Scientific Bases for Fee Determination

Constitution of Nepal-2072 restructured the national state after which Nepal was declared Federal Democratic Republic. The constitution has categorized Nepal into three political structures: Federal, Provincial and Local. The state power has been delegated to Federal, Provincial and Local Governments. Local government includes rural municipality, municipality and district assembly. So, education sector has also been governed by the three according to their jurisdiction. While implementing the constitution, there are a lot of challenges and responsibilities upon the stakeholders regarding formation of laws, and bylaws to actualize the spirit of constitution. However, fee determination of education sector has always been a hot talk. It has been unsolved challenge for the academic entrepreneurs regarding fee determination.

After state restructuring, constitution has made basic education compulsory and free. The constitution has delegated rights to govern basic level and secondary level education both to 753 local bodies. But the local bodies have not been equipped enough to execute the rights.

The country has no choice but to rely on private educational institutions to run schools and colleges at the local level, provincial level and federal level from school to university in order to provide quality education. Therefore, the responsibility of handling the quality education has fallen on the shoulders of private educational institutions. To fulfill this responsibility and provide education of international standard, it is necessary that private sectors expand their investment.

The Constitution of Nepal recognizes the contribution of private sector. To make the national economy prosperous and healthy, the three pillars economic policy include:

• State policy for private sector participation and development,
• Gives priority to private investment,
• Monitor and manage private sector to make it service-oriented.

As the country reaches the final stage of implementation of federalism, the investment of state and local bodies is declining instead of increasing. Under the three-pillar economy, cooperative is one, but there is no legal provision for the cooperative to run an educational institution. It is not the proper time to think of a complete alternative to the private sector on pretext of two category-education. In the current situation where our country is unable to fulfill its responsibility at the state level despite the responsibility of education, the role of private sector cannot be undermined to make Nepal an “EDUCATION HUB” by creating academic atmosphere to attract national and international students. As private sector is able to invest and bring international investment in education sector, government must play responsibly to safeguard the investment made in education sector.

This will not only provide quality education to Nepalese in Nepal but also to foreigners. It will discontinue the trend of Nepali students from going abroad for further study which will certainly save ample amount of money draining to foreign countries.

Receivable Fees

As per the Education Rule – 2073, the following fees and deposit can be taken from the student.

A) Monthly tuition fee

B) Annual fees (2 months tuition fee equivalent for sports, extracurricular activities, laboratory, maintenance, library and first aid without increasing)

C) Admission Fee – When enrolled for the first time (only once equivalent to one month’s monthly fee)

D) Miscellaneous Charges

1) Exam Fee

2) Computer Fee

3) Transfer Certificate Fee

4) Special Training (Judo, Martial, Arts, Swimming, Singing, Dancing etc.)

5) Hostel Fee

6) Transportation Fee

7) Meal Fee

Institutional schools are allowed to take the deposit amount equivalent to one month’s tuition fee. The amount will have to be refunded at the time of leaving school. School will be allowed to take the fee only if the school has availed the facilities under the heading.

The Government of Nepal has classified schools into four categories on the basis of prescribed criteria.

A) “A” Category School

B) “B” Category School

C) “C” Category School

D) “D” Category School

Provision of Fee Determination

1) The District Education Office shall publish the notice three months prior to the commencement of the academic session, setting the maximum limit of fees to be charged by the categorized schools respectively.

2) The school should submit the proposed fee structure within the maximum fee limit to the District Education Office two months prior the commencement of the next academic session.

3) The District Education Office will check the legal grounds and approve the proposed fee structure.

4) The rate of approved fee should be posted by the school on its notice board.

Institutional schools should provide meritorious scholarships to the first and second position holding students in each class by waiving 100 percent and 50 percent fees respectively. In addition, 10% scholarships should be provided to poor, disabled, women, Dalit and janajati students from the total number.

None Satisfying Discussion

A report “A study on identification of scientific basis of fee structure in the institutional school’ by Department of Education under Dr. Prakash Chandra Bhattarai was submitted in 2073. The study report selected 339 institutional schools out of 5673 and found the below 14 headings for fee charging.

The field report showed that the fee charge under the above 14 fee headings was as per the education bylaws-2073.

