University of the Philippines Ad-hoc committee committee to review rev iew tuition and other other fees
FINAL REPORT* The followin g constitutes constitutes the main main repo rt of an ad-h oc committee committee created created in 2005 2005 by President Emerlinda R. Roman to review unde rgraduate rgra duate tuition tuition and other fees at the University of the Philippines. This report is organised as follows: follows: a review of the cur rent system and the pr oblems itit has encou ntered (Section 1) is followed b y three th ree sections sections detailing, detailing, respectively, the rationale and recommendations for c hanges in the level of tuition fees (Section 2), in the prog ram of tuition discounts (Section 3), stipends (Section 4), and in miscellaneous fees (Section 5). A final section discusses issues of implementation and is followed by a conclusion. 1. On the current system and its problems The level and structure of University Uni versity underg u nderg raduate tuition tuition fees were last last re-examined re-examined and a djusted in 198 1989 9 when the Board of Regents appr ove d the Socialized Socialized Tuition and Financial Assistance Assistance Prog ram (STFAP). That program was an unprecedented bold move on the part of the University to “democratise “demo cratise access and ad mission mission to its vario va rious us academic prog pr ograms rams and p romote rom ote fairness and social justice in the U niversity, niv ersity, befitting its status status as a State-sup State-suppo ported rted insti i nstitution tution of higher hig her learni ng” ng ” [BOR [BO R Resolution, 30.1.1989]. The STF AP is based on the principle that “students “students who can afford [it] should should pay at leas leastt the full cost of their UP edu cation as tuit tuition ion fees; and students who cannot cann ot should be granted subsidies in the form of discounts in tuition tuition and other fees, fees, boo k allowances allowan ces and monthly stipends.” Implicitly, Implicitly, therefore, the STF AP entailed entailed first determin determining ing what the “full cost” of a UP education was – effectively effectively an efficiency consideration – and only after that considering equity by designing a program of discounts discou nts and subsidies subsidies to adjust that full cost to take into acc ount indi vidual students’ ability ability to pay. As instituted and practised, pra ctised, the elements elements of the ST FA P were the followi ng : (a) a one-time upward adjustment of tuition fees to reflect the actual or full cost of instruction. instruction. The first first year of STF AP implementa implementation tion saw the adjustment adjustment of UP tuition from almost nominal amounts to P300 per unit for Diliman and Manila, P250 for Los Baños, and P200 P200 for other regio nal campuses. At the time time these these lev level elss approached appr oached those pre vailing in compara ble private uni versities. versities. (b) an a n extensive extensive prog p rog ram of socialised socialised tuition-fee discounts, ranging from 100100- to 75-percent discounts based on ability to pay. (c) a further pr ogram ogr am of cash stipends stipends and allowances afforded to the most deservi deserving ng students, again based on financial need. The means-testing to implement (b) and (c) relies primarily on the family’s income level (standardised for number of members). As a check to possible underreporting of incomes, however, other indicators of financial means means are also also employe d, inclu ding the location of the family family residence, hig h school attended, electricity consumption, number and type of vehicles and appliances owned. A statistical procedure based on the foregoing is then used to classify students into nine (9) socioeconomic “brackets”, each with a respectively assigned financial package. Table 1 shows the currently applicable brackets and their corresponding incomes and tuition-fee discounts under (b): students in brackets 1 to 5 do not pay for tuition; 1 those in brac kets 6-8 6-8 receive
* Prepared Prepared by Emmanuel S. de Dios (chairman), Rene P. Felix, and Helen S. Valderrama. Sincere thanks are due Mr. Rj Angeles, Angeles, Ms. Al thea Rabe Rabe and Ms. Annabelle Annabelle Espadon Espadon for excellent research as sis tance. 1
Children of UP employees fall under Bracket 5.
1
declining discounts of 75-25 percent; and finally those in bracket 9 are asked to pa y w hat is deemed to be “full cost”. Under (c), additional financial assistance is prov ided those in brac kets 1 to 4 in the form of cash stipends ranging from P4,500 to P8,250 per semester (or an average of P6,750), and these are shown in Table 2. Table 1: STFA P b rackets and applicable tuition-fee discounts Bracket 1 2 3 4 5 6 7 8 9
Famil y income Tuition fee Applicable tuition in urban areas discount fee* (pesos) (percent) (in pesos) 0–45,000 100 0 45,001–55,000 100 0 55,001–65,000 100 0 65,001–80,000 100 0 80,001–130,000 100 0 130,001–170,000 75 75 170,001–210,000 50 150 210,001–250,000 25 225 250,001 and abov e 0 300 Source: UP ST F AP Bulletin (2001) *Rates for UP Diliman
Table 2: Stipends by ST FA P b racket (in pesos) STFAP bracket 1 2 3 4 A verage
Living subsidy Book subsidy Lodging allowance Total stipend per semester per semester per month* per semester 6,250 500 400 8,250 5,000 500 400 7,500 3,750 500 400 6,250 2,000 500 400 4,500 4,250 500 400 6,750 Source: UP ST F AP Bulletin (2001) *T he lodging allowance does not apply to students staying in a UP Dorm.
Notwithstanding a g ood deal of debate at its inception, the prin ciples underlying STF AP, it seems fair to say, have now been largely accepted by the University’s various constituencies. The hitherto pre valent notion that state-owned institutions are obliged t o set uniformly lo w (even zero) tuition fees has gradually given way to acceptance of the principle that students themselves – rather than the general taxpayer – should pay for the cost of higher education, subject only to the equity-proviso that poor students who qualify sho uld receive financial relief and assistance. This growing realisation has been prodded on by the stagnation of state-support given the government’s chronic budgetary 2 difficulties ; the spread notwithstanding of privately pr ovided undergrad uate education (though at 3 times of uneven q uality), thus reducing the social case for a pu blic subsidy ; and finally the University’s desire to reinfor ce its intellectual freedom thro ugh financial self-reliance.
