Cost sharing rate increases, repayments decline

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The Ministry of Science and Higher Education is to increase the Higher Education cost sharing tuition fee from 15 to 30 percent in the next academic year. This decision comes as repayment rates are declining. The Ministry of Revenue collected 488 million birr from the cost sharing repayment scheme last fiscal year.
Ethiopia developed the cost sharing plan to serve as an alternative source of supplementing revenue in a bid to open more opportunities and make students responsible citizens and customers.
Cost-sharing in Ethiopia has been implemented since 2003 with the objectives of generating non-governmental revenue, expanding access, and improving equity and quality in higher education.
Students are expected to pay 15 percent of their tuition fee while the remaining 85 percent is sponsored by the government.
The revenue from cost sharing is less attractive as the country spends a huge amount of its budget on education. However, the scheme is believed to be a more attractive, simple and manageable alternative in the Ethiopian higher education landscape. It is also an attempt to ensure equitable access to students of any background, as there is no need to stipulate income of parents to determine the repayment amount.
Government financing of education has been generous. It is similar to the amount spent on transport and other infrastructure. Public spending on education in Ethiopia has increased by 70 percent in real terms between 2003/04 and 2011/12. In this period, education accounted for roughly 20 percent of total government spending.
According to the figure from the Ministry of Revenue, repayments from cost sharing increased over the last three years from 238 million in 2016/17, to 314 million birr in 2017/18 and 488-million-birr last year.
Calculating appropriate tuition fees and costs, giving every citizen a tax identification number (TIN) and decentralization and strengthening the tax collection and information system are important for successful implementation of cost sharing in Ethiopia
“The importance of consolidating the national ID scheme is a wasy to trace who works where in order to collect or deduct the payment”, said Bahiru Awel, Revenue Administration Director at the Ministry of Revenue.
Lack of awareness by private organization employers to deduct 10 percent from the gross salary and pay it back to the tax collecting ministry after a six month grace period, lack of central data system to trace where someone is working, and the low amount of job opportunities are some of the challenges when it comes to collecting the educational revenue.
Surprisingly, the Ministry of Science and Higher Education has not organized data on how many graduates repay their cost sharing except data on the disciplines that are calculated in service years.
“Graduates who work in government offices and those who need their original documents pay the most as the experience shows,” Bahiru adds. The minister has decentralized the collection mechanism to make the program more accessible.