You 3 July 2012 ‘Wau ntemanonal Jona or Busness and Princ SSN 2044-1679 + Online ISSN 2044-1601 Managements pode by AMURE Intemational Peer Reviewed Journal unascpinary Resear, an iSO 90017008 or pd 19/1077 amare ion vit. 274 cei bythe AIA Rega In A Note on Measuring Economic Returns to Philippine Public Higher Education: Private, Fiscal, and Social Perspectives FRED AVESTRUZ [email protected] Business Management Cluster University of the Philippines - Cebu Cebu, Philippines Abstract - Higher education in the Philippines today appears to have reached a stage of investment saturation. Enrollment expansion in the public sector has led to relative contraction in the private sector Budget pressures in government funding have created low quality of education in many public institutions while fierce price competition among many private institutions has led to deterioration of quality of education. This paper addresses the concems of public institutions in their efforts to obtain suificient funding from the government and to assess the direction of their efforts so that they do not compete with private institutionsbut become leaders in their education communities. Methodologies for estimating private, fiscal, and social returns are developed. These methodologies are based on cost-benefit analysis, tailored to conditions where public institutions operate. Results from these estimates could guide public institutions in directing their resources to those activities that generate the greatest social retums Private and fiscal rates of retumestimates, when performed on specific disciplines, will assist institutions in assessing their current role in the market and the direction towards which they should move. Policy makers may also find these methodologies useful in their decision on creation, expansion, or rationalization of public institutions. 2Keywords — cost-benefit analysis, economics of education, public expenditure analysis, education finance, and welfare economics. INTRODUCTION In a market economy, efficiency and growth are achieved through the interplay of supply and demand in a competitive environment Innovations and constant improvements flourish from the private sector in this system. In the presence of market imperfections and externalities, the need for government intervention becomes necessary. This may be in the form of regulations and/or government participation. In the case of education where benetits accrue not just to the individual recipient but also to society, government intervention is, justified. The absence of government intervention in education would result to a socially suboptimal number of graduates. Social benefits decline from primary to secondary to tertiary education. Thus, more government subsidies are needed at the primary than at the secondary and much less at the tertiary levels (Hough 1993) Philippine higher education has been described as unique because of its extensive coverage and the dominant role played by the private sector. Enroliment ratios were higher than developed countries (Tan and Paqueo 1989 and Hossain and Psacharopoulos 1994). This can be seen in Figures 1 and 2 below. Figure 1. Global Comparison of Higher Education Enrollment Ratios (1980) Source: Ta and Pagueo (1989Figure 2. Philippine Higher Education Enrollment Ratios ‘Source Tan and Paquo (2989 The same authors also argued that investments in higher education in the Philippines were still warranted based on their estimates of social rates of retumn. Private retums exceeding social returns indicate that growth should come from the private sector. Table 1 below shows the various estimates of return on Philippine higher education. Table 1. Studies on returns to Philippine Higher Education Yess | Paivate | Social | Authoc(=) 1968 11% _ | Williamson and De Voretz (1969) in Tan and Pagqueo (1989) 174 [95% [85% [ILO (1974) in Tan and Paqueo (1989) te [16% | 85% | Dumlaoand Arceo (1979) in Tan and Paqueo ) tess [| 133% | Tan and Paqueo (1989) 1988 | 116% | 105% | Hossain and Peacharopoules (1994)In the 2 decades following the periods covered in those studies, public higher educational institutions (HEI) increased in number. Table 2 shows that between 2001 and 2011 the number of public HEIs increased at an average anmual rate of 8.6 percent, while the number of private HEIs increased at an average of only 3.2 percent annually. Table 2, Number of Higher Educational Institutions in the Philippines Year Public | Private | Total 2001 26 | 1aa7 | 1413 2004 a7 | 143 [7,890 2011 607, 2,180) Ave, Annual Growth 2001-11 | 36% | 3.2% Source Philippine Commission ot her Estuertion (2012) Enrollment in public HEls likewise surged relative to their private counterparts. It increased at an average annual rate of 47 percent ‘between 1998 and 2011 while private HEI enrollment increased at only 0.35 percent in the same period. Total enrollment was increasing at an average of 1.79 percent annually during that period. From a share of 28.8 percent of total enrollment in 1998, public HEIs absorbed 39.1 percent in 2011. Table 3 shows enrollment in public and private HEIs during that period. This confirms an earlier warning that increase of public investments in HEls may not lead to more schooling in the Philippines but to less private expenditures in education (Hossain and Psacharopoulos 1994), 6Table 3. Enrollment in Philippine Higher Education (000) Year Public | Private | Total 1998 56 1624 | 2279 2008 819 1583 | 2.402 2005 850) test | 2483 2006 882 ims | 2600 2007 5: 1739 | 2.654 2008 983, ies | 2605 2008 1,083 ess | 2771 ‘Ave, Annual Growth 11998-2009 47% | 035% | 17 Source: Philippine Commassion on Higher Eduction (2012) Budgetary allocation for public HEIs had remained essentially constant as their number increased leading to declines in the quality of education in many of these institutions. (Kitaev et al. 2003), The increase in the number of public HEIs also created fierce price competition among many private HEIs. As some private HEIs held their tuition rates low to attract more students, they pack 50 to 60 students in their classrooms and load their relatively underpaid faculty members with as much as 48-hour teaching weeks. The result is deterioration in the competence of their graduates. This paper addresses a portion of this problem through the development of methodologies that may reveal the economic and financial performance of public HEIs particularly on the fiscal and social aspects. Using these methodologies may also guide public HEIs, in the direction of their resource utilization. It should be noted that these methodologies apply mainly to undergraduate programs and may not apply to graduate programs, especially those in sciences and technologies and other fields where costs are high, and private returns are low. *FRAMEWORK Public HEls have to account to government and to society for all resources they use. All resources have to generate net gains to Treasury or to society. Net gains trom resources can be measured using cost- benefit analysis (CBA). While the method is fairly simple, the challenge is in measuring costs and benefits. These measurements can only be done in monetary terms to make costs and benefits comparable to each other. Money at different points in time has different values. One hundred pesos paid 5 years from now is only worth P56.74 today if the interest rate is 12 percent and P74.72 if the interest rate is 6 percent. These amounts are called the present values (PV) of 100 pesos paid 5 years from today at 12 percent and at 6 percent, respectively. All costs ‘and benefits have to be expressed in their PVs, using an appropriate interest rate, at a computationally convenient reference time period. There are two ways to express gains from an investment using CBA. Ones by subtracting the PV of costs from the PV of benefits. The difference is called the net present value (NPV) of the investment. If the NPV of a project is greater or equal to zero, the project is considered acceptable, This means that the project generates a rate of return greater than or equal to the interest rate used. ‘The other way returns from an investment is expressed is by solving for the interest rate that will make the PV of benefits equal to the PV of costs. This interest rate is called the internal rate of return (IRR) of the project. IF IRR is equal to or greater than the desired rate of return, the project is acceptable. Mathematically, CBA computations are as follows. (Q) NPV=CF,(142)!+CFy(eay+ CE yea) + ~ + CR /(l+2) (2) 1,= CE (0rky§+ CE (lek)? CF /(lsk))+~ + CE (Ike Where: I, ~ the amount of total investment at time 0 CE, = cash flow from the investment at time 1 CF, = cash flow from the investment at time n kK the Internal Rate of Return of the project r =the cost of funds used for the investment ”The superscripts after the close parenthesis symbol indicate the intimber of times the CF is discounted, Objections to the use of CBA in education have been raised. They include, the difficulty in measuring costs and benefits, selecting the time horizon, and the choice of interest rate (Dunn and Sullins 1982), Jimenez and Patrinos (2008), however, argue that despite the difficulty in getting accurate NPVs and IRRs for investments in education, it is, still a very useful tool, particularly in presenting proposals to finance- oriented poticy makers. In this study, the IRRis used as the indicator for determining returns to investments in public HEIs, Methodologies for determining IRR from 3 