2
The idea of students paying their way through higher education (though possibly through state -financed loans) has gained ground even in developed countries not facing budget-constraints demonstrates on the other hand that thi s is not merely a response to the exigency of a budget-shortfall but a general principle to be aff irmed. (See, e.g., “Pay or decay”, The Economist , 24 January 2004.) 3
A public subsidy to an acti vity is justified based on likely positive externalities arising from it, i.e., social benefits not apparent to the individual himsel f. It can be argued that vir tually all the benefits of an undergraduate education are in f act appropriable by the private individual himself, who should be therefore be willing to pay for its cost. Proof of this is people’s demonstrated wil lingness to pay for private college education (and indeed the Philippines already has an unusually high ratio of college-finishers to total its labour-force). The matter may be different, however, for graduate studies in some fields (e.g., the natural s ciences) whose preservation and expansion are nationally si gnificant though not privately profitable.
2
Pressures on the system
Seve nteen years since its institution, ho wever, the initial prog ressive impact of the STF AP has been severely c ompromised b y the failure to adjust it to changin g c onditions. The most crucial influence has been that of continuing price-inflation. Between 1989 and 2004, prices overall have trebled (the Consumer Price Index (CPI) rose from 59.3 to 180.8, 1994 = 100), eroding the real value of the tuition fees set in 1989. In real terms the original tuition fees of P300 and P200 per unit for Diliman and regional units, respectively, ha ve now been red uced to less than one-third of what they were in 1989. In today’s 4 (2004) values, they wo uld be the equi valent of only P98 and P61 per unit, respectively. Matters are even worse when fees are measured against the cost of education generally, which has risen faster than other prices: suc h fees would be n o more than P42 and P28 per unit for Diliman and Manila and the regional campuses, respectively. Figure 1. Real value of UP tuition fees (Diliman) (deflated using CPI and edu cational services price index, in pesos) 350
Educational Serv ices Index
300
Consumer Price Index
300 250 200 150
98.4
100
42.1
50 0 89
90 91
92
93 94
95 96
97
98 99 '00 '01 '02 '03 '04 '04
A leak y bucket
In effect the erosion of the real value of tuition fees extends unwarranted subsidies to students coming from families that could actually ha ve afforded to pay the full cost of instruction. A go od way to appreciate the situation is to cond uct a small thoug ht-expe riment: A student fr om a family earning more than P250,000 (the lower b ound for Brac ket 9) would ha ve been deemed ineligible for any kind of subsidy in 1989. Suppose now this student’s clone had presented himself in 2005, in the meantime that inflation had affected both University fees and the family’s income. Then intertemporal equity would be served if the clone, whose family now earns more than P820,000 (= 5 250,000 × 3.28) , were asked t o pa y for tuition of at least P984 (P300 × 3.28) per unit: both original and clone would have enjoyed the same level of welfare, in particular with neither enjoying any form of subsidy. As things now stand, however, the clone today is being asked to pay not close to 6 P1,000 but only P300 per unit, enjo yin g w hat is effectively a 70-percent discou nt .
4
Updating these to reflec t 2005 inflation (approximately 7.6 percent, based on initial NSO f igures) reduces the current v alues further to only P91 and P76, respectively. Obviously, the longer the delay in adjustment, the larger the gap becomes. Owing to a rebasing by the NSO, the 1994=100 consumer-price index series that formed the basis of the computation for earlier years is not available for 2005; the 7.6 percent inflation for 2005 has been “spliced” onto the earlier s eries. 5
Here, 3.28 is the ratio between the price levels o f 2005 and 1989, with the 2005 CPI obtained as desc ribed in the im mediately preceding footnote. 6
P300 is 69.5 percent less than P984.
3
The hidden subsid y also exists, thou gh to a lesser extent, for people who w ould have been classified unde r brackets 7 and 8 in the past. Althoug h inflation has boosted their incomes to brac ket 9 levels, 7 they nonetheless now pay less in real terms than they would have paid in 1989. Undercoverage
The other side of the inflation coin, of course, is the erosion of the benefits being gi ven to deserving students. That is to say, there are students who would have been deemed qualified for a certain level of support in the past (whether in the form of discounts on tuition, stipends, or both), who are no longer given the same level of real support today. Figure 2: Brac ket creep: Brac kets 1-4 and 9 (as percentages of UP student p opulation) 100 88
90 80
Brackets 1- 4
70
Bracket 9
60 50 40
33.8
30 20
15.8
10
5.2
0 1989-
1991-
1993-
1995-
1997-
1999-
2001-
2003-
1990
1992
1994
1996
1998
2000
2002
2004
Source: Appendix table 1
First, as nominal incomes have risen, the number of qu alifiers for tuition-fee discou nts and stipends has decreased (“brac ket creep”). Fr om as much as 34 percent of the UP student p opulation in 1989, stipend- qualifiers are now redu ced to no m ore than 5 perce nt (2003-2004). (Bracket 5 students account roughly for an additional 5 percent of the undergraduate population.) The fall in the number of qualifiers largely mirrors the rise in inflation whic h p ushes up the nominal incomes of students into the higher brackets; in addition, the manner of implementation of the means-testing formulae may have a r ole to play as well. Conversely, 88 percent of the University’s students can now to be found in the highest tuition-fee brac ket (Brac ket 9), from a figure of only 16 percent in 1989. For the richest students, as already seen, the bunching-up of the University’s students in Bracket 9 is an unwarranted subsidy, considerin g the erosion in real value of tuition fees. For truly needy students, howe ver, that same fact is an undeserved penalty. That as much as 88 percent of the student p opulation is in the full paying brac ket, howe ver, indicates for the most part that a large number of students can pay or do opt to pay the “full” tuition fee. Not onl y has the number of stipend-recipients shrun k, ho wever, so too has the real value of the stipends they receive. In pa rticular, grave questions must be raised about the adequac y of livin g subsidies (an ave rage of P4,250 per semester) gi ven to needy students under t he current system. Again, by 2004, inflation had redu ced what was originally worth a generous maximum stipend of P8,250 to effectively only P2,705 per semester . This is an amount bordering on tokenism, given the
7
For example, a s tudent wi th a bracket 7 famil y income of P180,000 in 1989 would have been charged P150 per unit then. Inflation up to 2005 bumps up the income to P590,000 (= P180,000 × 3.28) and bracket 9, so he is assessed the maximum P300 per unit. But preserving the real value of the tuition fee would have entailed charging him P594 (= P150 × 3.28).
