China’s universities are getting a lesson in debt.
Higher education in the country is awash in red ink, as costs rise alongside soaring enrollment and government funding fails to cover the gap, according to a survey reported by state media on Monday.
The survey by Peking University, one of China’s best and most solvent, found 76 universities affiliated with the Education Ministry had combined debts of 33.67 billion yuan (US$4.42 billion; euro3.25 billion) at the end of 2005, the 21st Century Business Herald reported.
Among those carrying the heaviest debt was Jilin University in the country’s northeast, which paid 100 million yuan (US$13 million; euro9.5 million) on its 3 billion yuan (US$393 million; euro289 million) in debt in 2005.
The survey blamed the high level of debt on investments forced on universities under a government program to combine large numbers of smaller institutions into super schools and massively expand the number of university places available.
Numbers of undergraduates enrolled more than tripled between 2000 and 2005 to 15 million and topped 20 million in 2007.
While that has pushed up education levels to serve the booming economy, side effects include employment strains, rising family debt, and campus riots that have broken out after students discovered their degrees were less valuable than promised. Many were issued by branches of famous universities which told students they would receive diplomas from the original schools, but then issued them in the name of affiliates that counted for far less in the job market.
Schools, meanwhile, have been forced to turn to banks for financing beyond the budgets allotted them by the state. Few have been able to convert those investments into higher rankings in global surveys of higher education.
China’s top schools were in the best financial shape, the survey said, among them Peking University and Tsinghua University in Beijing and Shanghai’s Jiao Tong, Fudan, and Tongji universities.
– Associated Press
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