International practice in fee determination includes additional heading in addition to the above 14 which consider physical infrastructure, teacher’s level, teacher’s retention rate, school’s reputation, student’s level, sports and extracurricular activities, technology-friendly environment, teaching-learning methods and materials, quality education, guardians’ satisfaction, price hike. The CBSE Board of India has fixed two levels of fees, Basic and Premium. The monthly tuition fee and essential fees will be charged under basic fee while the premium fee will be charged for additional facilities. This provision applies to 18,000 schools under CBSE. The board has also decided not to increase school fees by more than 10% each year.

When determining the fee in Nepal, no one is satisfied due to conflict of opinion, interest and prejudices. Private school owners believe that the market should be free in line with the open market economy, with less fear of interference from regulatory government bodies. It is mainly because Nepal is a member of the WTO that adopts an open market economy.

It is perceived that the fee would have been fixed in a way by which the cost would be recovered and the educational investment would be secured. The state controls the private sector in fee determination and does not allow them go beyond the boundary it has set.

Parents, by nature expect to pay low fee and always remain in dilemma whether the fee increase is natural & inevitable or it is fraudulent & profitable. Student unions are always rooting for a fair fee increase. They opine that fee cannot be increased in order to run a school and provide quality education. They believe that schools should be run even if they’re at a loss and they consider it as their regular/political agenda to oppose increase in fees. However, this thinking is gradually changing. Parents’ associations expect quality education at low fees or free of cost. Student unions and parents’ associations do not raise voice against the utility price hikes but make loud roar over the justifiable fee increase in schools.

Therefore, when setting fees, the government should focus on formulating scientific criteria and set fees fairly in a way that is acceptable to as many as possible. The school owners must accept the prescribed fee and put it into practice. Schools must address the allegation that private educational institutions have been charged more in an opaque manner and with less facilities and should also advocate for a fair fee. The complaints of well-functioning schools, especially those of “B”, “C” and “D” categories, which follow the rules, but the accessible and well-run schools, especially the “A” class, do not abide by the rules and regulations should be addressed. Also 10% scholarship should be made transparent. Most of the institutional schools have a public complaint that the salaries of teachers and staff are ill-paid compared to community schools’ teachers, however private school owners and principals are paid well off. This shall also be addressed. If the schools are not functioning, then the concerned should pay attention to make them functional whereas a well-functioning school should not be stingy in providing attractive salary to its teaching and non-teaching staffs. The teachers of the school should also keep in mind that quality of school only increases with happiness of students and guardians.

International Practice

In the international arena, expatfinder.com investigates and publishes reports on private school fees. The organization studied 707 schools in 98 countries in 2016 followed by 1576 schools in 117 countries in 2017 and a report was published. According to the report, the upper middle and middle class of the developed nations of the world wanted to study and teach other IB (Int’l Baccalaureate), American high school diploma, British Curriculum or other such courses every day. According to the report of the world famous “Forbes” magazine, by 2026, there will be a turnover of 89 billion US dollars in the world of education and even multinational companies will compete in the field of education. As international standard education becomes more expensive, some countries have even provided grants to make fees cheaper known as educational subsidies.

According to this report, the world has seen an increase of 2% in tariffs this year while Asia-Pacific has seen a 7% increase. As per the report, the world’s most expensive Leysian American school in Switzerland costs US $1,078,188 (about 110 million Rupees) for a 12-year schooling and the cheapest Norwegian “Kongsberg Int’l School” costs US $ 3,969 (approximately Rupees 4 lakh). In Asia-Pacific, the per capita income is US $ 14,150 per year (approximately Rupees 15 lakh).