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rising costs of living particularly in urban areas. Scholarships in private universities and even private scholarships administered b y the University pro vide stipends at least three to five times this amount. Partly owing to increasingly inadequate financial support, real obstacles to entry into the University are encountered by otherwise qualified poor applicants. Anecdotal evidence suggests instances when po or students wh o q ualify in the UP CA T an d are entitled to financial assistance are nonetheless unable to avail themselves of their slots in the University. The failure to adjust tuition fees (and, as argued below, miscellaneous fees as well) in the face of inflation not onl y compromises an important source of the Uni versity’s ability to defray the rising costs of instruction but also undermines its ability to implement a truly socialised admissions policy. It will be increasingly difficult for the Unive rsity to ignore the glaring gap between the original intent and subsequent reality of its fees policy; nor can it further delay action to c orrect the resulting inequities. The C ommittee’s recommendations flow fr om this motivation and c ove r the following areas: an adjustment of tuition fees; a reco nfiguration of the structure and scope of the Uni versity’s socialised tuition-fee policy; an adjustment of level and scope of stipends; an adjustment of miscellaneous fees; and suggestions regardin g the phase-in and subsequent readjustments of policy. 2. Tuition-fees The committee followed the example of the original STF AP initiative by first proceeding to define what the “full-cost” of a UP unde rgrad uate education was. Essentially three (3) benchmar ks or criteria were used to assess the adequacy of current tuition fees: (a) the benchmark provided by similar fees pre vailing in c omparable private institutions; (b) the historical standard, adjusted for inflation; and (c) an o wn estimate of actually incurred c osts based on the internal operating b udgets of the vario us campuses. 2.1 Comparison with private tuition The high deg ree of substitution between the University and some private institutions of a high q uality 8 is undeniable, particularly at undergrad uate levels. Unlike state universities, such institutions enjoy no budgetary subsidies and are unconstrained by government rules on audit, compensation, and employment and are thus better able to reflect the costs of a certain standard of education in their fees. A comparison of the Uni versity’s applica ble full tuition fees with those cha rged b y pri vate institutions shows a wide discrepanc y (Table 3). Relative to leading pri vate universities in the national capital region, the Unive rsity’s cur rent tuition fee is any where from 1/3 (UST) to less than 1/7 (ADMU) of those prevailing. The current large gap between the University in Diliman on the one hand and the Ateneo de Manila and De La Salle University is particularly striki ng, since in 1989, after the adoption of the STFAP, tuition fees the three were almost at parity (i.e., P300 for UP Diliman, P327.50 for Ateneo, and P329 for De La Salle). On the other hand, the gap between full tuition fees in regional campuses of the Unive rsity and those of major regional universities is less thoug h still substantial, the former running to ap proximately half to a third of the latter.
8
This may not be true for graduate studies, however, where the breadth and quality of the University’s offerings are unmatched.
5
Table 3. Tuition fees in various universities, 2004 (in pesos per unit-credit) *
Tuition fee per unit-credit (in pesos)
Metro Manila: Ateneo de Man ila Uni vers ity 2,200 De La Salle Uni versity 1,700 Univ ersity of Santo Tomas* 900 Regions Ateneo de Da vao 603 Univ ersity of San Carlos 538 St. Louis Univ ersity 589 Memorandum UP Diliman, Manila 300 U P Los Baños 250 UP Visa yas, Baguio, Mindanao 200 Source : Information supplied by various universities *Indicates a net loss for the year.