perspectives, namely, private, fiscal, and social are presented below. Private retums to higher education reter to the gains the student reaps from devoting personal time, money, and other resources in the pursuit of a college degree. These gains may focus on the difference in earnings between a college and a high school graduate. Private rates of retum may be of interest to policy makers in determining the impact of public higher education on equity and the redistributtion of income and in the design of student loan programs as alternatives to grants or subsidies Fiscal retums refer to how much more taxes are generated from, subsidies in public HEIs. Notable examples of studies conducted on this aspect of higher education are those of Bluestone (1993) for the University of Massachusetts-Bosion and Hipple (2001) in Tennessee. Using differences in income and consumption taxes paid by high school graduates and college graduates in their respective institutions they estimated significantly high fiscal returns, Public HEIs may find this aspect of return useful particularly in negotiating with government ‘budget officials. Social returns refer to how much benefits society, as a whole, obtains from investments in higher education. Tuition and other educational expenses, whether paid to private or public HEIs are part of social costs. Benefits may narrowly be measured by the difference in productivity of an individual who went through higher education compared to one that did not. Higher education may have broader social benefits that are difficult to measure including externalities such as how much *more constructive the individual becomes as a voter during political processes, Social retums to education are usttally compared to social retums of other projects competing for the same social resources such as infrastructure or poverty alleviation projects. MATERIALS AND METHODS In developing the methodologies for each of the three perspectives, data from the University of the Philippines-Cebu (UPC) undergraduate management program a used to illustrate an application. UPC is an autonomous mit in the Central Visayas Region of the University of the Philippines System (UPS). The same mandate applies to UPC as to all other units of the UPS. Table 4 shows some information about UPC and the undergraduate management program. Table 4. University of the Philippines Cebu Undergraduate Management Program (2011-2012) ‘Number of Fulltime Faculty of UPC 7 Number of Full-time Faculty of undesgradwate management program 10 Central Visayas UPCAT Qualifiers 2010) 30% “Total Undesgraduate Enrollment of UPC 1069 “Total Enrollment of undergrad management | 242, peogeam, Total Operating Budget of UPC P 647 million Cost per student 60,509 Average Govemamant Subsidy par student 53.315 Annual Growth Rate of Budget 10% Source: UP Cebu Ofte of Budget, Registrar's ice, UP Statistics (2010) Admission to UP Cebu is based on UP College Admission Test (UPCAT) scores, high school grades, and other factors. In 2010, a total of 1,664 high schoo! graduates from the Central Visayas Region applied with only 499 qualifiers, or 30 percent (UP Statistics 2010), ”With a total enrollment of 1,069 in 2011 and 77 full-time faculty members, the average student to faculty ratio was 13.88. Students in the management program take their first 2-year courses, general education, under other clusters. Maximum faculty teaching load is 12 hours per week. Personnel services and maintenance and other operating expenses were P64.7 million in 2011. This has been observed to increase at 10 percent annually in the last 3 years. UPC follows a socialized tuition and financial aid program (STFAP). Students at the high income bracket pay tuition rates comparable to the top tier universities in the region. Students at the lowest income bracket do not pay tuition. They also receive a stipend to cover partially other educational expenses. Table 5 shows the STFAP. Table 5. UPC socialized tuition rates and financial aid program Student |ncome Range [Tultion [Misc& Lab | Supend | Fercentage to Bracket | (Php) Feojcedit |Fee (Php) | pee Sem | Total Students unit Php) (Php) | a0u12) ‘A [Mocethan | 1000 f 1405 | 0 3 1,000,000 B | 500,001- a a 3 1,000,000 ‘| 250001. a a i 500,000 Dd ‘f1ss0o.