The world’s most expensive schools, three of which are in Switzerland, are:

Top 5 Most Expensive Schools in the World

Top 5 Most Affordable Schools in the World

Top 10 Most Expensive Countries in the world (In US$)

1. Switzerland-29,711/yr
2. Australia-25,957/yr
3. China-25,820/yr
4. Singapore- 23198/yr
5. Kazakhstan- 22,650/yr
6. Israel- 20,989/yr
7. USA- 20,625/yr
8. UK-20,045/yr
9. Brazil-19,194/yr
10. Hongkong-18,465/yr

Yearly Int’l School Fees in Asia Pacific (in US$)

1. China-25,820
2. Singapore- 23,367
3. Kazakhstan- 22,650
4. Hongkong- 18,645
5. Vietnam- 17,857
6. Australia- 14,540
7. New Zealand- 13,977
8. Japan- 13,767
9. Thailand- 12,666
10. Myanmar- 11,000
11. Indonesia- 10,739
12. Malaysia- 10,363
13. South Korea-9,422
14. Taiwan-9,163
15. Sri Lanka- 8,994
16. Philippines- 8,182
17. Nepal- 7,613
18. Bangladesh- 7,164
19. Cambodia- 6,522
20. Laos- 5,418
21. India- 4,061
22. Vanuatu- 2,507

Analyzing the facts above, it is wrong to claim that school fees in Nepal are expensive. However, the living standards and purchasing power of the general Nepali population can be expensive. Even so, owning one is still beyond the reach of the average person. To provide more international standard education, provide additional facilities, build technical education and techno-friendly schools, enhance physical infrastructure, and strengthen library and laboratory, to provide qualified/capable & experienced teachers, manage staff and to provide salary and facilities accordingly. However, the fee collected today is insufficient.

University and College Fees

Various countries of the world that includes Austria, Argentina, Brazil, Belgium, Egypt, France, Germany, Finland, Iceland, Scotland, Italy, Spain, Slovakia, Mexico, Kenya, Luxembourg, Malaysia, Morocco, Panama, Hungary, Turkey, University education is free. However, there are also paid private colleges in these countries.

According to a study by the Organization for Economic Co-operation and Development (OECD) in its 35 member countries, the most expensive education in the world is that of United States, where public and private colleges pay an annual fee of $ 8,202 per year.

Average Annual Tuition Fees (for Bachelor’s Level) in US$

Public colleges in about a third of OECD countries do not have to pay tuition fees. There are only private colleges in the UK where the average person has to pay 12 thousand US dollars annually. Due to the high tuition fees in the United States, 75 % of students complete their studies with loans, scholarships or subsidies.

University fees are also lower in Nepal compared to other countries. However, there is a need to increase the quality and facilities of university level education. The fee for that is sure to increase.

Suggestions:

1. Education Act and rules should be amended in accordance with the restructuring of the state. The government should be generous, flexible, and universally acceptable, in-depth discussions with stakeholders, taking into account the above-mentioned national and international standards. While determining the fees, special attention should be given to the investor’s investment, the services provided by the school, quality and location, short-term & long-term plans of the school, the level of teachers and staff and salary and facilities and price increase.
2. Fee determination should be decentralized. Fees should be determined at the local level rather than at the central level as determining fees at the local level is more practical and realistic.
3. Fees should be determined independently by the school itself. The fee increase should be transparent and must be done in a fair manner only after consulting the parents and giving full information about it. The service provider should have the right to set the price of the service and the client should have the right to choose the service according to their level.
4. Once determined, the purpose should be to increase the tariff at a maximum of 10 % in other years or in line with the inflation rate and inflation rate published by Nepal Rastra Bank, in addition to providing more services and facilities.
5. When schools increase fees, there should be an increase in the salaries and facilities of teachers and staff. Every government teacher and employee should be given the same or more. If that is not done, then salary and facilities should not be given in a way that is embarrassing to say according to merit and ability.
6. It is not a crime for a school to make 20 to 25 % profit. This is because a reduction of 10 to 12 % bank interest rate (without meter interest) is essential for the development and prosperity and expansion of the school.
7. Schools should not charge fees for areas where facilities are not available and scholarships should be made transparent.
8. Institutions such as PABSON, N-PABSON, and HISSAN should outline the minimum and maximum fees (e.g., warnings, admonitions, penalties, keeping out of organizations etc.) depending on the region and area and the services and facilities.
9. The argument that fees should be increased every 3 years is impractical. Even in India, even if the fee is increased in CBSE / ICSE every 3/3 years, the fee is manipulated so that it does not increase by 10 % every year.