Given the data available to the committee, it has not been possible to delineate all sources of variation. A big part of the reason, ho we ver, is clearly to be found in the greater willingness and ability of the better private universities to adjust their fees for inflation. The same fact has allowed them to adjust faculty salaries accordin gly, not only to retain their existing faculty but also to hire those of distinctly higher qualifications (indeed many of them being lost to the Unive rsity itself) in or der to start new academic prog rams or strengthen existing ones. 9
Table 4. Faculty salaries per teaching load unit
(in pesos; figures in parentheses are percentage differentials relative to UP)
Instructor
UP 7,098
As sistant Professor
9,033
As sociate Prof essor
11,019
Full Professor
13,686
ADM U 7,600 (7.0) 11,000 (21.8) 15,400 (40.0) 18,600 (35.9)
DLSU 9,454 (33.1) 13,645 (51.0) 18,312 (66.2) 27,971 (104.4)
UST 7,057 (-0.5) 8,933 (-1.1) 11,248 (2.1) 15,343 (12.1)
Source : Information supplied by various universities
Table 4 presents load-adjusted monthly faculty salaries from some compara ble Metro Manila universities. The University’s pa y-scale generally be co mes less competitive at higher ran ks, the differentials being smaller at instructor and assistant-professor levels and larger for associate and full pr ofessors. A rou gh cor relation is evident between tuition fees (Table 3) and faculty salaries. The UST, where the pa y-structure is most similar to the Unive rsity’s (thoug h even here a full professor’s salary is 12 percent higher) deems it necessary to charge a tuition fee three times (P900 per unit) what UP does, although e ven that rate is barely financially viable and d oes not standardize for quality-differences in faculty. The significantly hig her tuition fees of ADMU (P2,200) and DLS U (P1,700) appear closer to w hat might be an unsubsidised rate entailed by a stronger emphasis on maintaining and attracting a certain quality-level of faculty, as well as a commitment to substantial investment and infrastructure upkeep. The relevance t o the Unive rsity hardl y needs to be pressed, since it is obvi ously these same challenges (faculty retention, investment, and maintenance) that have taxed UP’s capabilities in the recent past, which is the major reason that the gap between itself and some of these other institutions has been rapidly closing.
9
Computed by dividing annual basic faculty salary into the annual fac ulty load-requirement of his/ her university
6
2.2 Adjusting for inflation Since the original structure of fees established in 1989 was de facto judged app rop riate and accepted and legitimate by the University’s constituencies, one may argue there is no reason that those same levels should not c ontinue to be ac cepted, after merely adjusting them for the general increase in prices to restore their real value in relation to other goo ds and ser vices. It is straightforward to state that this amount would have been roughly thrice the current levels: to wit, for Metro Manila campuses P912 and P984 in 2004 and 2005, respectively. For regional units, these would be respectively P608 and P656 for the same two years. If instead the cost of education services had been used as inflator, the blow-up factor would ha ve been closer to seven (more precisely 7.125) than to three. For 2004, therefore, one obtains P2,137 for the Metro Manila campuses and P1,425 for regional campuses. It is somewhat remarkable that the former almost coincides with what some pri vate institutions actually charge. 2.3 Direct cost of under grad uate instruction The reflation of fees relies on the implicit validity a nd legitimacy of the levels set in 1989, merely updating these to restore their real values. The committee attempted a more direct validation of costs as currently incurred by examining the internal operating budgets of various units of the University. An effort was made to include o nly those elements of cost that relate to unde rg raduate tuition. The results are displayed in Table 5. For the system as a whole, the estimated cost of undergraduate instruction is P1,531 per student credit-unit, with significant variation acr oss campuses. Figures range from a high of P2,246 for Mindanao to the lowest at P1001 for Baguio. Diliman is slightly above average at P1,665. The high cost per student credit-u nit in Mindanao is und oubtedly due to its nature as a start-up, with a small student pop ulation relative to a large initial fixed in vestment and staffing, which shows up in high facilities cost, MOO E expenses, and even faculty servic es cost. A fairer notion of the amounts inv olved is probably better provided b y mature campuses such as Diliman, Manila, and Los Baños, where enrolment has stabilised. O n this basis, the “full cost” actually inc urred on each student creditunit is likely to be between P1,500 and 1,600 for the larger campuses, and a somewhat lower P1,000 for regio nal campuses. Table 5 Estimates of direct costs of undergrad uate instruction at UP (all in pesos except for student credit-units (SCU )) Campus
Total student credit units (SCU)
Faculty PS/SCU
Admin Cost/SCU
Annualized facilities Cost/SCU
MOOE per SCU
Lib and lab per SCU
Total direct cost
UP Diliman
571,579
546.07
325.93
534.70
185.85
72.97
1,665.52
UP Manila 1/
125,772
451.48
240.93
396.32
268.40
108.80
1,465.93
UP Los Baños
360,899
517.39
242.39
158.73
94.29
44.09
1,056.89
UP Baguio
69,791
358.19
133.13
294.52
125.69
89.55
1,001.09
UP Visayas
158,910
641.24
475.18
340.71
142.17
35.36
1,634.66
23,327
684.04
277.66
852.18
374.13
58.86
2,246.86
1,310,278
569.56
332.95
387.19
173.84
67.57
1,531.11
UP Mindanao Total UP system
1/ Excludes College of Medicine and School of Health Sciences since SCU for some courses could not be computed
It should be noted, however, that these figures contain both an upward and a downward bias, the sign of the net direction being uncertain. To the extent that UP faculty salaries are uncompetitive relative to those in private institutions (as already noted in Table 4), the figures are underestimates. As part of sensitivity analysis, therefore, salaries are simulated to be either 64 percent higher (appr oximating DLSU levels) or 26 percent (appr oximating ADMU levels). The results are given in
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Table 6. Imputing these figures raises the cost of instruction to P1,644 and P1,809 per student creditunit, respectively. Table 6 Estimates of direct costs of undergrad uate instruction at UP for various chan ges in faculty salaries (pesos per student credit-unit) Campus
