This document discusses the economics of higher education. It covers objectives like investment in education at the university level, wastage in higher education, cost-effective analysis and its implications, and financing higher education. Some key points include that investment in higher education is an investment in the future. Wastage can occur from students dropping out or repeating grades. Cost-effectiveness analysis is used to evaluate alternatives when resources are limited by looking at measures of effectiveness and costs. Financing options discussed are institution-based funding and loans.

1. ECONOMICS OF
HIGHER EDUCATION
Presented by:
M. Aman Ullah Khan
BSc Hons, M. Phil, MA Edu, MA Pak Study

2. Objectives of the session:
Students will be able to know:
• Investment in Education at University
• Wastage in Higher Education
• Cost effective analysis and its educational implications
• Financing in Higher Education

3. Introduction
Higher Education System requires considerable investment both at
individual and societal level. As a result economics of higher education
is always a phenomenon attracting debates and deliberations. In this
unit on one hand we will learn about different modes of financing
higher education and on the other hand we will discuss reasons of
investment in education particularly in higher education.

4. Investment in the University
● This is very common understanding that an investment in the university is the
investment in the future.
● Another thoughtful question is that: Should you invest in equities, bonds or property
– or a college/university education?
● Human capital can be seen as a nation’s most critical capacity. An educated populace
has the skills to develop and sustain meaningful change. Yet the present reality for
many students in developing countries is that education, especially higher education,
is out of reach due to financial barriers.

5. Wastage in Higher Education
● Wastage in higher education is considered in terms of the magnitude of expenditure
on education, which remains ill spent due to non-utilization, or improper utilization
of education.
● Wastage in education occurs when students leave the educational system prior to the
termination of an educational cycle (drop out).
● Repetition of a student in the same class or grade
● Two kinds of wastages First: Wastage for the course due to dropout Second: Wastage
due to the non utilization of training

6. Forms of wastage in Higher Education
● Educational wastage exists in the following forms:
● a) Failure of the system to provide a universal education;
● b) Failure to recruit children into the system;
● c) Failure to hold children within the system;
● d) Failure of the system to set appropriate objectives;
● e) Inefficiency in the achievement of such objectives

7. Cost-Effectiveness Analysis
● Cost-effectiveness analysis is an evaluation tool that is designed to assist in choosing
among alternative courses of action or policies when resources are limited.

8. Example of Effectiveness Measures:
Program objective Measure of effectiveness
Program completions Number of students completing program
Reducing dropouts Number of potential dropouts who graduate
Employment of graduates Number of graduates placed in appropriate jobs
Student learning Test scores in appropriate domains utilizing appropriate
test instruments
Student satisfaction Student assessment of program on appropriate instrument
to measure satisfaction
Physical performance Evaluation of student physical condition and physical skills

9. Cost Estimation
● The costs of an intervention are defined as the value of the resources that are given
up by society to effect the intervention. These are referred to as the ingredients of
the intervention, and it is the social value of those ingredients that constitute its
overall cost.
● the method sets out systematically to identify and ascertain the value of the
ingredients that are required for each alternative that is under consideration.

10. Educational Applications
1. Educational Television Educational television as a way of improving educational
quality in developing countries, as well as expanding their educational systems
2. Curriculum: Curriculum is an area that is very appropriate for cost-effectiveness
analysis. In the quest for educational improvement, schools face numerous ways in which
they can organize the pace, content, and method of instruction.
3. Teacher Training: Teacher performance and pupil achievement were used as
measures of effectiveness.

11. Financing Higher Education
There are different methods of financing higher education:
1. Institution-based funding The controls that are attached to the funds provided to
institutions in higher education may well affect the efficiency with which education is
provided.
2. Loans
In many countries throughout the world, in Scandinavia and North America in particular.
Loans scheme have been introduced to finance students in higher education.