17. University and Polytechnic Tuition Fees. I have mentioned in paragraph 13 above the statement in the 1978 White Paper on the Development of Senior Secondary and Tertiary Education that a reasonable share of the cost of extended education should be met through fees, coupled with satisfactory arrangements to provide relief to students less affluent families. In 1985-86, tuition fees collected by the universities, polytechnics and the Hong Kong Baptist College were estimated at $110 million, of which I have estimated $23 million was met by the universities and polytechnics student finance scheme, compared with recurrent Government subventions of $1,500 million. In conjunction with my review of school fees referred to in paragraphs 13 to 16 above and as a follow-up to my review of the student finance scheme referred to in paragraphs 107 to 123 of my previous report, I have conducted a study into the subject of tuition fees at the universities and polytechnics.
18. By law, tuition fees are prescribed by the individual institutions, although in the case of the two polytechnics and the Hong Kong Baptist College the Governor in Council can give overriding directions. In 1962, when the University of Hong Kong revised its fees, income from fees represented about 16% of its recurrent expenditure. When the Chinese University of Hong Kong was established the following year, tuition fees represented 9% of its recurrent expenditure.
19. In 1965 the University Grants Committee was established to advise the Government on the financial needs of university education. In the context of assessing the recurrent grants for the first triennium 1967–1970 the Government asked the Committee to review the level of tuition fees at the two universities. The Committee advised that because fee income at the two universities accounted for about 10% of recurrent expenditure, a position not very different from that in Britain, an increase in fees would have to be accompanied by a new and more far-reaching scheme of aid to needy students financed from public funds.
20. In 1969 a student finance scheme was introduced with the aim of ensuring that no student who is offered a place in a university should be unable to accept that place because of lack of means. In approving the scheme it was stated in the Executive Council Memorandum that the Government would ask the university authorities to review their scales of fees and charges to those students who could afford to pay and make what revisions they could with a view to relieving the burden on public funds. In the view of the Government it was important that fees should be increased once the student finance scheme was introduced as otherwise the more wealthy students would be subsidized unnecessarily.
21. Accordingly, in late 1969 the Government requested the University Grants Committee to consider the level of tuition fees for the 1970-1974 quadrennium. The Committee however considered that although the student finance scheme had been introduced it was undesirable to alter the fees of the Chinese University of Hong Kong before the University was established on its new site and therefore proposed that the question of raising tuition fees be deferred. This proposal was reluctantly accepted by the Government.
22. Action to revise the fees eventually commenced in 1971 when the level of fees for the 1974-1978 quadrennium was considered. The University Grants Committee suggested that fees should be restored to a level of about 12% of recurrent expenditure which was the level at the University of Hong Kong in 1965 when the Committee was established. It was subsequently agreed in 1972 between the Committee (then renamed the University and Polytechnic Grants Committee) and the two universities that with effect from the academic year 1974-75 fees would be revised and a uniform fee would be charged for all first degree courses. It was estimated that income from the revised fee would amount to approximately 12% of recurrent expenditure in 1973–74. However, since the revision would result in an increase of between 12% and 50% in the fees of the University of Hong Kong and between 65% and 103% in the fees of the Chinese University of Hong Kong, the universities also proposed that the increase be phased by applying it only to new students joining the universities for the academic year 1974-75 and thereafter. Because fees had not been revised for a decade and the increase was a substantial one, the Government accepted the universities' proposal, although it was realized that by phasing-in the increase there would be a delay in the fee income achieving 12% of recurrent expenditure. To avoid getting into this predicament again it was agreed between the Government and the universities in 1973 that fees should be reviewed for each quadrennium and it was suggested that as a minimum target the income to be derived from fees should equal at least 12% of the mid-quadrennium expenditure.
23. To ensure that this target was achieved, the Social Services Branch of the Government Secretariat drew up a procedure in May 1974 for future revisions which provided that one year after the start of a new block grant period, policy guidance would be given by the Government to the University and Polytechnic Grants Committee on the level of fees for the next block grant period. The Committee would then transmit this to the universities who would agree between themselves on the fees to be charged. I have not traced any evidence to confirm that the procedure was put into effect.
24. In 1977 the University and Polytechnic Grants Committee informed the Government that it had agreed with the universities that instead of having relatively large revisions every three or four years, it would be more practical to make small fixed percentage revisions every year during the 1978–1981 triennium so that the impact in any one year would be reduced, and students and their families could budget with more confidence for a known level of fees. The Committee further stated that at prevailing levels of inflation an increase of 5% each year would be adequate. The Government realized that this was well short of achieving the target that fee income should equal at least 12% of recurrent expenditure calculated at the mid-year of the triennium. However, in recognition of the autonomy of the universities the proposed increase was agreed with only minor alterations. Consequently fee income as a proportion of recurrent expenditure fell well below the minimum target of 12%. By the end of the triennium in 1980–81 it was only 4.3% at the University of Hong Kong and 6.0% at the Chinese University of Hong Kong.
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