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Work in progress. Draft version. Please do not quote.

Higher Education Vouchers in Russia:

The Bad Case of Market Socialism?

Alexei G. Matveev

Graduate Student, Department of Educational Policy, Planning, and Leadership

School of Education

The College of William and Mary in Virginia (USA.)


Prepared for the presentation at the 9th NISPAcee Annual Conference

"Government, Market and the Civic Sector: The Search for a Productive Partnership"

Riga, Latvia May 10-12, 2001.


Everyone shall have the right to receive, free of charge and on a competitive basis, higher education in a state or municipal educational institution or enterprise

(Constitution of the Russian Federation, Article 43.3).

Tuition fees have become the norm of life . . . Free education . . . corrupts students and instructors

(Address of the President to the Federal Assembly of the Russian Federation, April 3, 2001).

The President shall be the guarantor of the Constitution of the Russian Federation

(Constitution of the Russian Federation, Article 80.2).

In the annual Address to the Federal Assembly1 on April 3, 2001, Vladimir Putin, the President of the Russian Federation, called for the radical change in approach to education. He emphasized that education is the investment in future of the country and, therefore, everyone must contribute to this investment. Thus, the guarantor of the Constitution proclaimed that people have to pay for their constitutional right to free education. Indeed, as Cass Sunstein keenly noticed, “the rights do not fall from the sky”, but the fact is that all citizens already contribute to the realization of this right by paying taxes. What we have in hand is the state default on the constitutional right to free education.

The purpose of this paper is to discuss one of the most controversial elements of the educational reform proposed by the government – the Gosudarstvennoe Imennoe Finansovoe Obiazatel’stvo-GIFO (the state personified financial certificate) or, in other words, the higher education merit-based voucher. The voucher issue has the potential to result in substantial changes in Russian higher education. This will have serious consequences, the implications of which scholars of higher education and policy-makers have to carefully examine.

The introduction of the voucher system is scheduled for the 2003-2004 academic year. However, the design of the new system is still in embryonic state. One may argue, exploiting the “devil-is-in-the-details” argument, that my further discussion is moot in this case. However, I will follow Dewey’s (1997) recommendation that “voucher plans must be evaluated . . . as they are written and proposed” (on-line) since my objective here is not to predict whether higher education vouchers will work well, rather I will discuss whether they are able to positively address their stated objectives – promotion of equality of opportunity and effective utilization of public funds – at all.

In the first part, I will present the voucher concept and overview the international experience with postsecondary voucher and quasi-voucher programs. In the second part, I will introduce the voucher proposal in Russia. In the following two parts, I will outline the proposed voucher scheme with the respect to its two main goals – equality of opportunity and efficiency. In the final part, I will speculate on the perspectives of political acceptability of the voucher system of higher education financing.

Part I. Vouchers: The concept and experience.

I.1. The concept.

Fundamentally, a voucher is “a contract providing an individual . . . with purchasing power, without an actual monetary transfer” (West, Sparkes, Balabanov, & Elson-Rogers, 2000, section 1.3.). There are a “host of different definitions of vouchers” (Patrinos & Ariasingam, 1997, p.5). Appendix 1 presents a selection of definitions. A student aid program can be considered as a higher education voucher if it is allocated directly to students and “may only be used for tuition and other expenses related to college attendance . . ., benefits are portable to a broad range of institutions, and the amount of benefit is largely determined through a statutory formula in which institutions have little or no discretion in determining the amount students receive” (Hauptman, 2000, p. 336). The essential feature of a voucher is that it is a contract among three parties – individuals, the government, and institutions. “If a person collects a voucher to attend a specific programme, the government is obliged to pay a pre-determined amount of money to the institute that offers the programme” (Oosterbeek, 1998, p. 233).

West, Sparkes, Balabanov, and Elson-Rogers (2000) differentiate between vouchers for education with a government guarantee to fully funded education and vouchers for education with government part funding. The goals of the fully funded scheme are (i) consumer choice; (ii) personal advancement; (iii) promotion of competition; and (iv) access to private education. The objectives of partially-funded plan are quite different and include (i) stimulating the demand for education; (ii) increasing investment in education; (iii) overcoming market failures; and (iv) making market fairer.

The concept of government financing of education through consumers is not so new as it might appear. The idea of the voucher system is rooted in Adam Smith’s concept of “consumer sovereignty”. Smith believed that if consumers were provided with a choice and money they would seek the best education. Later, in the 18 century, Thomas Paine developed a plan by which tax rebates would be given to low-income families for use on their children’s education. The first and most influential modern educational voucher system was proposed by the Nobel prize-winner economist Milton Friedman in the late 1950s (see Milton, 1955).

Beckerman (1993) viewed vouchers for higher education as an integral part of a broad liberal policy proposal, which holds that the political and economic action should stress the importance of the individual and the family liberties above the needs of the state. Beckerman drew on the works of Mill (1985) and Friedman (1955) and concluded that the voucher encapsulates the following three basic liberal principles: (i) the subsidization (provision) of education is a totally separate activity from the direct production of education by government; (ii) a subsidy should be provided directly to the individuals for whose benefit the subsidy was intended; and (iii) market place is able to adequately provide the educational supply. Similarly, Hanus (1996) asserted that a educational vouchers system contributes to the liberal cause “by confirming individual self-determination in the development of one’s moral character and intellectual talents, and it does so without direct injury to anyone else” (p. 92).

The literature (e.g., Harman, 1999; Landis, 1975; Shafe, 1975; West, 1996) points out at several perceived advantages of the voucher concept as an alternative to the current system of tertiary education finance. The voucher proponents argue that vouchers would enable higher education consumers to exercise a greater degree of freedom in selecting appropriate institution. The opportunity to choose and to decide would stimulate participation and dedication. Vouchers would bring about increased competition among the schools, and as a result, increased efficiency, responsiveness, program diversification and greater accountability in performance on the part of higher education institutions. A voucher system would assist the state to eliminate the unnecessary duplication of higher education programs and facilities. The implementation of a voucher scheme would minimize tuition differentials between the public and private sector. Finally, a voucher system would limit the direct governmental interference in institutional affairs, thus protecting academic freedoms from bureaucratic control.

Conversely, there is a number of potential disadvantages. First, it is argued that consumers (i.e., students and their parents) are not knowledgeable enough to make intelligent choices among alternative suppliers. Second, it is feared that the voucher system would destroy state higher education institutions by causing a mass flow of students to private schools. Third, opponents believe that the voucher system would cause proliferation in courses of high demand and termination of low demand programs that may still be important culturally and scientifically. Fourth, the state would have much weaker mechanisms for adjusting enrolment patterns to national needs. Fifth, funneling public money in the form of vouchers to the colleges and universities founded by religious entities would be unconstitutional. Sixth, a voucher system would add to the public cost of education by providing public funds to pay tuition fees in non-state institutions. Seventh, the influx of public monies in the form of vouchers into independent colleges and universities would result in greater public scrutiny and would make private schools less private. Finally, vouchers, especially in the form of tax credits, might result in fraudulent practices (e.g., Harman, 1999; Landis, 1975; Shafe, 1975; West, 1996, etc.).

Unfortunately, it is not possible to substantially support or refute the abovementioned advantages and disadvantages of the voucher system since the most of existing discussion is limited to elementary or secondary levels and is based largely on ideological presuppositions, with minimal reliance on factual evidence. In the next section, I will overview the limited international experience with postsecondary voucher and quasi-voucher programs.

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