- a a wr 0,000 er [s0p01- 0 0 ° Bi 135,000 2 _[0-s0000 a 0 | B00 35 Sources UPC Office of Student Afirs Private Rate of Return ‘The first step in estimating private rates of return is to determine the costs incurred by the student while in college. This would include tuition and other schoo! fees, books and other materials, and foregone 0income while in college. Living expenses, including travel, are not included because these are incurred even if the individual does not attend college. Travel would be to work instead of to college. For a UPC management student in bracket A, this would be as follows’ Tuition (P1,000 per unit X 36 units/year) 36,000 Miscellaneous and Laboratory Fees (P1,405/ semester) 2,810 Books and other materials (assumed) 10,000 Foregone income (P305/day X 339 days/year) 103,400 Total First Year Private Expense P152,210 Foregone income is assumed to be the legal minimum wage that a highschool graduate may earnif she doesnot goto college. Itis assumed that she works for 6 days per week. Although the legal minimum wage is not increased every year, it increases at an average annual rate of 5 percent (Philippine DOLE 2012). Foregone income, therefore increases to P108,570 in the second year and increases accordingly every year until the student graduates. Tuition, other school fees, and books and ‘materials are assumed to remain the same every year tntil the student graduates. An annual opportunity cost of 25 percent (the prevailing interest rate of unsecured personal loans in most banks) is imputed This asstumes that all of the student's costs, including foregone income, are borrowed for repayment after graduation. This may overstate the amount of total investment. Table 6 shows the different amounts of personal investments of UPC management students in different STFAP brackets. The student is assumed to complete the undergraduate program in 4 years. Table 6, Private Investment of UPC Students SIFAP Bracket |Studentslnvestment | Foregone income | Total Fisst Year peryearfordyears | in Fist year Investment (Php) (000) (Php) (000) (Php) (000) A 88 1084 1522 B Bd 1088 8 € 2 1034 1306 8D 200 18 13a ET 100 1084 Tad BR (49) 1034 soa Upon graduation, the student starts working at an assumed anntial salary of P195,000 (P15,000 X 13months) growing at 10 percent annually for 45 years. The student’s annual return is the difference between her income as a college graduate and the ammual income of a high school graduate. Figure 3 shows a graphical representation of investments and returns of UPC management students at the assumed salary rates. INVESTMENT (000) Figure 3. Investments and cash flows of UPC Student Initial annual income ditterential between UPC and high school graduates is assumed to be P69,300. As the years progress, this difference increases at an average annual rate of 12.35 perce 5 percent.‘Mathematically, the computation of private IRR is as follows. GB) = CEPI CE, UCL Her CEL + CEUCREY Le Le ieee edie Lier) Lee) ©) CESHCE (lig) where: = the total value of the stuclents investment for a UP Cebu education 1) 1%, Land I,e*'are the amounts of annual investments made by 2 UPC student in his/her frst, second, thied, and fourth year of study, sespectively assumed to be made at the hegianing of the year. P95 the interest sate the student pays for borsowing money. CE, CE om, .., CEseare the cash flows resulting from the student's investments in a UPC edtscation Jk== the student's IRR om hisher UPC education investments (CE-*- UPC graduate’s cash flow at any year t g7°= growth rate of cash flow of UPC graduates Fiscal Rate of Return The estimate of fiscal IRR starts with the amount of subsidy. For UPC in 2011, subsidy per student was P53,315. This amount is assumed to grow at 10 percent annually in accordance with the pattern during the previous years. Each year’s subsidy accumulates interest at 6.5 percent, the yield of government Iong term bonds, until the student graduates. The sum of these annual subsidies including accumulated interests comprises the total government investment. If the student had studied at a private HET she would still have eared a college graduate’s salary (although at a different salary rate) and paid taxes, Casual observation shows that salaries of college graduates are correlated with the tier their HET belongs. This is true even in developed countries (Hill et al. 2005). For purposes of illustration, it is assumed that the average earnings of private HEI graduates is P156,000 with an annual growth of 8 percent. The initial annual income differential is P39,000. This difference in income grows at an average annual rate of 12.89 percent until the 45 year of work Returns to the Treasury come in the form of the difference in income and consumption taxes paid by a UPC management graduate and a aprivate HEI graduate. This is assumed to be 38 percent of the income differential. Figure 4 shows a graphical representation of the subsidy and cash flows to the Treasury. Figure 4. UPC subsidy and fiscal cash flows Fiscal IRR is the interest rate that makes the PV of the difference in taxes paid equal to the total amount of subsidy; using graduation date as the reference time period. If the IRR is greater than or equal to the government's cost of funds its subsidy is fiscally