UNIVERSITY FEES

Dr Tony Tan Keng Yam: Mr Speaker, Sir, the increase in university fees, announced by the National University of Singapore (NUS) and the Nanyang Technological Institute (NTI) last month, has predictably drawn a number of comments from members of the public, Members of Parliament and University students. This is to be expected. Increases in fees or charges are never popular and the public, parents, students, MPs are naturally concerned about any increase in fees or charges, what effect this will have on students' budgets and whether the increase in university fees will have the effect of limiting access to university education for poor but deserving students.

Sir, to allay Members' fears, let me repeat again Government's policy regarding university fees. I will quote from the speech which I made in Parliament on 17th March 1989 [Hansard Vol. 53, No. 6, col. 455]:

"In a nutshell, Sir, the policy of the Government is and will continue to be to make sure that no bright student who has been accepted by NUS or NTI will be prevented from acquiring a university education simply because his or her parents cannot afford to pay the fees and we will do what is needed to maintain this policy including, if necessary, reviewing our loan schemes or providing other forms of financial assistance, such as awarding more scholarships or bursaries if this is shown to be necessary."

Sir, I think that no one should have any doubt of Government's determination in this respect. As I said at the inauguration of the JCCI Singapore Foundation function at the end of last month:

"For a small country like Singapore, education and training are vital. Our only resource is our people. It is for this reason that the Singapore Government has placed top priority on raising standards of education and providing quality education for our children."

We want as many of our students as possible to go as far as they can up the educational ladder so that they can improve their prospects in life and thereby make a contribution to Singapore. Why then do we raise university fees? Sir, the answer lies in the schedule which I had circulated in 1987 and 1989 and which I have updated. I shall ask the Clerk of Parliament to circulate Annex A (Cols. 83 - 84). [Copies of Annex circulated to hon. Members]. Annex A - 1990 RECURRENT EXPENDITURE AND ENROLMENT (Cols. 83 - 84)

Sir, this schedule is a very simple one. It shows how money is spent by the Ministry of Education. And if Members will note from the schedule, they will see that the greater part of the educational expenditure, some 65%, is spent on primary and secondary school education and vocational training. This is as it should be because the majority of our students, 440,000 students or 85% of our total student population, are in primary and secondary schools or in the VITB. It is therefore right that the largest amount of education expenditure should go towards this group. For post-secondary education (junior colleges, centralised institutes and polytechnics), the figures are as follows: 51,000 students, representing 10% of our total student population, and accounting for 15% of total education expenditure. Finally, university students, NUS and NTI, 24,000 students (5% of the total student population), and 20% of our total education expenditure. Sir, in other words, 20% of total recurrent expenditure on education in Singapore was spent on NUS and NTI and the number of students in NUS and NTI represents 5% of our student population in Singapore. Put it another way, the Government was spending in 1990/1991 some $14,000 to educate each student at NUS and NTI as against $5,000 for each student at the post-secondary level or $2,500 per pupil in primary or secondary schools.

Sir, we have to be fair. Students who make it to university have good prospects in life. Most of them will earn good salaries after they graduate. Some will earn very large incomes. It is surely only right that, after the students have graduated from university, they should pay back part of the Government's subsidy in order to lessen the burden of financing university education from taxpayers' money. And this is the reason, Sir, why it is Government's policy to ask the universities to reduce their dependence on direct Government financing and to earn more of their income through charging appropriate fees and the raising of donations and endowment income.

Even with this policy, Sir, I would point out that the actual grant by Government for NUS and NTI has increased significantly. For the financial year 1989, the Government grant to these two institutions was $271 million. For this financial year 1991, the grant will be $342 million, an increase of $71 million or 26% in two years. I think, faced with these figures, it is quite clear that Government has been generous in financing university education and no one should quarrel with the allocation.

Sir, I now come to Members' worry as to whether the increase in fees will limit students' access to university education. As I said in 1989:

"We must ensure that fee increases do not have the effect of limiting access to NUS and NTI particularly for students who are bright but who come from poor homes. These students have as much right to university education as children whose parents are in more comfortable circumstances."

Sir, there are many avenues for students to get access to money. The Government has liberalised the use of CPF funds for education. In addition, the Government proposes to raise the maximum percentage of the tuition fee loans from 50% to 60%. As of last year, the number of students who took advantage of our tuition fee loans was 20% of the student population in NUS and 26% in NTI. Those who have required additional finance from the university's own loan funds represented half percent of the student population in NUS and 2% in NTI.