Actual
With 26% adjustment of faculty salaries
With 64% adjustment of faculty Salaries
UP Diliman
1,665.52
1,776.96
1,939.84
UP Manila
1,465.93
1,555.22
1,685.72
UP Los Baños
1,056.89
1,162.85
1,317.72
UP Baguio
1,001.09
1,077.55
1,189.30
UP Visayas
1,634.66
1,742.93
1,901.17
UP Mindanao
2,246.86
2,355.18
2,513.48
Total UP System
1531.11
1,644.25
1,809.59
1/ Excludes College of Medicine and School of Health Sciences since SCU for some courses could not be computed
On the other hand, these figures may also con ceal a degree of slack. As an example, UP’s ratio of faculty to staff is distinctly lower than those of selected private universities: 0.6 for UP versus 1.1 for DLSU, 1.6 for ADMU, and 2.8 for U ST. This at least suggests there may be a degree of ove rstaffing with respect non-academic person nel, which may a rtificially bloat costs. 2.4 Proposed adjustment Havin g considered these various benchmar ks, the committee prop oses the adoption of the following schedule of undergraduate tuition fees (supplemented b y the associated socialised scheme to be discussed in section 3 below) beginning in academic year 2006-2007 and to be applied only to the entering freshman class: Table 7 Prop osed adjustments in undergraduate tuition fees (per c redit unit, in pesos) Campuses
Group I: Diliman, Manila, Los Baños Group II: Baguio, San Fernando, Visa yas, Mindanao
Proposed Existing
1,000 600
300 200
It is proposed that the University henceforth adopt only two (2) base tuition rates for two groups of campuses. Diliman, Manila, and Los Baños are gr oupe d together (thus ending Los Baños’s currently odd halfway status) and c harge the same tuition fee; this owes primarily to the similarity in the pr ofiles of the student markets they serve. The other regional campuses are placed in another group that charges lower fees for the same reason. This pro posal essentially opts for the minimal step of restoring the real value of fees already established and accepted in 1989. Tuition fees were indexed to the general level of prices (CPI) rather than to the prices of educational goods and services, which have historically risen more rapidly. Under the prop osal, therefore, a 15-unit semester cove red b y inflation-adjusted tuition fees should cost P15,000 and P9,000 for Gr oup I and Group II campuses, respectively. It would have been arguable – using Group I rates as an example – to set full tuition fees at levels of P1,500, as direct costs would imply (Table 5), or even closer to P1,700-2,000, as the benchmark of the best private universities indicates (Table 3) or as a fuller rec koning of faculty costs wo uld sug gest
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(Table 6). Chargin g the higher amou nts, howe ver, entails a number of presumptions that the committee is unwilling to make at this time. The markedl y hig her fees in some private uni versities may partly emb ody the peculiar strategies of rapid g ro wth and faculty recruitment on the part of such institutions, especially those starting from a smaller base. Noticeably higher faculty compensation may be set to facilitate lateral recruitment (especially at more senior levels), and this will undoubtedly be reflected in the fee structure. The same observation holds with respect to the demands of vigorous infrastructure spending. The University admittedly also confr onts grave pr oblems of faculty retention and inadeq uate infrastructure spending ; it is not ob vious, howe ver, that it shares these goals to the same extent as some private institutions that are at an earlier phase in their academic life-cycle. Consequently, it is also debatable whether it ought to ad opt as forthright a p osture in fee-setting. A second reason for moderation is the need t o revisit whether all actual direct c ost cur rently b oo ked 10 by the Uni versity is in fact unavoida ble. Although there are possible explanations , the suggestion cannot be dismissed that the University’s non-academic plantilla may be bloated relative to these other institutions; hence again it could be imprudent simply to reflect all such c osts in tuition. As for regional campuses, an ob vious c onstraint to using act ual direct cost as the basis for fee-setting is the practical limit imposed by fees in important private universities that serve as substitutes. For this reason the increase in tuition fees also needs to be moderated, and using inflation-adjusted rates appears reasonable from this aspect as well. By continuing to price tuition significantly lower than direct cost in all units, of cou rse, the Unive rsity implicitly ack no wledges the need for public subsidies. In this sense, therefore, except for a few exceptions to be discussed below, virtually all students in the University are still greater or lesser beneficiaries of state support, and the University’s character as an institution that benefits from state supp ort is not negated. 3. On tuition-fee discounts The matter of base-tuition fee havin g been settled, the principle of equitable access to public higher education and social justice that underlay the original STF AP needs to be re-asserted: Students who can afford to should pay at least the full cost of their U P education as tuition fees ; and students who c annot should be granted subsidies in the form of discounts in tuition and other fees, book allowances and monthly stipends. [Emphasis supplied.]
The family-income profile of freshman students actually admitted to the University in 2003 and 2004 forms the basis of the prop osal, under which students shall continue to be assessed amounts equal to, less than, or g reater than the base (understood as the inflation-indexed) tuition fees, according to the following schedule: Table 8 Tuition-fee discounts: proposed bracket delineation and privileges Bracket
Annual family incomes
Applicable scheme
A B C D E
poorest decile or 650 * of entering freshm en P3 6,000 to P136,000 and not in A P1 36,001-P420 ,000 P4 20,001-P1, 000,000 P1 ,000,000 or more
free tuition plus standard stipend 70% discount on base tuition fee 40% discount on base tuition fee base tuition fee full-cost tuition fee (= base × 1.5)
* whichever is greater
10
Among others, there is the fact of a larger overhead necessitated by large land-area being administered, as well as the multiple-campus system.
