International Higher Education--22/13

The Argentine central government heavily subsidizes higher education by financing tuition-free public universities serving all students, regardless of their economic and academic background. Enrollment is open to all individuals with a high school degree. In 1998, almost 83 percent of more than one million undergraduates in the greater Buenos Aires area were attending public universities. During the last decade, this figure has been increasing at an average annual rate of 3.6 percent. A direct consequence of this “overpopulation” of public institutions is an associated decrease in the quality of education.

The current organization of public higher education presents several other problems. The most obvious is the availability (or lack thereof) of public funds for the growing student numbers—given the severe fiscal constraints in the country. The system has also had unintended distributional consequences. Although standard models of public provision of college education tend to imply a transfer from the rich to the poor, new empirical and theoretical work show that free higher education implies a transfer from lower to higher income groups.
Of course, students attending public universities defend the status quo. They are active, organized, and very vocal. The argument for the tuition-free university is made on grounds of equal opportunity and access to education for all. In Argentina, this is far from being the case; our work shows that only a privileged group is able to attend college. Poorer students are excluded from higher education, so they are not able to enjoy the subsidy. In reality, tuition-free public universities do not seem to benefit the poor.

The Population under Study
We analyze data from the May 1998 Permanent Household Survey, which covers the greater Buenos Aires region. In Argentina, universities are located throughout the country, but the majority are in the main urban areas, and in 1998, more than 50 percent of university students were concentrated in Buenos Aires. Our analysis focuses on this region. We examine the group that is between 17 and 34 years of age and without a college degree. Approximately 18 percent of them are enrolled in the university. The rest have finished or abandoned their formal schooling.

The most striking difference between those who attend college and those who do not is their family per capita income. The average family income for those who do not attend college is $269 a month, less than half the $615 average that of university students. The distribution of education among parents is also very different. Almost half the college students have fathers who attended university, while less than 7 percent of the nonattendees’ fathers did. We find a similar pattern among the mothers.

Almost 70 percent of university students belong to the wealthiest 30 percent of the population, while only 11 percent belong to the poorest 50 percent. This was not always the situation. Using comparable data from 1974, we find that the probability of attending college was much higher for those at the bottom half of the income distribution then. Almost 30 percent of the college students in 1974 belonged to the bottom 50 percent of the income distribution.

University Attendance
By modeling the probability of attending college as a function of a family’s socioeconomic background and personal characteristics, we find socioeconomic background to be an important determinant of college attendance. Individuals coming from families with higher income have a greater probability of attending college, after controlling for sociodemographic characteristics. Also, the probability of attending college is greater for those individuals belonging to a family whose head of household has a high school or college degree. Having attended a private school also increases the chances of attending university. This may reflect differences between public and private institutions and how those differences affect the demand for additional education.

Our results clearly imply that income is an important determinant of college attendance. Its effect on attendance is greater at the top of the income distribution. For example, doubling per capita income from $50 to $100 would only increase the chance of attending the university by 14 percent. However, increasing per capita income from $500 to $1,000 would raise the probability by 128 percent.

Public vs. Private University Students
Students in private universities are similar to those in public institutions in many aspects. The educational level of the students’ parents is not statistically different. Among students in private universities, 69 percent attended private secondary schools. This figure is not much lower than that among students in public institutions, almost half of whom come from private high schools. It should be noted that private high schools are not tuition-free, in some cases charging a higher fee than private universities.

As mentioned earlier, very few students (less than 12 percent) belong to the bottom 50 percent of the income distribution. Surprisingly, the figure is somewhat higher among the students in private institutions, almost 14 percent. A multivariate analysis indicates that per capita family income has no effect on the probability of attending a public institution, as opposed to a private, after controlling for sociodemographic variables. Educational level of the head of the household and number of siblings have no effect either. In brief, none of the variables related to personal characteristics, income, and family background appear to affect whether students attend a private or a public university. The only variable that seems to have an effect is prior attendance at a public high school, which raises the probability of attending a public college. This may reflect differences in taste or differences between public and private schools, such as quality of education, that may affect the demand for
higher education.

Conclusion
College students in Argentina belong to the country’s wealthiest families. Almost 50 percent of the students at public universities belong to the highest 20 percent of the income distribution. Moreover, 90 percent of the students at public universities have a higher than the median per capita family income, and 46 percent attended private high schools. Since the public university is tuition-free, this is an implicit subsidy of the richest families.

Students at public universities seem to have the ability to pay; therefore one might argue that the equity and efficiency of the system could be improved by charging tuition. To complement this policy, universities should offer selective scholarships and student loans, in order to attract the most talented students from poor families.