Sir, I met with the student leaders of the NUS and NTI last Monday and discussed with them concerning the increase in university fees and the impact on students. To lessen any hardship that students may face, the student leaders requested, among other things, that the Tuition Fee Loan Scheme be revised by further increasing the loan amount so as to reduce the amount in cash that the students have to pay as well as extending the repayment period and the period before commencing repayment of the loan.

Sir, I am happy to inform Members that we have considered the requests of the student leaders and will revise the Tuition Fee Loan Scheme as follows:

(1) The amount of the tuition fee loan will be raised to 65% of the tuition fee. Sir, as shown in Annex B (Cols. 85 - 86), which I shall ask the Clerk of Parliament to circulate [copies of Annex circulated to hon. Members], this would mean that, other than Medical and Dental students, students will not have to pay any additional amount in cash as compared with last year. Medical and Dental students will have to pay an additional $180 per year; Annex B - TUITION FEE LOAN SCHEME (Cols. 85 - 86)

(2) We will extend the repayment period of the loan from the current 15 years to 20 years; and

(3) The period before commencing repayment of the loans will be extended from one year to two years after graduation. These revisions will make it substantially easier for students to repay the loans and I hope that students who have financial difficulties will be wise enough to take the loans.

Sir, now that the Government grant to NUS and NTI has been reduced to 75% of their operating expenditure, with 21% being funded by student fees and 4% by miscellaneous income, it is my view that we should now shift the focus from increasing student fees to building up of large endowment income for NUS and NTI.

University fees will continue to increase in future years to take account of rising costs, particularly wage costs, and to increase the percentage of operating expenditure funded by fees from 21% to eventually 25%. However, this can be done over a period of years so that the fee increases in future years can be smaller and not as large as in the last four years.

Sir, NUS and NTI are of the view that the percentage of operating expenditure to be funded by miscellaneous income can increase from 4% to 5%. If NUS and NTI can build up endowment funds large enough to generate income amounting to 10% of their operating expenditure, this will enable us to bring down the Government grant to NUS and NTI to 60%, that is, 25% funded by student fees, 5% by miscellaneous income, 10% from endowment fund income and 60% from the Government grant.

Sir, the budget of NUS and NTI for the financial year 1991/1992 is $459 million. If 10% of this expenditure is to be funded from endowment income, this would mean that NUS and NTI would need endowment income of $46 million for the financial year 1991. At an interest rate of 5%, this would mean an endowment fund of some $1,000 million.

Sir, can NUS and NTI build such large endowment funds? I think that it will require a lot of work but I am confident that with the support and generosity of Singaporeans, this can be achieved.

Last month, I had the opportunity to visit Princeton University, together with the Vice-Chancellor of the NUS and the President of NTI. We were told, Sir, by Princeton University officials that Princeton raised some US$80 million each year, of which US$50 million came from individuals, principally alumni of Princeton University. And Princeton is not unique. Cornell University, which we also visited, raises US$160 million annually, with US$100 million (or two-thirds) coming from individuals, again principally alumni of the University. And Harvard, Sir, is launching a drive to raise some US$2.5 billion to add to its endowment fund which is already very large.

Sir, when we asked the officials at Princeton University why their alumni were so generous in contributing, their reply was instructive. The officials said that even though the alumni had already graduated from the University, they retained a stake in Princeton to ensure that the quality of the University continued to improve. This is because the alumni knew that the value of their degrees was dependent on the continued high quality and standing of Princeton University. In other words, Sir, if the University deteriorates, then the value of their degrees goes down. If the university continues to improve, then the value of their degrees goes up. So the alumni had an incentive to contribute to make sure that the education which Princeton offered continued to be of high quality and recognised to be so by the community in America.

I think that this is a very sensible attitude of mind. NUS and NTI will, in the coming months, make public their plans to raise the endowment fund income. And my Ministry is now discussing with NUS and NTI as to how the Government can help to get their endowment funds off to a good start but alumni should respond positively and indeed generously. I hope that Members here, particularly those who are graduates of NUS and NTI, will rally round the two institutions and encourage their fellow graduates to contribute generously to the endowment funds of their alma mater.