9
Applied to the adjusted tuition fees determined in Table 7, therefore, the above scheme results in the following effective peso amounts, where for ease of reference, discounted fees for Gr oup II campuses are determined as 2/3 of those of Group I. Table 9 Tuition-fee discounts b y b racket and campus-grou p (in pesos per credit-unit) Bracket
Group I
Group II
A 0 0 B 300 200 C 600 400 D 1,000 600 E 1,500 1,000 Group I: Diliman, Manila, Los Baños; Group II: Baguio, Visayas, Mindanao
The following points are salient to the prop osed scheme: 1. The delineation of socio-ec onomic brac kets is based on the distribution of family inc omes among freshmen admitted to the University in 2004, as compiled by the Office of Admissions from self11 reported incomes . This distribution is presented in Table 10. and Figure 3, whic h also include the income distribution for all households for comparison. As defined, Bracket A largely coincides with the poo rest decile of freshmen, which in the data corresponds to a maximum income of not more than P36,000. Bracket B largely comprises deciles 2, 3. and 4, while Bracket C pertains to deciles 5, 6, 7, and 8. Bracket D, which is asked to pay the full base rate, is the next-richest decile earning between half to somewhat less than a million annually. Fi nally there is the open-en ded richest decile beginning with those that earn more than a million. 2. This appr oach deviates somewhat from the original STF AP , whic h based its categories on the national distribution of income, particularly the Family Income and Expenditure Survey (FIES). As Table 10 shows, ho weve r, family inc omes among e ntering freshmen are always g reater than in the cor respon ding national mean in ever y decile except for the poo rest, suggesting that the present student pop ulation probably has a different income-pr ofile from what pre vails nationally. The committee suspects this is partly the outcome of an increasingly inadequate system. For e ven as better-off qualifiers are attracted to Uni versity b y the unadjusted fees, the University may be unwittingly turning away qualified but p oor students to the extent that its financial assistance package (to be discussed below) under STFAP is not sufficient. Table 10. Family-inc ome distribution b y decile: entering UP freshmen 2004 and all households 2003 (in thousands of pesos per annum) 1
Entering freshmen Decile
Income
Average 2
A B
C
3
Poorest
maximum 36,000
income 13,511
Second
65,000
Third
Average income
4
Average expenditure
26,467
28,588
52,188
42,354
43,556
98,169
80,609
55,052
55,096
Fourth
135,140
116,216
68,863
66,147
Fifth
182,239
159,687
85,391
80,204
Sixth
247,264
215,473
106,029
98,701
Seventh
340,000
288,047
134,473
120,972
Eighth
509,200
417,122
175,784
152,501
D
Ninth
700,000
591,796
245,939
204,834
E
Richest
8,105,618
1,186,699
545,836
393,191
1
11
National
Uses income-statistic from the Office of Admissions
The Committee is aware that the fact these incomes are self-reported also implies a tendency to understatement.
10
2
Income of the richest person in each decile 3 Average of incomes in each decile 4 From the Family income and expenditure survey 2003(FIES)
Figu re 3: In come distribution: national (2003) and incoming freshmen (2004) (by deciles; in thousands of pesos annually) 1,400
National
1,200
E
Entering freshmen
1,000
D
C
800 600 400
B A
200 0 t s e r o o P
2
3
4
5
6
7
8
9
t s e h c i R
Sources: Office of Admissions and Scholarships and Fa mily income and expenditure surve y 2003
3. The reduction of the number of categories or brackets is an attempt to simplify the administration of the University’s policy of tuition-fee discounts and stipends. In any e vent, inflation and the stagnation in the amounts of the stipends have caused the differences in treatment among Brackets 15 under the cu rrent system to become marginal at best. 4. The 650-student limit of Bracket A approximates the actual number (about 10 percent) of each entering class who currently qualify under Brackets 1-5 of the existing STFAP. In pre-determining this number, the prop osal doubles the number of students (10 percent versus the current 5 perce nt) that receive a stipend, and raises this stipend to a higher common level of P12,000/semester (see also below). 4. The tuition fee asked of the next-poorest Brac ket B will be no different from what they w ould have paid to study at UP prior to the tuition fee adjustment (i.e., P300 and P200 per unit for Gr oup I and II campuses, respectively), so the pr op osed scheme is not expected to re present a significant burden for them. Simulations suggest this group accounts for 30 percent of each entering class. 5. Bracket C is asked to shoulder rates (P600/unit for Group I and P400/unit for Grou p II) that are twice the fees assessed since 1989. It bears repeating, however, that even these rates are heavily subsidised, since, first, full inflation adjustment would have entailed a rate thrice the current levels, and, second, inflation adjustment itself falls short of covering full cost. (This adjustment affects some 40 percent of each entering class.) 6. Bracket D will be asked to pa y the inflation-adjusted base tuition fees. Past enrolment trends indicate that this bracket may constitute about 16 percent of each e ntering class. 7. The delineation of a supernumerary B racket E (historically constituting 4-5 percent of each entering class) has become necessary in or der to reflect the huge gap in mean incomes between the ninth- and tenth-richest percentiles, whether one refers to the reported incomes of entering freshmen or to the national income distribution. On the princip le that those who can afford to do so sh ould pay at least full cost, students from families earning P1 million annually are assessed the benchmark tuition cost of P1,500/unit, with the 2/3 rule being applied to regional units to arrive at P1,000/unit for Gro up II campuses. Eve n the hig hest rate applicable can hardl y be called exorbitant: it is still less than
11
