THE IMPACT OF TUITION FEES ON STUDENTS ENROLLMENT IN UNIVERSITY (A CASE STUDY OF THE AL-HIKMAH UNIVERSITY)

THE IMPACT OF TUITION FEES ON STUDENTS ENROLLMENT IN UNIVERSITY (A CASE STUDY OF THE AL-HIKMAH UNIVERSITY)  

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Over the course of the past few decades, the cost of the higher education at public colleges and universities has risen rapidly. Adjusting for the availability of state and federal financial aid, growth in the cost of higher education has outpaced inflation and even health care. The rise in tuition has been driven by a number of factors, including a pervasive trend in the use of cost offsetting in public higher education (John Stone, 2004), and real and even nominal declines in appropriations due to state revenue short falls (Koshal & Koshal, 2000; Rizzoo & Ehrenberg, 2003).

In Nigeria, the federal universities still maintain a ‘no tuition fees’ policy. However, the state and private universities charge tuition fees which have increased tremendously in recent times. Due to limited available capacity and resources at the disposal of the institutions and government the federal universities have not been able to admit all qualified students. A substantial percentage of these students are admitted into the universities which charge tuition fess/other charges. This is because these institutions operate in an economy characterized by high inflation rates and are profit oriented. The resultant effect has been a decline in university enrolment by poor households. According to Johnstone (2007) and Sanyal and Martins (2006). The tuition fee aspect of the educational financing reforms amongst others on the need to improve public finances as placed a significant pressure on household finance through increase in out-of-pocket expenditure and created financial barriers among households. Developing a better qualified and employable individual by running programs that provides students with tools for entering the workplace ensuring demonstrate capacity for innovation and technology in the institutions for facility learning (Federal Ministry of Education, 2012). As a result, this study also wants examine the cause of tuition fees on student’s enrolments in Nigerian universities. It will help a great deal for students to proffer solutions that will reduce the effects of tuition fees on student’s enrolments in Al-Hikmah University Ilorin, Kwara State.

1.2 Statement of the Problem

Critics of the tuition fees enrolment of students has increased in the demand for and enrolment in university education. According to Aina, Oyetakin and Oshun (2009), the monumental increase in student enrollment at the primary and secondary levels of education have consequently put a lot of economic, political and social pressure on the tertiary education level with the resultant financial consequences for student’s government and economy generally.

In the same vein, studies in the socio-economic background of households in over 70% are poor and on 29% of families can live on one dollar (N157.00) or above a day, which implies that the social-economic hardship experience by the parents deprives any of access to the university education as many cannot afford to pay their children’s school fees thereby not addressing the issue of access and equity. (Ukertor, 2010; Ehiametalor, 2005 and Williams 2004), also in the area of human development, Nigeria is ranked 168th in the world (Roa, 2008).

However, Nwangwu (2001) states that when parents and their children exercise their right to choose the types of higher education to pursue, it should be understood that higher education is not free or universal or compulsory, they have the duty to provide financial support for such students.

1.3 Research Questions

The foregoing has elicited a number of questions in terms of tuition fees on student’s enrolment:

1. What is the trend of students enrollment and tuition fees in Al-hikmah University?

2. What are the effect of increase in tuition fees on student enrolment in Al-Hikmah University?

3. What is the role government playing in reducing the tuition fees of such Universities?

4. To what extent do tuition fees determine/affect student’s enrolment.

1.4 Objective of the Study

The major objective of this study is to examine the impact of tuition fees on students’ enrollment in Al-Hikmah University.

The Specific Objectives are:

1. To examine the trend of students enrollment and tuition fees in Al-Hikmah University

2. Examine the effect of increase tuition fees/school charges on the student enrolment.

3. To estimate the price elasticity of the tuition fees on student’s enrollment in Al-Hikmah University.

1.5 Research Hypothesis 

Ho: Increase tuition fees have no significant impact on students’ enrolment: Al-Hikmah University.

Ho: Increase tuition fees has significant effect on student’s enrolment: Al-Hikmah University

1.6 justification of the study

This study will be of great importance to all academic institutions and Al-hikmah University in particular, in implementing appropriate students’ enrollment strategies through a better understanding of the sensitivity of University  education demand. Academic leaders need to understand the responsiveness of demand to tuition fees in their institutions to help them in planning and implementing correct enrolment strategies. 

Another motivation for this study  is the dependence of tuition revenue on enrollment. There is need to understand the importance of the demand for higher education when proposing or implementing a policy to increase tuition fees. Also, this study can help higher education decision makers in managing unexpected effects of soaring tuition fees, and in managing enrolment and tuition revenues. 

Therefore, considering the importance of tuition elasticity of demand is essential in managing enrolment in academic institutions. It could be argued that using the concept of elasticity is useful in evaluating enrolment policies. In fact, elasticity is an important evaluation tool that may be used by government and academic decision makers. 

1.7 Scope and Limitation of Study

This study shall involve and strictly confine itself to the economics of tuition fees and student’s enrolment in Al-Hikmah University Ilorin, Kwara State, Nigeria. This study sought to determine the effect of tuition fees on student’s enrollment between  2009 and 2017.

