UG students should thank their lucky stars

Public good

The Vice-Chancellor of the University of Guyana (UG) has proposed a hike in the tuition fees to be paid by students of the university. The initial fees of $127,000 were pegged to the exchange rate of 1994 between the Guyana and US dollar. Now that the value of one US dollar has moved to $210, student fees are expected to be set at $210,000. The 65-per cent fee hike has triggered consternation among students, who will be faced with the tuition increase, and quite rightly so. But the students need to realize that they are nowhere near to paying the true cost of their higher education as will be shown later. Given the apparent reluctance of the University Council to raise the fees, the discussion about the tuition hike brings up two other issues. One is whether higher education should be treated as a public good and be paid for by the government. The other is whether the fee hike should be based solely on the value of the exchange rate between the Guyana dollar and the US dollar.

Debate

It would be best to get the debate of whether education is the responsibility of the government or not out of the way since an understanding of the debate would make it easier to discuss the other two concerns. A public good is one that is characterized by two factors. Both factors, non-excludability and non-rivalry, are concerned with the consumption of the goods. This has implications for pricing the goods, and by inference of how well the market works in allocating resources to make the goods available. Markets quite often have the capacity to enforce exclusion and rivalry in the consumption of goods through the use of the price mechanism. Markets do not always work well, especially in the case of public goods. Determining if higher education is a public good depends on how well the market could work in allocating resources to provide the education and in determining the supply and demand for higher education. That several other privately-owned universities operate in Guyana suggests that the demand and supply for university level education exist. Part of the need is for the University of Guyana to become more competitive.

 Non-excludability

20130728rawle's business pageStarting with a look at non-excludability, it means that it is possible to use the market to exclude persons who do not pay from enjoying consumption of higher education. Experience in Guyana with private schools and private universities shows that persons who cannot afford to pay fees could actually be excluded from a private educational institution on the basis of the price. In that sense, higher education is not a true public good and the market helps to allocate resources from households to businesses through the fee structure. Competition, reflected in reputation and test results among private institutions, also helps to reallocate resources among the educational institutions.

Non-rivalry

LUCAS STOCK INDEX The Lucas Stock Index (LSI) rose 0.19 per cent during the fourth period of trading in June 2014.  The stocks of five companies were traded with a total of 107,873 shares changing hands.  There was one Climber and no Tumblers.  The value of the stocks of Republic Bank Limited (RBL) rose 0.83 per cent on the trade of 69,610 shares.  In the meanwhile, the value of the shares of Banks DIH (DIH), Caribbean Container Inc (CCI), Demerara Tobacco Company (DTC) and Guyana Bank for Trade and Industry (BTI) remained unchanged on the sale of 35,277; 2,000; 486 and 500 shares respectively.
LUCAS STOCK INDEX
The Lucas Stock Index (LSI) rose 0.19 per cent during the fourth period of trading in June 2014. The stocks of five companies were traded with a total of 107,873 shares changing hands. There was one Climber and no Tumblers. The value of the stocks of Republic Bank Limited (RBL) rose 0.83 per cent on the trade of 69,610 shares. In the meanwhile, the value of the shares of Banks DIH (DIH), Caribbean Container Inc (CCI), Demerara Tobacco Company (DTC) and Guyana Bank for Trade and Industry (BTI) remained unchanged on the sale of 35,277; 2,000; 486 and 500 shares respectively.

For non-rivalry to hold, additional persons seeking higher education must not diminish the benefits to others, and this point is relevant to the UG experience. Here is where a discussion of this matter becomes tricky and could muddle further the argument for education to be regarded as a public good. In institutions with small class sizes, less than 30 persons, an additional student might not reduce the attention and assistance that others are enjoying from lecturers. In the case where the class size was small, the lecturer might be able to identify weaker students and increase their understanding of the subject matter faster by giving greater attention to them. The learning curve therefore has a chance to move up at a faster rate. In UG where class sizes could range between 50 to 600 students, the benefits to all the additional students could diminish since the lecturer might have to change his or her method of teaching and testing just to ensure that he or she is able to complete the agreed course outline on time.   The benefits that could accrue to a class of small size might not be available to the larger classes. In the case of large class sizes, additional consumption is diminishing the benefits to others.

Benefits

It should be kept in mind though that not all the benefits of education accrue to the student alone and it is the positive benefits that arise that lead many to think of education as a public good. The wider Guyanese society benefits from the graduates with higher education since such persons help to bring improvements in the way things are done and help to lower the cost of goods and services to Guyanese. Further, Guyanese enjoy access to new products and services that have come about as a result of knowledge gained through higher education. It has been shown that unskilled persons who work in enterprises with persons who hold higher level degrees earn higher wages on account of the overall improvement in the productivity of the labour force caused by those with the higher education. In other societies, it has been observed that students with higher education tend to be more active citizens and their volunteer efforts bring additional benefits to the society.

The split in the benefits of higher education between students and society at large suggests that some amount of the students’ education cost should be borne by the government. There was every possibility that students would under invest in their education if they felt that others could not be excluded from the benefits that their higher education would permit. Such a disposition takes on greater validity when placed in the context of the study and work environment of the Turkeyen campus. Pricing of education was therefore very important. To get to pricing, one has to consider the realities on the Turkeyen campus.

 Horrendous conditions

Anyone who has to dwell on the Turkeyen campus for any length of time must acknowledge and face some horrendous conditions. It is not the responsibility of the municipality of Georgetown to keep the Turkeyen Campus clean, but the appearance of the campus does not look too different from that of the city. At any time, one could find garbage strewn across part of the campus just as in Georgetown. Dogs, sheep, goats and even horses roam the campus with impunity, just as in Georgetown. The grass grows tall quickly on the grounds of the campus and stays tall for lengthy periods just as in Georgetown. The gutters used for drainage could do with a good cleaning and then should be kept clean to reduce the amount of flooding that takes place, just as in Georgetown. The reasons for Georgetown and the Turkeyen campus of the university looking alike are basically the same: the lack of adequate resources to get the job done properly.

The issue then arises as to whether students at the UG should be made to pay the higher fees, and what a realistic figure is. The determination depends on the true cost of operating and maintaining the university. It means paying realistic salaries and attracting suitably qualified staff. It means providing ample and competitive learning facilities, including access to online library services. It means providing competitive laboratory and research facilities. It means providing competitive academic and social guidance services so that students do not have class schedules that clash and keep them from enjoying the full benefits of either class. It means providing competitive accommodation and classroom facilities for staff and students. It also means providing a clean environment for education and learning.

Ignore true cost

The costs associated with the above items are exorbitant. Using the Consumer Price Index (CPI) as a guide, prices in Guyana have moved 169 per cent from 1994 to 2013. The cost of doing business at the university has gone up and the institution needs to reflect this change in price if it is to be able to take care of itself. The true value of the university degree today is over $340,000. The anticipated increase of $83,000 will meet part of the change in cost, 39 per cent, seen from 1994 to 2013. The proposed students’ increase is based on the need to maintain parity between the price of 1994 and that of 2014. That parity hinges on the parity between the Guyana and the US dollars, but ignores the true cost of running the university. Within the level of the fee hike is the apparent reluctance of the University’s Council to raise the actual cost to the students to attend the university. What that means is that, despite the fee increase, UG will have a deficit in its operating budget.

 Sad affair

The university has to make up the difference. That difference could come from a subvention from the government. If that is insufficient, the university would have to sell services to the private sector. If UG is unable to sell enough services to the private sector, the staff will have to continue subsidizing the students’ education. That is a sad affair.

NB: Rawle Lucas is a lecturer at the University of Guyana.

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