the fees charged in c omparable pri vate universities (e.g., ADM U P2200/unit, DLSU P1700/unit) that are realistic alternatives for members coming from this social bracket. To summarise: the prop osal relating to tuition fees envisions the po orest 40 percent of each batch paying rates no higher than what they w ould ha ve paid pri or to the tuition fee adjustment ; in addition, it provides for wider stipend-coverage and higher stipend rates among the poorest 10 percent of the entering class; it provi des discounts ranging from 100 to 40 percent to as many as 80 percent of each entering f reshman class; finally it charges close to full-cost to students coming only from the most affluent families (top percentile of the population). 4. On stipends As already been mentioned, a significant conseque nce of the failure to adjust the current system has been the increasing inadeq uacy of the financial assistance pac kage afforded to the neediest students. 12 A student entitled to a stipend currently receives an average of P6750 per semester (see Table 2), of whic h the “living subsidy” averages P4250, ranging from P6,250 per semester for Bracket 1 to P2,000 for Brac ket 4. The unrealistic level of financial assistance is an important obstacle to greater access to the University by the poorest students. One cannot rule out that the divergence between the income-profiles of incoming students and the p opulation at large is due to the fact that truly po or a nd q ualified students no longer find it feasible to enrol in the Uni versity gi ven un realistically low levels of stipends and scholarships. As already mentioned, U P gives stipends to students who bel ong to the lower brac kets, howe ver, the average of P4,250 per semester is no longer appr op riate. For example, full private scholarships that are also given to U P students pro vide better and adj usted packages. Table 11 gives examples of some of the scholarship gra nts that can serve as models in pr ogramming for student subsidies. Table 11. Illustrative scholarship pac kages
Tuition Pa yment Se mestral Stipend Book subsidy/semester Food subsidy/semester Transportation/semester
Minimum UP private scholarship Full coverage P15 ,000 P1,500 None P2,500
Lodging allowan ce
Non e
Components
NECFI scholarship Full coverage P 3,300 per month P2,500 None 2 round-trip tickets per ye ar to home province Non e
A teneo financial aid
Full or half-coverage Non e None Food coupons or P10,000 None P1 5,000 or requested to stay in A D M U Dor m
Source: Office of Scholarships and Student Servic es, Nippon Electric Foundation, Inc., Ateneo de Manila University
The UP Pri vate Scholarship offers a stipend of P15,000 per semester, which is on the high e nd: it is three times the average rate given t oday for the most financially needy UP students. Thus, there is still an avenue for the UP System to bring u p the subsidy levels to a more acceptable and applicable rate as long as there is a source of fund ing. Ateneo de Manila University, on the other ha nd, av oids giving semestral stipends by giving out food coupons to students in financial need or asking them to board in dormitories on campus. This strategy also impro ves the system of contr ol in terms of disbursements and expenses for the said university. The Nippon Electric Foundation Inc. (NECFI) scholarship is a c ompetitive financial assistance prog ram give n to Filipino students in the areas of comp uters, electronics and communications engineering. Its semestral stipend is relatively genero us. The Department of Science and Technology (DOST) scholarship is also comparable to the NECFI scholarship. It has various monthly stipends given to its recipients but the most generous is P2,200 a month or P11,000 a semester.
12
A per-semester maximum of P8,250 for Bracket 1 and minimum of P4,500 for Bracket 4.
12
It is recommended here that the total stipend be increased to a standard level of P12,000 per semester – a level still less than, but closer to the minimum amounts afforded b y pri vate scholarships (e.g., P15,000 as specified by UP). Other privileges are to be retained. The existing differential treatment between STFAP Brackets 1-4, which have long since been reduced to quasi-tokenism by inflation, should be abolished. These privileges must be viewed as assistance, however, and not entitlements. More over, aside from receiving a stipend, a student is not pre vented from a vailing himself of other forms of financial assistance, i.e. other scholarships, or oppo rtunities (part-time wo rk and student assistantships). Pr ovisions can and should be made to support a larger number of students at this higher stipend level. The current five percent of the UP student population that qualifies for semestral stipends can be expanded to include the entire 10 percent who typically qualify under current STFAP Brackets 15. The Committee recommends, however, that this proposal be implemented in the form of a fixed quota of scholarships to be awarded annually, to be set initially at 650 slots, or the poorest ten percent of the entering class, whichever is lower. As the Uni versity’s own resou rces expand, or outside resources can be tapped, the number of scholarships can be expanded. The number of students from poor families who enter the Univ ersity is partly an endog enous phenomenon that depends on the number and adequacy of the financial packages the University can offer to such students. O nce the packa ge of financial assistance has been re-examined and adjusted, there is every reason to hop e that students from p oorer families will once more bec ome better represented in the student p opulation. 5. Miscellaneous fees Benchmarking the Uni versity against comparable priva te institutions reveals large disparities not only in existing tuition fees but also in miscellaneous fees. UP’s miscellaneous fees are on average only 8 percent of those charge d b y comparable universities on an annual basis (Table 12), with some in excess of P15,000 pesos per semester. In particular, unlike other institutions, the University’s fees throu gh the years have failed to reflect the emergence of significant cost items that are indirectly b ut closely related to the effectiveness of its teaching functions. Particularly fo r private institutions, earmarking fees is a particularly helpful way to add ress emerging cost items, since it clarifies the rationale for such payments and more readily forms a constituency for such fees, and second, unlike tuition fees, miscellaneous fees are unregulated.
Table 12. Comparison of miscellaneous fees 1 (in pesos) T ype of Fee
Registration Me dical Library Athletics Cultural Internet Fe e Others Energy fee Intact fee Development fees 5 Various 6 Subtotal - misc fees Student Fund7 T o t al
UP 2
40 50 400 75 50
615 47 66 2
DLSU 3
A D M U 4
323 265 1,628 471
761 231 3,515 518
617
500
1,035 199 4,538 778 5,316
1,070 1,000 5,307 1,712 14,613 693
US T
900 725 1,400 1,000
800 750 550 6,125 340 6,465
15,30 6 1. Some reclassifications were made to make data comparable across universities.
