Renowned Chinese economist Mao Yushi has recently caused a sensation after delivering a controversial speech in Guangzhou, southern Guangdong Province. Addressing an education forum, Mao said that only 10 percent-20 percent of college students are poverty-stricken, and if Chinese universities lower the threshold by further cutting tuition fees, those who receive the most benefit are the rich, who then pay less for higher education. The best solution, proposed by Mao, is to raise school fees and offer more scholarships and loans to poor students.

Other elite economists, including Professor Zhang Weiying, Dean of the Guanghua School of Management under Peking University, known as China's Wharton Business School, and Tang Min, Chief Economist with the Asian Development Bank mission in China, share Mao's opinion. They believe Chinese universities are generally suffering from shortages of funds due to rising education costs and too low tuition fees. If students are charged more for higher education, universities would be relieved from their current financial difficulties and would be able to offer more scholarships and aid to poor students via the newly raised funds.

Take a college that annually recruits 4,000 students for example. If each student is charged 10,000 yuan ($1,163) annually, doubling the previous charge of 5,000 yuan ($581), its total revenues would amount to 20 million yuan ($2.33 million), which would enable the college to assist more poor students in the form of scholarships.

Those opposed to Mao's proposal, argued that in effect expenditures on higher education accounts for about 20 percent of a nation's per-capita gross domestic product (GDP). But that level for China has reached nearly 60 percent-70 percent. Results of a survey carried out by the Chinese Academy of Social Sciences reveal that, college tuition fees have risen 25 times than those of 20 years ago, maintaining a growth rate five times more than income increases over the corresponding period. This has led to fears that another further price hike will make education even more inaccessible.

But Mao's supporters contended that the root cause for university difficulties lies in a deficient assistance and scholarship system. To assist inadequate state budgets, they say, universities should be allowed to control their own income by raising tuition fees.

It is suggested that a unified standard on collecting tuition fees or a policy concerning education allowances will help hedge inflating costs faced by most public colleges. Conversely others believe that, under market rules, the only solution is to expand supplies of education resources to balance price, rather than increasing additional government expenditures. If more resources are available, market demands will naturally cease with lower commodity prices.

Rich support poor

Wang Dongjing (21st Century Business Herald): Many believe that to maintain tuition fees at a comparatively low level is favorable to poor college students. In fact, it is not absolute. When several farsighted scholars proposed raising college fees years ago, it ignited hot debates. People in education circles argued that an undifferentiated standard of college tuition fees for both the rich and the poor is actually more beneficial to students from rich families, who are equally compensated by public funds.

As we know, in the Western world, private education is very expensive, but if poor students perform well in their exams, they are eligible to be funded by scholarships. In contrast, China's public education is too large in scale to be fully covered by public funds. Maybe we could allow the well-known Tsinghua or Peking universities to float tuition fees, through which limited financial resources would be able to focus on public education.

Cao Yueping (The Beijing News): In the energy sector, when prices for raw materials rise, price hikes of refined oil or electricity are foreseeable based on demand and supply changes.

Both in the fields of education and the economy, it is suggested that disadvantaged groups be subsidized by hedging risks caused by such price hikes. Poor students could be lifted from heavy financial burdens by receiving more scholarships and loans, like the policy which compensates public transportation systems for the costs generated by soaring oil prices.

Under market rules, general price increases are inevitable, but the question is how to stabilize social order and balance wealth distribution by implementing subsidies to the poor and strengthening welfare programs.

Zhang Tianwei (Beijing Youth Daily): The average level of tuition fees for Chinese university students has reached as high as 5,000 yuan ($581) per year; for popular majors, however, students have to pay nearly 10,000 yuan ($1,163) for one-year studies. Yet universities cannot make ends meet as a result of rising teaching costs, and most students in fact now enjoy "invisible" subsidies sponsored by state or other social funds.

Mao Yushi, who is keen to enhance assistance in the form of scholarships and loans to poor students through transferred public funds, hopes that the "invisible" subsidies would soon be cancelled. In the United States, where higher education is widespread, total expenses for top universities average at around $40,000 each year, including tuition and boarding fees. This is way above the means of poorer students, but those with ability can be partially sponsored or get full scholarships.

But it is preconditioned by devising a scientifically designed appraisal mechanism, under which rich families must pay what they can afford; while poor-but-bright students will be financially subsidized. To raise tuition fees in haste based on an unverified assumption is very likely to fail, in addition to challenges from scarce public funds and loose internal governance. It is a concern that students from average families will face growing difficulties when it comes to affording college life.

Despite this, it's still unreasonable to conclude that the mode of "high tuition fees, high scholarships and loans," proposed by Mao and other economists, is completely impractical. In fact, the biggest obstacle for implementing this proposal is the failure of the government and universities in setting up necessary institutional guarantees.

It's a public thing

Wei Zhiming (The Beijing News): In economics, education is defined as a quasi-public good because of its social benefits. Also it is a category of investment in human resources and is vital to the future of an individual or a nation. The government may raise funds through mandatory taxation, besides social donations and tuition fees, as major financial sources for colleges and universities.

In Western countries, both private and public colleges survive on donations and supplementary tuition fees. But in China, most universities, excluding several top-notched colleges, are incapable of raising enough funds to finance daily expenses. As a result, universities are trapped in a dilemma. On one hand, they are desperately short of funds. On the other hand, they need to develop themselves to meet growing social demands. Some of them, therefore, have to sell land, make loans, raise tuition fees, or draw sponsors to survive increasingly furious market competition.

It's clear that the fund shortages facing China's tertiary institutions are largely due to inadequate state and social investment. This problem cannot be solved by any individual university through means such as increasing tuition fees.

Guo Zhichun (Beijing Youth Daily): The rich will have to pay more tuition fees to aid the poor. It is not yet mentioned how to ensure that these extra payments are used efficiently. The Geely Holding Group, a Zhejiang-based car maker, has recently donated 50 million yuan ($5.81 million) to assist 1,000 poor students. At the same time, it allocated another 2 million yuan ($232,558) to identify every applicant and confirm that the money was properly used. The so-called preferential policy to poor students by raising tuition fees also risks their chances for admission.

Xiong Bingqi (Oriental Morning Post): Pursuant to relevant government stipulations, universities should spend no less than 5 percent of regular income on reimbursement of student loans and living allowances to poor students. But for most privately-funded colleges, where the amount of tuition fees has doubled that of public schools, poor students can not enjoy free education, or receive assistance from scholarships and loans.

Chinese families have to assume a 40-percent proportion of total education expenses, and students of private schools may have to pay full fees, far surpassing the affordability of the average Chinese. In the United States and Britain, tuition fees for college study account for merely one sixth and one fifth of GDP per capita, respectively. Considering the repaying capability of most civilians, a further increase in tuition fees will force more poor students to give up opportunities to receive higher education.

Cao Lin (Yanzhao Metropolis Daily): The government has to keep prices of public goods or services low, at least affordable to the majority. In fact, due to slow transfer payment-forwarding procedures and unstable supplies of allowances, the strategy of "high tuition fees, high scholarships and loans" is not operational in practice.

With prices of daily necessities falling, the balance can be achieved by charging more on consumption of luxury goods by the rich. And the government may redistribute wealth by strengthening investments in public goods to assist the poor.