Chapter 5

Financing Vietnamese Higher Education:

From a Wholly Government-Subsidized
to a Cost-Sharing Mechanism

Hiep-Hung Pham and Huyen-Minh Vu

Abstract Over the last three decades, Vietnam’s higher education has transited
radically from an elite to a mass system. Under this circumstance, the financing
system in higher education has shifted significantly, from a wholly government sub-
sidy system to a cost-sharing mechanism. This chapter traces such an evolvement of
financing polices and proposes implications for policy-makers in Vietnam.

Introduction

Cost sharing, which refers to the transition of a certain proportion of the higher
education cost burden from government to other stakeholders, including students,
parents, donors and so forth, has been a significant trend occurring to higher educa-
tion across the world in previous decades (Johnstone 2004). This is not only true
with capitalist-oriented countries but also with socialist-oriented countries or con-
tingent European countries.1
Embracing the ideology of socialism, Vietnam believed education, including
higher education, was public good and therefore should be provided by the state.
Prior to the 1970s, Vietnam’s Government used to cover tuition fees for any student
entering university. Better still, those studying in northern Vietnam (i.e. The
Democratic Republic of Vietnam) were even given living allowances and free
accommodation at university dormitories. In the mid-late 1980s, when the economy
slumped and inflation hit to a three-digit number, the government budget could not

1
Johnstone (2004) called contingent European countries as the “last bastions of generally free
higher education”.

H.-H. Pham (*)

Center for Research and Practice on Education, Phu Xuan University, Hue, Vietnam
H.-M. Vu
Faculty of Linguistics and Cultures of English Speaking Countries, VNU Hanoi University
of Foreign Languages and International Studies, Hanoi, Vietnam

© Springer Nature Singapore Pte Ltd. 2019 75

N. T. Nguyen, L. T. Tran (eds.), Reforming Vietnamese Higher Education,
Education in the Asia-Pacific Region: Issues, Concerns and Prospects 50,
https://doi.org/10.1007/978-981-13-8918-4_5
76 H.-H. Pham and H.-M. Vu

afford to continue its generous subsidy for the expanding higher education sector.
To compensate for the deficit, policy-makers had to agree to introduce some pre-
liminary forms of cost sharing such as medical and sanitation fees or construction
“contributions” (London 2011, p. 27). Since then, the way higher education is
financed has undergone an irreversible shift to cost sharing, despite the country’s
continued embrace of socialism.
At the beginning of the twenty-first century, the demand of social demand for
higher education was greater than ever. This demand has put urgent pressure on the
Vietnamese Government to create a higher education landscape that simultaneously
achieves targets of quality, accessibility and equality. Consensus about the impor-
tance of these targets is widely shared, but disagreement exists regarding which
financing mechanism is appropriate to enable them to be achieved. While the notion
of free higher education still seems to be attractive to the general population and to
senior government officers, most policies promulgated over the past three decades
have tended to move in the direction of cost sharing under the framework referred
to euphemistically as the “socialization” (xã hội hoá) of higher education.
This chapter starts with a brief review of the evolution of the cost-sharing mecha-
nism in Vietnam since the late 1980s. It then presents an analysis of the issue of cost
sharing, drawing upon an ADB (2009) framework for developing member coun-
tries.2 The final section addresses implications for policy-makers. The chapter’s
focus is on the financing of teaching and related activities, which accounts for most
of Vietnam’s higher education budget. The financing of other activities (e.g.
research, facilities investment or construction) is not addressed by the chapter.

Trends Since the Late 1980s

Throughout the past century, the world has seen a remarkable growth in the higher
education sector. It is estimated that the worldwide population of tertiary students in
2000 was around 100 million, accounting for 200-fold times the respective figure
100 years ago (Schofer and Meyer 2005). And it is forecast that by 2025 the corre-
sponding figure will reach to 262 million (Maslen 2012).
This unprecedented cascade in student population stems from both the individual
level (i.e. students and parents) and governmental level (Johnstone 2004). In paral-
lel, higher education becomes costlier. Consequently, these phenomena resulted in
a significant deficit in maintaining a continuing financial support to higher educa-
tion institutions, especially support from taxpayers. Under this circumstance, a per-
vasive trend occurring globally is the shift from a government-subsidized financing
system into a cost-sharing system. Johnstone (2004) categorized cost sharing into
six different forms as following: (1) the introduction of tuition fee where higher
education used to be completely free, an increase in the existing tuition fee; (2) the
allowance of dual track system, where personal tuition fee track is added in juxta-
posing to the traditional free higher education; (3) the decrease of student grants and