profitable Mathematically this is as follows © Yrsackeyasemy+ace, OD Ler e desler Ledeen Ledeen) © AChr= CRTC) @) acr=acr,ratery asnsr ace eytenery mace isey ‘Where: L>*= the total value ofthe governments subsidy fr a UP Cebu education Lp 2 ge are the amounts ofthe governments subsidy on UPC education sa.the student’ years 1,23 and 4 of stady: respectively, assumed to be incurred at the beginning of ach year ACEI", ACEP -, ACF, are the incremental tax fn flows seni from the governments subsidy in a UPC education CCRt'= UPC graduates cash flow at yeart CCR*~ peiwate HET graduate’ cashflow at veart"= the governments internal sate of sean on subsidy to UPC tb interest rte the goveanment pays for borowving mene ACE S*=-cazh flow at yar ‘Tr Tax rate, arumed tobe the same for both UPC graduates and gracaates of private colleges {2°77 gsoneth sate of incremental tax cash flat from UPC graduates Social IRR Social costs include all of society’s resources devoted to a project. For education, both private and public expenditures are treated as social costs. It may be assumed that the market for higher education is competitive and, therefore, tuition rates and other fees of private HEIs reflect their costs, On the premise that public HEIs have higher costs per student than private HEIs, society's incremental investment in public HEI is the ditference between those costs. For illustration purposes, tuition rates of selected private HElsin the province of Cebu are used as the basis for private HEI costs. Table 8 shows the tuition rates of these selected private HEIs. Table 8. Tuition rates of selected private HEIs in Cebu (2011) School ‘Average Tuition unit University of San Carlos PLO91.92 University of San Jose-Recoletos P1025.67 University of Southern Philippines- | P742.60 Foundation St Paul College Foundation, Ine PRAT? (Cebu Institute of Technology-University | P648.08 University of the Visayas-Main 561.02 University of the VisayasMandaue | P42047 University of the Visayas-Toledo P368.63 St. Cocilia’s College Cebu 316.50 Source Sun Star Newspaper (May 12,2012) 6Based on these tuition rates an average annual private HEI cost of 26,700 growing at an average annual rate of 6 percent is assumed. UPC’s annual social cost is P60,529 per student in 2011 growing at 10 percent annually. Both private HET'sand UPC’s annual costs accumulate interest at the rate of 15 percent, the social discount rate (Zhuang et al. 2007). This leads to a total incremental social investment, for a UPC management student, of P230,619 at the time of graduation. Society's benefit from an investment in higher education is the increase in productivity of college graduates compared to high school graduates. Ina competitive labor market, incomeis often used asa proxy for productivity (Woodhall 2004 and Hough 1993). Between private and public HEIs, society's incremental benefit can be approximated by the ditference in incomes between their graduates. The same assumed income differential and income growth rates used in the computation of fiscal IRR can be used here for illustration purposes Figure 5 illustrates the patterns of incremental social investments and incremental social benefits. INCREMENTAL ‘SOCIAL ee BENEFIT (000) GRAD 15.000 “ass TOYEARS 231/397 INCREMENTAL SOCIAL COST (000) Figure 5. Incremental social costs and incremental social benefits 36The interest rate that makes the PV of incremental social benefits equal to the incremental social costs is the social IRR. If this is greater than the social rate of discount, the investment in this particular public HEI program is deemed socially acceptable. Mathematically, this is as follows. (0) AC MAB jClokPaB, yy “AB dt) acwac mer) (02) B= Con CE (3) ABs aR, ase (eke B ky AC “(lee AC (19+ AC," where: AC =the total incremental value of social cast for a UP Cebu education, AC ACM ase the incremental amounts of sedal cost on UPC education in the student year and 4, aumed fo be incurred a the beginning ofeach year of study. AB, ABT, AB, are the incremental social benefits eoulting from the incremental socal investments in a UPC education 8 > inevemental social benente st yeset (CF p~ UPC graduate’ salary at yeart (CE p graduate of private collages’ salary at yeart 1ke"~ the social sate of etusn on incremental social investments to UPC ‘=the socal discount sate for iavestnents {gh + growth a of incremental social benefits from UPC graduater RESULTS AND DISCUSSION Factual cost data on UPC and the economic environment and assumptions made regarding incomes of graduates discussed in the above section were used as inputs forthe computation of private, fiscal, and social rates of return. Results of these illustrations are discussed delow. Private Rate of Return Table 9 shows the results for