International lenders have informed lawmakers in Islamabad to defund public universities as part of the austerity measures of the new loan agreements. Businesses engaged in the provision of higher education are likely to eye these negotiations with great interest as they stand to benefit enormously if these measures are to be implemented by the government.
If the Ministry of Finance makes this budget cut, large sums of money can be freed up for cash-strapped Pakistan. This is because the current budget to fund public universities stands at a staggering PKR 61 billion annually.
While unpopular, the argument for budget cuts does have its merits: 80 per cent of public universities are expected to default in 3-4 years.
Is it better to just cut losses and let the universities fend for themselves?
International lenders certainly think so as they suggest that universities, after being defunded, should boost enrollment levels, fire unwanted staff and most importantly, increase tuition fees to stay afloat.
In the absence of government funding, will these measures alone save public universities from going bankrupt?
The provision of education is a multibillion-rupee business in Pakistan. Following these new developments, education businesses are preparing to mint money off of the wave of students that will likely come their way.
If public universities are to implement fee hikes, students are likely to opt for private universities. This is due to the fact that private universities are more likely to possess better facilities than their public counterparts.
Furthermore, if public universities start to default, private universities will get a further boost in enrollment levels, as students will be forced to switch institutions to continue their education. This migration of students from public to private universities will result in higher profit levels.
This influx of students into these private institutions will serve to benefit their owners directly. However, the same cannot be said for students who will have to bear a higher cost to earn their degree. More concerningly, the closure of public universities might result in the monopolisation of the education sector as public institutions will cease to be valid alternatives.
For now, all eyes are on the Ministry of Finance. Will public universities be defunded to appease international lenders, or will budget cuts be sought elsewhere?
