Financing higher education: perspectives and challenges.

This study examined the relationship between enrolment and financing in higher education. In particular it assessed the relationship between public financing in higher education and universities enrolment and analysed the rate of loan recovery by HESLB. The study employed cointegration technique to assess the existence of long run relationship among variables and descriptive analysis for examining the rate of loan recovering and its contribution to the loan funds. The study used secondary annual time series data from 1980 to 2011 and data for loan recovery from 2006 to 2012. Findings of the study are that there is a positive relationship between enrolment and public financing in higher education. This means that the rate of enrolment to various universities does not occur on itself but it depends on the public financing, where 1 percent increase in public financing leads to 0.13 percent increase in university enrolment. The descriptive analysis for loan recovery reveals that HESLB is not performing well in recovering loans from the past beneficiaries. Findings show that annually on average HESLB recovers 1.8 percent of the total loan given to students since 1994 to 2012 which is very small compared to total demand of students who want loans. Hence, this hinders the process of creating a revolving fund so as to have a self-financing board. Therefore, these results imply that policy makers should make effort towards increasing public spending on higher education, employing efficient methods that ensure high rate of recovering loans and also finding other alternative sources of financing so as to reduce the financing pressure. Among the suggested sources are private sector supports like banks, donors’ support, mobilizing funds from universities’ alumni, encouraging saving by parents for their children and widening the tax base like introducing education levy.