private rates of return, It can be gleaned that in the 4 years of enrollment students incur a substantial amount of costs, ranging from Pé91,000 for bracket E2 and PL.1 million for bracket A. These include foregone incomes and an assumed cost of srfunds of 25 percent, Returns before tax range from 24.9 percent to 19.7 percent. These retums are higher than returns in the stock market. Table 9. Result of private rate of return estimates for UPC student SIFAP | Total sumed [AssumedAve, | Estimated IRR Bracket [nvestment Jinitilinc. | Growth Rate | (pescent) Php (000) | ditferential. | of income Php (000) | differential A L140 916 11.68 197 B 10001 916 1168 205 € 9862 916 168 210 D 9363 916 1168 25 A Bas 916 1168 BS 2 es 916 188 29 Private rates of return appear to be quite reasonable considering that income isnot the only gaina student gets from a college education, It also provides the student with prestige and the opportunity to achieve other personal goals stich as being able to contribute more to the betterment of society. Knowing the private rates of retum can help policy makers design alternative schemes of financing higher education, such as student loans, instead of outright grants and subsidies. Alternative financing schemes can help expand the coverage of higher education particularly to those in the lower income brackets. Fiscal Rate of Return Table 10 below shows the fiscal retum to investments in UPC ‘management program. Given the assumed income differential between UPC and private HEI graduates, the Treasury appears to be piling up ahefty retum on its investment. An 18 percent return is almost 3 times the cost of government funds. This result is similar to those estimated in Bluestone (1993) and Hipple (2001). They used income differential Pyof high school and college graduates. These returns are, however, valid only with well documented data on income differentials, Estimates of fiscal returns based on well documented data is helpful tor public HEIs in justifying requests for budgetary allocations from the government budget ottice, ‘Table 10. Result of fiscal rate of return estimate “otal Investment P288,175 ‘Assumed Initial Tax Rew Differential PL 820 “Assumed Average Annual Growth Rate of Tax Revenue Differential 129% Estimated Fiscal Rate of Retum on Investment 18% Extimated Government Cost of Funds (yield con long term government bonds) 65 Where income differentials between public and private HEI graduates are narrow, fiscal retumns may be very low. In this case, it may be necessary to investigate further nonfinancial returns. These are described under social returns, Social Rate of Return Table 1] below shows that a total social investment of P230,649 per student at UPC management program yields a return of 29.8 percent As in other estimates above, this is only for illustration purposes of the methodology and would only be valid with validated data inputs. Table 11, Result of Social Rate of Retumn Estimate Total Incremental Sodal Investment at] 7230649 ure ‘Assumed Initial annwal Social Benefit P39,000 ‘Assumed Average Annual Growth Rate | 12.87% of Benefit oEstimated Social Rate of Retun on] 29.8% Investment Social Cost of Capital 15% It should be noted that the methodology for estimating social rates of retum does not take into account the nonmeasurable returns to society from undergraduate public HEIs. Birdsall (1996) argues that undergraduate programs in public HEIs in developing countries, serve purposes, other than the training it provides students. It provides a base for graduate education, research, and extension activities, whose values are difficult to quantify. Although undergraduate training may be provided more efficiently by private HEIs, undergraduate programs in public HEIs support basic research and research necessary for nation building, These activities cannot be economically or efficiently performed independently from undergraduate programs. To address the shortage of funds in public HEIs, Birdsall (1996) suggests that high private return programs such as business and law charge higher tuition rates that are comparable to private HEI tuition rates. CONCLUSIONS The methodology presented should be useful to both public HEIs and policymakers in the assessment of further investments in the undergraduate programs of public HEIs as well as in the direction of these investments. Since the quality of estimates of returns is, very much dependent on the quality of data on salaries/incomes of graduates, public HEIs and policy makers need to obtain reliable data through surveys of graduates, organizations hiring their graduates, and students. High private returns of students in public HETs indicate that they are in disciplines that are in high demand, such as business, nursing, and