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LCQ 8: University tuition fee

    Following is a question by the Hon Cheung Man-kwong and a written reply by the Secretary for Education and Manpower, Professor Arthur K C Li, in the Legislative Council today (May 3):

Question :

     The Administration announced in 1991 that subvented tertiary institutions should aim at recovering 18% of costs from tuition from the 1997-98 academic year onward.  In this connection, will the Government inform this Council:

(a)  whether the above policy is still in force; if so, how it ensures that the institutions follow the policy when determining tuition; if not, of the time when the policy was changed and the reasons therefore, and whether the new percentage has been announced;

(b)  of the average cost and tuition for each place and the percentage of tuition fee against the cost in respect of each of the past five years, broken down by academic level and institution; and

(c)  whether the tuition charged in the past five years by the institutions has exceeded the above percentage; if so,

 (i)   of the reasons and details regarding the overcharge;

 (ii)  whether the relevant institutions have breached the above policy; and

 (iii) whether it will request the relevant institutions to bring the tuition down to the above percentage immediately and return the overcharged amount; if it will, of the details of the request; if not, the reasons for that?


Madam President,

(a)  The then Executive Council decided in 1991 that the cost recovery target for fees for degree courses should be increased by phases to 18% of the total recurrent costs by the end of the 1995/96 to 1997/98 triennium.  This target was achieved in the 1997/98 academic year as scheduled.  

     The 18% cost recovery target was set against the background of a very low cost recovery rate at that time.  The aim was to increase the tuition fees gradually so as to achieve a more reasonable balance between the students/parents and the community at large in shouldering the cost of providing tertiary education.   The cost recovery target also provides an overall indicator for the Government to compare and benchmark students/parents' contribution to tertiary education in Hong Kong with those in other jurisdictions.  It is however not the intention nor would it be practical to enforce the cost recovery rate down to the institution, academic discipline and programme level.  This is because applying the same tuition fee level to different institutions, levels of studies and disciplines gives rise to different cost recovery rates due to different cost structures.  This has always been the understanding of the Government, the institutions and the community at large, and reflects the current situation.

     It is not the Government's intention to fix the cost recovery rate at 18% once and for all. As with the tuition fee level, the cost recovery rate is subject to revision in the light of changing social and economic circumstances.

(b)  Through the University Grants Committee (UGC), the Government provides recurrent subventions to the eight UGC-funded institutions mainly in the form of block grants.   The institutions are free to determine the amount of funds to be used for different levels of studies and disciplines, as well as the actual tuition fee levels.

     The average student unit costs, tuition fees and cost recovery rates for different levels of study of the eight UGC-funded institutions in the past five academic years are set out at Annex.  In calculating the unit costs, we have taken into account only the recurrent expenditure of the institutions, but not the new sources of non-recurrent funding (e.g. the two Matching Grant Schemes totalling $2 billion launched in 2003 and 2005) provided to them to support internationalisation and ongoing academic developments and to strengthen their fund-raising capabilities.

(c)  While the average tuition fees for degree courses in the past five academic years have remained unchanged (at $42,100), the average cost recovery rates for the 2003/04 and 2004/05 academic years had slightly exceeded 18%, primarily due to a reduction in the recurrent costs incurred by the UGC-funded institutions.  However, it should be noted that the recurrent costs, which comprise Government's recurrent subvention, is only part of Government's funding support for the UGC sector.  The Government has indeed made substantial cash injections into the UGC sector in the past few years, notably the two Matching Grant Schemes totalling $2 billion which have helped secured substantial private sector donations for the institutions.  The total amount of resources available to the institutions and their students has thus increased substantially, only not in the conventional mode of recurrent funding and therefore cannot be reflected in the student unit costs and cost recovery rates.

     Insofar as the students are concerned, by freezing the level of tuition fees since the 1997/98 academic year and continuing to provide financial assistance to needy students, the Government has not changed its policy, which is that no student should be deprived of education because of the lack of means.  Indeed, as a result of the Matching Grant Schemes and the donations received by the institutions in the past few years, students of the UGC-funded institutions will benefit from better facilities, higher quality of education and the availability of more scholarships.  

     As it is within the institutions' authority to set tuition fees, the Government should not and will not intervene in the institutions' decisions.  Nonetheless, reducing tuition fees or refunding the fees received to students would adversely affect the financial situation of the institutions and hence their plans to upgrade their programmes and facilities, which will not be in the interest of the institutions or the students.

Ends/Wednesday, May 3, 2006
Issued at HKT 15:16