2
Vietnam is a member of these developing countries.
5 Financing Vietnamese Higher Education: From a Wholly Government-Subsidized… 77

scholarships; (4) the introduction of student loans; (5) the imposition of “user
charge” principle in which students, but not government, are those who have to pay
for living expenses; and (6) the introduction of wholly fee-based private higher
education sector.
The financing regime in Vietnam’s higher education3 also reflects this pattern.
Along with the Economic Reform (Đổi Mới) in 1986, due to the unprecedented
growth of population at university age and the demands of the newly emerging mar-
ket, higher education in Vietnam has undergone radical changes of which the most
notable is the rapid expansion of the system. Between 1987 and 2009, the number
of higher education institutions (i.e. universities and colleges) increased nearly four
times (from 101 to 376) and the number of students 13 times (from 133,000 in 1987
to 1,719,500) (Pham 2011).
Under this circumstance, the government became unable to fund the whole
higher education system as it had previously done. As a result, a number of cost-­
sharing policies have been steadily introduced and implemented over the last three
decades. However, the term “cost sharing” was rarely adopted in official documents.
Vietnamese policy-makers have used the term “socialization” (xã hội hoá) of higher
education instead. The meaning of “socialization” in this context, indeed, does not
align with regular understanding of “socialization” in western culture (i.e. process
of acquiring culture) but refers to “broad-based social mobilization of resources for
education, not public finance of education” (London 2011, p. 26). In fact, the issue
of “socialization” of education and other traditional public services such as culture
and public health already appeared in Vietnam’s policy practices in late 1980s but it
was mentioned officially only for the first time in government’s Resolution No. 90/
CP in 1997. Particularly in education, Resolution No. 90/CP placed the emphasis on
some cost-sharing features such as: the role of parents and students as alternative
sources of revenue, apart from government subsidy; the role of student loan in
ensuring the accessibility and participation in education and the importance of non-­
public sector, including foreign investors and private sector as well.
In the following subsections, we outline some notable examples of such cost
sharing or “socialization” policies in higher education in Vietnam which were issued
and implemented before and after the scheme identified by Resolution No. 90/CP.

 ome Notable Policies on Cost Sharing or “Socialization”

S
in Vietnam’s Higher Education System Since the 1990s

Policies on Tuition Fee at Public Higher Education Institutions Prior to 1993,

tuition fee at traditionally public subsidized programmes in Vietnam was strictly
free. However, universities and colleges were allowed to levy some additional fees

3
The current Vietnamese higher education inherits from the system of North Vietnam prior to
1975. Therefore, in this chapter, Vietnamese higher education financing system refers to this in the
unified country after 1975 and that in North Vietnam between 1954 and 1975.
78 H.-H. Pham and H.-M. Vu

Table 5.1 Tuition fee per student per month at regular state-sponsored undergraduate courses in
Vietnam
The cap of monthly tuition fee at government subsidized
programmes at different clusters of disciplines
Science,
Social Science, Engineering,
Economic, Law, Technology, Sport,
Regulative Agriculture, Forestry, Fine Art, Hospitality,
Year documents Fisherya Tourism Medicine
Before Tuition fee waived; administrative fee allowed
1993
1993–1998 241/QĐ-TTg Not identified clearly
1998–2008 70/1998/QĐ-TTg 50,000–180,000
54/1998/
TTLT-BGDĐT-­
BTC
2009–2010 1310/QĐ-TTg 50,000–240,000
2010–2011 49/2010/NĐ-CP 290,000 310,000 340,000
2011–2012 355,000 395,000 455,000
2012–2013 420,000 480,000 570,000
2013–2014 485,000 565,000 685,000
2014–2015 550,000 650,000 800,000
2015–2016 86/2015/NĐ-CP 610,000 720,000 880,000
2016–2017 670,000 790,000 970,000
2017–2018 740,000 870,000 1,070,000
2018–2019 810,000 960,000 1,180,000
2019–2020 890,000 1,060,000 1,300,000
2020–2021 980,000 1,170,000 1,430,000
Source: Author synthesized from Vietnamese regulative documents
Unit: VND; 1 USD~22,000 VND
a
Agriculture, Forestry and Fishery were included since academic year 2015–2016

such as: construction fee, admission fee or graduation fee (Decision No. 248-TTg
issued by Prime Minister in 1973). However, these fees were usually small and did
not contribute significantly to the overall revenues of higher education institutions.
In 1993, along with the implementation of Decision No. 241-TTg issued by Prime
Minister, a tuition fee was officially introduced for the first time in Vietnam at public
higher education institutions. Since then, the policy on tuition fee has been adjusted
and increased regularly. Table 5.1 draws attention to some major regulatory docu-
ments on tuition fees in Vietnam since 1993. By the academic year of 2015–2016,
the regulation stipulated that students at public subsidized programmes had to pay
up to 610,000 VND, or 720,000 VND or 810,000 ND (per month), respectively,
according to their disciplines of study.4 And these caps of tuition fees are expected

4
Since 2014, 23 public universities across the country have been selected as parts of a so-called
governmental Resolution 77 on piloting of rennovation of operational mechanism at public higher
5 Financing Vietnamese Higher Education: From a Wholly Government-Subsidized… 79

to increase by approximately 10% per year until academic year of 2020–2021.