  1.8 Organization of the Study

This study shall be divided into five chapters. This study commences with the introduction of the topic. Chapter two contains the literature review which includes its conceptual framework, theoretical framework and the sources of external debt. The research methodology is outlined in chapter three while chapter four represents and analyzes the data as well as the interpretation of the findings. Chapter five, which is the last chapter, concludes and recommends.

CHAPTER TWO

2.1 Introduction

This Chapter presents a review of related literature on the topic of the effect of tuition fees on student enrolment in Nigeria Universities. The chapter is structured on the research questions and compartmentalized into three sections. The first section explains the conceptual framework with regards to the universities and their effect on Nigeria University. The second section entails theories relating to tuition fees empirical examination of the relationship between tuition fees and student’s enrolment as well as their effects on the Nigeria Universities. 

2.2 Conceptual Framework

This explains different concepts as they relate to the relationship between tuition fees and student’s enrolment in Nigeria and their effect on universities. 

2.2.1 Concept of Tuition Fees

According to Marcucci & Johnstone, (2007) tuition fee generally refers to a mandatory charge levied upon all students (and/or their parents) covering some portion of the general underlying costs of instruction. A fee, on the other hand, generally refers to a charge levied to recover all or most of the expenses associated with a particular institutionally-provided good or service that is frequently (although not always) partaken of by some but not all student and that might, in other circumstances, be privately provided. Thus, charges to cover some or all of the costs of food and lodging, or of health and transportation services, would normally fall under the category of fees. In short, Tuition fee is the money that a student pays in order to be taught, especially in a college or university.

Hoenack and Weiler (1975) explore tuition policy and whether price elasticity of student quality is significant. Choosing to sample one liberal arts Ph.D. program and one professional program (programs they observe having sizable excess demand), they hypothesize that tuition could be allowed to increase without significantly sacrificing student quality. Using data from the University of Minnesota in 1971-1972, they estimate the effect of a 50 percent tuition increase and find that student quality is mostly unresponsive to a change in price, but they do not rule out the possible substantial effect of tuition changes on demand by students of comparable quality.

Dolan, Schmidt, and Jung (1985) use a three-equation simultaneous model to

examine the institutional production of higher education in order to identify the implications of institutional resource allocation. In their empirical model, student quality is treated endogenously and is measured as the median composite SAT score of the 1981 freshmen class at 174 private undergraduate institutions. They find a significant, negative effect of scholarships (aid) on student quality and a positive relationship between student quality and tuition. The seemingly perverse nature of these findings suggests, as explicated by the authors, that less prestigious universities are relatively unsuccessful at attracting quality students through aid and that tuition may be perceived as an index of institutional quality.

Nicholson (1995) expands upon the ideas of Newhouse (1970), who examines the

nature of the non-profit hospital by jointly maximizing its quantity and quality of service subject to its costs, and provides a basic theoretical framework for constrained utility maximization of a non-profit organization. Nicholson assumes that non-profit firms make decisions which afford maximum utility to their managers and administration. He maximizes a two-variable utility function, in which both variables are assumed to have positive but diminishing marginal utility, subject to a zero-profit budget constraint. The Lagrangian maximization yields an equation that sets the ratio of the marginal utility of the first variable to the marginal utility of the second variable equal to the ratio of the net marginal cost of each variable. Since the marginal utilities of both variables are assumed to be positive, the marginal cost of each variable is greater than its respective marginal revenue. Nicholson concludes that non-profit organizations expand production beyond profit-maximizing levels, diminishing their own profits, in order to maximize utility.

White and Rothschild (1995) focus on developing a theoretical model that concentrates on educational technology of various inputs and outputs in order to examine tuition pricing. They note that students in higher education are inputs into the educational process as well as recipients of educational services known as human capital output. Assuming that students only care about the amount of human capital they receive and the amount of tuition they pay, White and Rothschild’s model maximizes the amount of human capital output allocated to each student subject to the amount of general resources available at a given non-profit university. Thus, tuition is equal to the human capital increment per student. Breneman (1994) uses a similar model that maximizes education inputs, accounting for a school’s size and prestige, subject to various revenue sources and costs. Wetzel (1998), on the contrary, concludes that the nature of the competition in higher education is too complex to model holistically. He insists that enrollment demand models must be specific to each institution of higher education to obtain meaningful insight.

Farhan, (2015) investigates the phenomenon of elasticity of demand in higher education and how tuition elasticity can affect enrolment among international students in comparison to national students in publicly funded universities in Ontario. This study examined the relationship by categorizing universities into three categories (research intensive, teaching intensive, and comprehensive universities), and by sorting demanders (students) into two groups: national students and international students. The study also examined international-national students’ ratio with respect to tuition fees at each category of universities. The result finds a positive and significant relationship between enrolment and tuition fees for international students at research intensive universities. This result suggests that the quantity demanded (enrollees) and tuition revenue will be increased as a result of increasing tuition fees.

On the other hand, when elasticity of demand was examined at different categories, universities

might not be harmed strongly even if there is a negative relationship between enrolment and tuition fees for domestic students. The result finds that enrolment is less sensitive (less elastic) when tuition fees is raised by one percent for domestic students.

In addition, from demanders’ viewpoint, the negative relationship between enrolment and tuition fees for domestic students highlighted the rationality of national students.