International Higher Education, Summer 2002

Means Testing in Developing Countries

Thomas Wolanin
Thomas Wolanin is a senior associate at the Institute for Higher Education Policy in Washington, D.C. Address: Institute for Higher Education Policy, 1320 19th St., NW, Suite 400, Washington, DC 20036 USA. E-mail: <tom@ihep.org>.


Many underfunded institutions of higher education in developing nations are considering the imposition or the increase of tuition fees. To prevent the exclusion of academically qualified, low-income students, various student financial aid schemes that target assistance on low-income students are being contemplated. Other nations interested in improving social equity and fairness have established financial aid programs for students who would not otherwise have access to higher education. These programs require means testing to determine which students should receive aid.

“Family” Responsibility?
 The decision to distribute aid to students based on means testing first requires determining whose means are to be tested. Should a student’s family be responsible for the higher education costs of the student? What constitutes a “family”—the nuclear family or a more extended family? Should there be an age of the student beyond which the family no longer has the responsibility to help pay tuition fees (21, 30, or 40 years)? What should be done in cases where the student and the student’s family are alienated from each other—that is to say, there is no “family” relationship?

What portion of the family’s resources should be available to support the student? This is another way of asking what standard of living should the family enjoy before its resources are directed to supporting the student’s higher education costs.

All of these questions raise difficult political issues and touch on important and sensitive cultural values. In addition, there are practical issues of verification and documentation—such as birth, marriage, and death certificates and court records to establish, for example, whether a student is an orphan, how many other siblings the family is supporting, and whether a claim of family alienation is genuine or just economically convenient. Therefore, the quality of public records and the ease of accessing them in developing countries are important constraints on means testing.

The quality of public records and the ease of accessing them in developing countries are important constraints on means testing.

Standard Questionnaires
 The actual process for gathering information about the financial and family circumstances of the student and the student’s family is usually by means of a standard questionnaire. One obstacle to gathering useful information by questionnaire in developing countries is that the income and assets of a substantial segment of the population may be in kind rather than in cash or cash equivalents.

A second and even more important issue is how to determine that the information about the income and assets of the student and the student’s family is true and accurate. How can the information provided on a questionnaire be verified? One possibility is to compare the information provided on the means testing questionnaire with the information provided to the government for purposes of collecting either a national income tax or contributions to a national pension system. However, many developing countries have neither a national income tax system nor a contributory public pension scheme. Or, the income tax system and public pension scheme may only cover a small segment of the workforce or the official information may not be dependable.

Social Indicators
An alternative method for means testing is to use various social indicators to distinguish those who have the ability to pay tuition fees from those who do not. One example of the use of such social indicators is the application for financial aid at the Pedagogical University in Mozambique. In addition to asking for information about family income, the application requires information about the occupation of the student’s parents or guardian, whether the student’s home has running water and electricity, and whether the student relies on public transportation. Another example is a study of students at Makerere University in Uganda, which defined family income categories in terms of the number of years of schooling of the father and whether he had access to an official or a personal vehicle.

The assumption behind the use of such indicators is that the social status and lifestyle that they signify are correlated with family income and assets available to pay tuition fees. However, the use of such social indicators in determining ability to pay tuition fees also presents some significant practical problems. First, verifying the accuracy of the information with respect to these indicators is very labor intensive. Staff from the Pedagogical University of Mozambique visit the neighborhood and home of the applicant for student financial aid. The staff asks people in the neighborhood, the parish priest, and others whether the information provided is accurate as well as inspecting the quality of the home itself. At the American University in Kyrgyzstan—which collects similar information from applicants for scholarships—university staff sometime actually visit the family and count the size of its flock of sheep. The confirmation of information in this manner is very time consuming and expensive.

A second limitation of the use of social indicators in determining ability to pay tuition fees is that it is by its nature highly subjective. The best that can probably be hoped for is a judgment that the student and the student’s family have no ability to pay or have some ability to pay tuition fees. Social indicators are likely to be unreliable in deciding which family can pay 10 percent of tuition fees or 50 percent, versus 100 percent.

The difficulty of verifying information about families’ ability to pay could be made more manageable by only verifying the accuracy of the information for a sample of those who apply. The efficacy of sampling or spot-checking depends on the severity of the penalty for cheating, the certainty that the penalty will be applied if cheating is discovered, and the thoroughness of the verification for the sample.

Conclusion
 The use of means testing at the University of the Philippines represents a good summary example. Adrian Ziderman and Douglas Albrecht report in Financing Universities in Developing Countries (1995): “To assess financial need, the university has had to move beyond income tax returns, which often understate true ability to pay. . . . (A)pplicants must complete a twelve-page questionnaire which asks about family assets, parental occupation and education levels, and location of residence. The questionnaire itself does not stop dishonest applicants, but home visits and harsh disciplinary actions are believed to make applicants answer questions more truthfully. Home visits verify the accuracy of most reports. Several students have been expelled from the university for giving false information.”

In sum, means testing for purposes of student financial aid in developing countries is subject to a number of serious practical difficulties that call into question its viability. It is particularly burdensome if attempted for large numbers of students or for student applicants drawn from across a large country. Therefore, the implementation of increased tuition fees in developing countries is likely to be hard to achieve in ways that are economically efficient and socially fair.