Education: Filling in for the government

Pressures on the economy are real and present. The government is being forced to rationalise expenditure. Difficult decisions have had to be taken, and the education budget once again seems
ationalised, though a mere 2.1 percent of GDP was allocated for education, according to the Economic Survey.
But its not all doom and gloom. The central bank recently announced that Rs189 million will be disbursed through a scheme that gives out loans on an interest free basis for a ten year period to students pursuing post secondary education.
The programme is based on an endowment fund that was setup with a one-time donation from the Ministry of Finance and the five major banks. The returns on the Rs500 million fund are funnelled into the lending scheme.
Loans cover tuition fees, room and board, and textbook costs. The emphasis of the programme is on the sciences, engineering, medicine and business disciplines, though almost half of those who obtained a loan under the scheme went on to study medicine.
"In 2002, we disbursed 166 loans to students; the number of loans has consistently risen and this year we will give loans to 1,436 students," said Shamim Iqbal of the NBP, who oversees the programme.
Still, there is plenty of room to grow as only about half of those applications that met the criterion for selection were awarded loans in 2009-10 due to the paucity of funds, according to data shared by the NBP.
Recovery rates are higher than 70 percent, which makes for a compelling argument for commercially launching student loans as a bank product. The government will have to provide interest protection to banks if loans are to be doled out to students at affordable rates.
A cause for concern is that almost 90 percent of the disbursements were for undergraduate studies; doctoral students received less than 1 percent of the loans.
And that is where the urgent need lies, according to former minister of science and technology, Dr Atta-ur-Rehman. "The real need is to support students to go abroad to top universities for graduate education," he said.
Higher Education Commission had launched a Rs1 billion programme that sent nearly 900 students to universities, but that programme grounded to a halt in the current year.
There are 400,000 students in Pakistani universities, but only 4,000 PhDs as university faculty in the country. That represents about 23 percent of university faculty. Dr Rehman feels that 40,000 PhD faculty will be needed to meet the education needs of the country in the coming years as more young adults come of age.
"We need to be thinking in the billions and not in hundreds of millions if we are to bridge the gap that is developing in higher education," asserts Dr Rehman.
While the programme in question is a welcome step, the government and the private sector alike, need to give the education sector the attention it demands if human capital in the country is to be equipped with the tools it needs to remain competitive in the years to come.