Financial instability is casting a shadow over the future of higher education institutions (HEIs) in the country, according to a recent study by the Philippine Institute for Development Studies (PIDS).
The study, titled "Financial Sustainability of Higher Education Institutions in the Philippines: Issues, Challenges, and Opportunities,” revealed that the reliance on private HEIs on tuition fees and the dependence of public HEIs on government subsidies had created vulnerabilities in the higher education system.
While the Philippines has made strides in expanding access to higher education, the study warned that many institutions are struggling to stay afloat due to factors, including outdated regulations, political disruptions, and rising costs.
"Financial sustainability differs depending on the HEI type," said a public HEI president, highlighting the complex nature of the issue. "These can influence the HEIs' financial sustainability strategies. Funding sources differ for public and private HEIs, so revenue diversification and fundraising efforts also differ."
The study found that the reliance on tuition fees and government subsidies, coupled with increasing operational costs, has created a precarious financial situation for many higher education institutions.
Private HEIs are particularly vulnerable, with some administrators reporting a decline in enrollment due to the government's free tuition policy in public institutions.
"There should be complementarity in terms of students," argued a private HEI president. "Public HEIs attract even those who can afford to pay the tuition fee due to the FHE law [Universal Access to Quality Tertiary Education Act]. The government should give scholarships only to those who need them. Instead of building facilities, why not expand the scholarship program to include private HEI students?"
The study also underscored the urgent need for policy reforms to address the challenges facing the sector. It called for the national government to develop and implement long-term policies and plans for tertiary education that provide direction and stability.
"There is a lot of uncertainty because CHED [Commission on Higher Education] does not have that long-term direction," said a private HEI administrator. "It goes with the wind. Whatever the political breeze is, they sort of sway with it, and that's dangerous because educational institutions need stability. Our products take time to develop. We are caught off guard when policies suddenly change, and we need to scramble."
The study also recommended enacting a law on LUC operations and governance to mitigate political disruptions, exploring the establishment of more regional university systems to promote greater efficiency in SUCs' resource use, harmonizing the requirements on the full tax deductibility of donations in private and public HEIs, and building HEI resilience through support for digitization of processes and systems.
"LUCs have no law at the national level," said a public HEI (LUC) president. "We look for ways to achieve our fiscal autonomy. It would be helpful if we had laws for local colleges that speak to our autonomy. LUCs should be treated as attached agencies but independent institutions. So, the local chief executive can still be the chairman, but the LUC should have its own human resources and procurement division."
The study's findings serve as a wake-up call for policymakers and educators alike. Without immediate and concerted action, the financial instability of the higher education sector could have far-reaching consequences for the country's economic and social development.
"HEI's financial sustainability is an educational asset and strategic imperative," the study concluded. "Thus, policies are needed to ensure HEIs can fulfill educational objectives, deliver valued outcomes, support societal advancement, and add tangible value to stakeholders."