How hostel subsidy distorts finances

June 23, 1995

Lucy Hodges in her summary (THES, June 9) of the recent World Bank report on higher education in Eastern Europe, quotes the example of Romanian student protest at hostel overcrowding in support for the case for non-state funding for higher education.

The Universitas consultancy group, which makes the expertise of British university managers available to universities in central and eastern Europe and elsewhere, has carried out several studies of the financing and management of Romanian student residences and catering facilities for the Romanian ministry of education.

While not disputing the general need for diversification of funding, we have found that the greater distorting factor is the concentration of funding, regardless of its source, on the support of facilities, rather than on the support of students.

This approach creates at least three big problems. It inflates demand for hostel places (because this is the only way for students to cash in on facility-based subsidies), leading to the conflicts the World Bank report describes; it insulates university residential and catering facilities from the effects of competition with other providers; and (because the facility subsidies form such high proportions of university mainstream budgets) it diverts all-too-scarce management resources away from improvements in academic areas.

PAUL TEMPLE

Universitas

Higher education management consultants

Gun Court, 70 Wapping Lane

London E1

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