Conclusion:

The Constitution of Nepal 2072 has made basic education (from elementary school to class 8) compulsory and free whereas secondary education (from class 9 to 12) free. In fact, education cannot be free. Because there is investment in education and quality can be guaranteed according to the investment. Now, the question arises that in countries with free education in the world (such as Cuba, North Korea, etc.) the government is responsible for the expenses while in some country’s local bodies (provinces or municipalities) or religious and social associations / institutions, trusts, missions etc.

Similarly, in the Slovak Republic and Hong Kong, more than 90 % of private schools receive government grants. In Korea, Peru and Indonesia, the government provides up to 50 % subsidy directly to private schools. The state has provided grants and concessions to low-fee Catholic schools in Australia, while giving independent schools autonomy to set fees. Education is free in Italy, Germany, China, etc. but private schools still exist. There are more than 70,000 private schools in China alone. Private schools receive less than 1% in the United States, the United Kingdom, Mexico and Greece. In Sri Lanka, schooling is compulsory and free. Private schools are cheaper than government schools in Sri Lanka and Philippines. In Bhutan, both private and public receive free books. Even in India, private schools receive tax exemptions, grants and land from the government.

In a country like ours, the current fees can be reduced if the government makes some practical decisions. Here are some examples:

1. Depending on the location, currently 20 to 25 % of the total income is spent on house rent or real estate bank interest. Fees can be reduced if the state provides government land to private schools for free or on lease at a concessional rate.
2. Fees can be reduced by providing concessional loans at very low interest rates if you want to increase the physical infrastructure of the school (such as buying or building a house or land).
3. Fees can be reduced by providing tax exemptions on educational materials, sports materials, chemicals and equipment, computer and information technology related materials, buses and vehicles, etc. used by private schools.
4. Exemption from current taxes such as income tax, real estate tax, social security tax, etc. The amount can be deposited in the scholarship bank and the poor and deprived and backward areas and the target group can be studied for free.
5. The model of public-private partnership should be introduced to enhance the quality of public schools and the model of government physical infrastructure and private sector management should be implemented to reduce fees.
6. The government should either merge or close the schools which are running at a loss and run at a loss by providing attractive facilities or by paying compensation and improve the quality by merging or rejecting the schools which do not bring the minimum pass percentage even for 3 years. It also helps reduce costs.

The Constitution of Nepal states free education up to class 12 and enshrines the right to education as a fundamental right and does not exclude free education in community or private. On top of that, there are two levels of education in Nepal. The voice that there should be equality in education has also been raised loudly. Only the voucher system can provide a long-term solution to this problem. The voucher system is the freedom to allow students or parents to study in public or private sector and to choose a school by providing vouchers cost per student to the student/parent or school. Voucher system is currently applicable in Sweden, Netherlands, Finland, Ireland, Hong Kong, Portugal, France, Colombia, Chile, Belgium, Denmark, Cameroon, South Korea, Pakistan, UK whereas partially in USA. Out of 35 OECD countries, voucher system has been implemented in about 25 countries. In OECD countries, 84 % of students are studying in government, 12 % in government-funded private schools, and 4 % in pure form.

The world has its own model and practice of voucher system. The main feature of this system is that it fills the gap between rich and poor. It gives students and parents the right to choose the school. This system enhances the quality as it makes the enrollment of students selective rather than collective to cover the school expenses. It makes education competitive and emphasizes on making education not only theoretical but also practical.

According to the report of PISA (Program for International Student Assessment), having expensive education does not mean quality. According to the PISA report, the best education in the world can be achieved in Singapore. According to the PISA report, Asian countries like Singapore, Hong Kong, Macau, Taiwan, Japan, China, Korea, Israel have better quality of school education than the United States.

If Nepal is to become an “education hub”, an international standard school that is competitive in global market must be established here. For that, the government should be liberal and bring a liberal policy and invite the private sector by rolling out the red carpet. It will be relevant not to make the determination of tariffs – a matter of controversy, not to make the increase in ordinary tariffs to make the pricing of tariffs acceptable in practice.

Mr. Ramesh Kumar Silwa is the President of HISSAN and Chairman of GoldenGate International College and Advance College of Engineering and Management.