13
2 .Trimestral 3. Miscellaneous fees of the 2 most populous UPSystem campuses: Diliman and Los Banos. Miscel laneous fees in the UP Sys tem range f rom P565 (UP Manila) to P830 (UP Mindanao) 4. Fees for ADMU students vary per year level - ranges from P9,599 to P17,086 per semester 5. For DLSU: Science Devt Fund, Engg Devt Fund, Sports Devt Fund For ADMU: 'Generic' Fund and P.E. Fee (P.E. fee i s charged only in the 1 st 2 years) For UST: 'Generic' Fund 6/ E.g., Facilit ies maintenance, ID, guidance and counseling fee, student information fee, audio-visual 7/ Journal, Publication, Student Council, Community Chest (varies by unit in the UP Syst em; ranges f rom 46.50 to 71.50)
The Committee thus prop oses an adjustment in miscellaneous fees charged by the autonomous u nits to augment the resources the University uses for three recurring expenditures which have experienced the most significant price increases in recent years. These expenditure items, together with the Committee’s recommended actions, are as follows: (1) maintenance of the internet infrastructure of each campus. Recommendation : an internet 13 fee per student of P260/semester in all autonomous campuses. (2) electricity consumed b y the University’s various facilities (e.g., libraries and laboratories). Recommendation : an energy fee per student of P425/semester for Group I campuses and P250/semester for Group II campuses.14 (3) purchase of books and maintenance of journal and other library subscriptions. Recommendation : an upward adjustment of library fees per student by P700/semester in Group I campuses and P300/semester in Group II campuses. Other miscellaneous fees (e.g., athletics, medical) also need urgently to be adjusted. The Committee however sees the need to temper the increase in miscellaneous fees, given the parallel recommendation to adjust tuition fees across the UP System. A summary c omparison of miscellaneous fees before and after the prop osed adjustments for each campus is given below. Table 13 Existing and pr op osed miscellaneous fees, by campus (in pesos per semester) Campus
Dilim an Los Baños M anila Baguio Vis ay as Mindan ao
Proposed Existing Increase rate rate 2000 615 1385 2000 515 1385 1950 565 1385 1405 595 810 1405 595 810 1640 830 810
Please see Annex 1 for details.
6. Final remarks on implementation These new fees should be implemented prospectively and applied only to each year’s entering batch of freshmen. The ladderized character of college education is a rigidity that penalises students who might wish to transfer institutions in midstream in the face of changing tuition costs or other reasons. Applying existing rates to old students spares students such transition costs and thereby hon ours an implicit contract between them and the Uni versity. The anno uncement of new fees and schemes well in advance of each academic year should also provide prospective applicants with an informed choice regarding alternative education choices and their respective cost-quality trade-offs.
13
See Albacea [2004]. The bandwidth cost for a 2 MBPS allocation/semest er to a s tudent i s P60. The balance of P200/student is allocated to the annual cost of network maintenance, replacement, repair, and upgrade but excludes the co st and use of terminals. 14
Based on the utili ties budget of Advanced and Higher Education units in their respecti ve 2004 IOBs divided by to tal s tudent population. The proposed amounts represent the lowest budgeted utilities cost per s tudent among the campuses in each group.
14
The abo ve rec ommendations are designed to be flexible enough to be readjusted periodically , the key variable being the inflation-adjusted base-tuition fee. Once this is determined, the same scheme of tuition-fee discou nts may continue to be applied. (Other aspects that may be adjusted are the amount and coverage of stipends.) The Committee cautions against a repeat of past experience of allowing inflation to catch up with and distort the University’s fee-and-subsid y p olicies. The University administration may wish to consider a perio dic study of fees, discou nts, and stipends for entering freshmen every three years. More immediately, however, there is urgent work to be done in refining and implementing the financial means-testing un derlyin g these prop osals, proceeding fr om a revision of the existing forms and systems used by the STFAP.
20 March 2006
15
Annex 1 Schedule of existing and proposed levels of miscellaneous fees by campus 1. Diliman Library A thletics Registration M edical Cu ltural Internet Energy Total
Proposed
Existing
Change
1,100 75 40 50 50 260 425
400 75 40 50 50
700
2,000
615
260 425 1,385
2. Los Baños Proposed
Library A thletics Registration M edical Cu ltural Internet Energy Total
Existing
1,100 75 40 50 50 260 425 2,000
Change
400 75 40 50 50
615
700
260 425 1,385
3. Manila Proposed
Library A thletics Registration M edical Cu ltural Internet Energy Total
1,100 25 40 50 50 260 425 1,950
Existing
Ch ange
400 25 40 50 50
700
565
260 425 1,385
4. Baguio Proposed
Library A thletics Registration M edical Cu ltural Internet Energy Total
Existing
Ch ange
700 55 40 50 50 260 250
400 55 40 50 50
300
1,405
595
260 250 810
16
5. Visayas Library A thletics Registration M edical Cu ltural Internet Energy Total
Proposed
Existing
Change
700 55 40 50 50 260 250 1405
400 55 40 50 50
300
595
260 250 810
Existing
Change
6. Mindanao Proposed
Library A thletics Registration M edical Cu ltural Internet Energy Total
800 100 80 100 50 260 250 1640
500 100 80 100 50
830
300
260 250 810
17