information technology. Public HEIs should investigate further whether training in these disciplines is sufficiently provided by private HEls. If there is suificient capacity in private HEIs in these disciplines public HEIs should not compete, but rather support the efforts of private HEIs through graduate training of faculty members oof private HEIs, development of course materials such as cases, and conduct research in these fields. High fiscal returns of public HEIs, provide indications of superior quality of teaching in public HEIs and that private HEIs can improve with public HEI support, Public HEIs should, therefore, limit their enrollment in disciplines with high private and fiscal returns when there is sufficient capacity in private HEIs. Undergraduate as well as graduate programs, with a limited number of students, should focus on training the future and current faculty members of private HEIs. The undergraduate programs in public HEIs serve as laboratory for the development of innovative teaching methods and materials that should be shared with private HEIs, In this aspect, the role of public HEIs is as a leader and an enabler not a competitor. RECOMMENDATIONS Stucients in disciplines with high private returns should be charged higher tuition, Support may be provided through a combination of partial grants, subsidized and unsubsidized loans, based ona students need. Loans may be forgiven for students who go into low private return careers, such as teaching and public service ‘The methodology should be applied to different undergraduate disciplines offered by public HEIs. A discipline with low private and fiscal returns needs to be evaluated on the basis of its social returns, particularly non-monetary returns. Disciplines such as teaching, public administration, physical sciences, engineering, and agriculture may have low private and/or fiscal returns but high non-monetary social returns. Public HEls should, therefore, continue offering these disciplines and justiiy budgetary support based on nonmeasurable non-monetary social returns. LITERATURE CITED, Birdsall, N. 1996 (October) “PublicSpending on Higher Education in Developing Countries: Too Much or Too Little?” Economics of Education Review aBluestone, B. 1993 (October 6) “States May be Making a Healthy Profit on their Colleges and Universities,” The Chronicle of Higher Education Dumlao, A and A. Arcelo 1979 “Financing Private Education,” FAPE Review 16 (July-October) Dunn, B. and 5. Robert 1982 (Summer) “Cost-Benefit Analysis: Applicability in Higher Education,” Journal of Education Finance (v8 nl pp. 20-32,) Hill, K,, D, Hoffman and T. Rex 2003 (ctober) “The Value of Higher Education: Individual and Societal Benetits (With Special Consideration for the State of Arizona),” Productivity and Prosperity Project (P3) Arizona State University. Hipple, . 2001 “A Cost-Benefit Analysis of Higher Education in Tennessee” Journal of Economic Educators Hough, IR. 1993" “Educational Cost-Benefit Analysis,” Educational Research Paper No. 2, Overseas Development Administration, UK. Hossain, S. and G. Psacharopoulos 1994 “Profitability of School Investments in an Educationally Advanced Developing Country,” Intemational Journal of Educational Development Volume 14, Issue 1, February, Pages 3542 International Labour Office 1974 “Sharing in Development: A Programme of Employment, Equity and Growth for the Philippines,” ILO Geneva Kitaey, L, T. Nadurata, V. Resurrection, and F. Bernal 2003 “Student Loans in the Philippines: Lessons from wethe Past” ~—- UNESCO _htp://unesdoc.unesco.org/ images/0013/001336/133623e.pdt Jimenez, E. and H. A. Patrinos 2008 “Can Cost-Benefit Analysis Guide Education Policy in Developing Countries?” The World Bank Psacharopoutlos, G 1980 “Higher Education in Developing Countries: A Cost-Benefit Analysis,” Statf Working Paper No.140. The World Bank, Washington, D.C. Psacharopoulos, G. 1985 “Returns to Education: A Further International Update and Implications” The Journal of Human Resources, Vol. 20, No. + Tan, J. and V. Pacqueo 1989 “The Economic Retus to Education in the Philippines,” International Journal of Educational Development, Volume 9, Issue 3, Pages 243-250 Williamson, JG. and DJ. De Voretz 1969 “Education as an Asset in the Philippine Economy,” Philippine Population in the Seventies, Edited by Concepcion, MB. Manila Woodhall, M. 2004 Cost-Benefit Analysis in Educational Planning, 4% edition, UNESCO: International Institute for Educational Planning, Paris, hitp,//unesdoc.umesco.org/images/0013/001390/139042e. pdf Ziwang, J, Z. Liang, T. Lin, and F. De Guzman 2007 Theory and Practice in the Choice of Social Discount Rate for Cost -benefit Analysis: A Survey, ERD Working Paper No. 94, Asian Development Bank a