuition fees, some have nearly a billion," Cui Bangyan, a senior ministry official said at a press conference in Beijing.

Cui said that the average annual tuition charge for one college student on the Chinese mainland has remained between 4,000 and 4,500 yuan (513 and 577 U.S. dollars) since 2000, but some majors, particularly at prestigious universities, could cost far more.

"Even the average 4,000 to 4,500 yuan can be a heavy burden for a student coming from some rural, remote or minority regions," Cui said, noting that a college student may spend more than 10,000 yuan a year including tuition, accommodation and other costs.

Cui also said some students pretend they can not afford to pay back the loans or make up excuses as to why they can not clear their debts.

In 1999, China's education authority increased the size of the enrolment to its higher educational institutions, allowing around 5 million students to go to college each year.

Loans are available to poor students and the government pays the interest on the loan, which has to be paid back in full before graduation.

"Paying tuition on time is an obligation of every college student," Cui said, "if he or she can't afford it, the college, government and the ministry will help him to finish his or her studies."

"Government aid does not mean a free higher education," he affirmed.

"College students should be honest when applying for a grant or loan, Cui said.

To show that the Chinese government does care about redistribution comes the news that:

China promises 50B yuan for impoverished students

The Ministry of Education will spend 50 billion yuan ($6.5 billion) this year to help students from poor families.

The money will come from the budgets of central and local governments. It will go toward the setting of national scholarships, stipends and student loans to ensure these students can continue their education, ministry spokesman Wang Xuming said yesterday.

The funds will cover more than 20 percent of college students and 90 percent of vocational students.

China's institutes of higher learning are one of most expensive in the world relative to per capita GDP, said Liu Shouren, a member of the Chinese Academy of Engineering.

Annual tuition fees have increased to more than 5,000 yuan, about 10 times that of a decade ago, and incomes have not kept pace.

According to a report last year by the China Youth Development Center, education was the No 1 expense of a family.

About 33 percent of a rural family's yearly income went on education, while the figure is about 23 percent for urban families.

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