According to governmental explanation, this annual increase aims to recover the
expected inflation rate in the country in the next few years (Tieu 2015).

The Allowance of Private Sector in Higher Education By 2013, among 421

higher education institutions across the country, there were 83 private ones,
accounted for 19.7%. Regarding student population, these non-public institutions
enrol 14.3% out of total 2,177,299 students nationwide (Bộ Giáo dục và Đào tạo
2013). These figures completely contrast to what was accounted in 1987 (the first
year after Economic Reform – Đổi Mới). In 1987, the correspondent figures were
both “nil” (institutions and students). As a socialist-oriented country, Vietnam used
to only have public institutions. However, due to the mismatch between the increas-
ing demand from students and parents and the capacity of public higher education
providers, the Vietnamese Government eventually allowed for the establishment of
the private institutes in higher education sector with the first approval of Thang
Long Center for higher education (the former name of the current Thang Long
University). Subsequently, in 1993, the first regulation (i.e. Decision No. 240-TTg
by Prime Minister) on private higher education institutions was released. After that,
until 2012, the regulations on non-public higher education sector have been adjusted
several times with the promulgation of a plethora of legal documents. Thus, the
nature of ownership of non-public higher education institutions has also been regu-
lated accordingly with different names (e.g. people-founded, semi-public and pri-
vate). Under the current regulation (i.e. Law of Higher Education 2012 and Charter
of University issued along with Decision No. 70/2014/QĐ-TTg by Prime Minister),
there is only single type of non-public higher education in Vietnam: private higher
education. And this sector, subsequently, is divided into two sub-sectors: not-for-­
profit private higher education and for-profit private higher education.

The Introduction of Student Loan Programmes In 2002, the government intro-

duced a loan programme aiming to support disadvantaged people in general, among
which students from lower income families were one of the eligible recipient groups
(Decision No. 78/2002/QĐ-TTg). Until 2007, Vietnam introduced the first-ever stu-
dent loan designated for secondary and post-secondary levels under the tenure of
the former Minister of Education Nguyen Thien Nhan (Decision No. 157/2007/
QĐ-TTg). This, indeed, is a mortgage-type of loan with the annual interest rate of
0.5%. And all students, regardless of their gender, ethnicity, economic situations
and household registration, have the right to apply for the loan. The maximum
amount of loan was set at 800,000 VND per month per student when it was first
released in 2007 and it was increased steadily since then to recover the inflation rate.

education institutions between 2014 and 2017. Under this scheme, the 23 selected public universi-
ties are granted more institutional autonomy at the expense of cease of receiving recurrent subsidy.
Among indentified aspects of institutional autonomy, autonomy on setting tuition fee above the
predefined caps as represented in Fig. 5.1 is one of the most important powers granted to the
selected universities.
80 H.-H. Pham and H.-M. Vu

Table 5.2 Amount of student Year Amount of loan Interest rate

loan in Vietnam
2007 800,000 VND per month per student 0.5% per year
2009 860,000 VND per month per student 0.5% per year
2010 900,000 VND per month per student 0.5% per year
2013 1,100,000 VND per month per student 0.5% per year
2015 1,350,000 VND per month per student 0.5% per year
Source: Ha (2015)
1 USD~22,000 VND

In 2015, the corresponding amount of loan for students is 1,350,000 VND per month
per student (see Table 5.2 for details). According to Vietnam Bank for Social
Policies, which is the agency in charge of this student loan, there have so far been
3.3 million students accessing to this programme between 2007 and 2015 (Ngân
hàng Chính sách xã hội 2016).

The Allowance of Dual Fee Track System in Public Institutions According to

Johnstone (2004), the dual track fee system in public higher education has two com-
ponents: the traditionally free higher education and the newly added tuition fee-­
based higher education. In Vietnam, there is also a dual track fee system in public
higher education; however, the Vietnamese system seems to be different from
Johnstone’s model. Indeed, the dual fee track system in public universities and col-
leges in Vietnam refers to two ways to finance a student’s study: (i) the regular track:
government-subsidized track and (ii) the newly added track: self-funding track.
Under the first track, students pay partially for their college while the government
subsidizes the rest – which is recurrently allocated to universities based on their
approved quotas of enrolment, historical budget and degree type.5 Their tuition fee
scheme has been discussed in the first paragraph of this section. In the official docu-
ment, we call this track as “students within quotas of enrolment” or “students within
governmental subsidy”. Under the second track, students have to pay the whole fee
by themselves and are not subsidized by the government. These students are referred
to as “students outside the quotas of enrolment” or “students without the govern-
mental subsidy”. Table 5.3 presents the dual track fee system in the public sector of
Vietnam higher education in comparison to that of Johnstone (2004).

The Introduction of Policies on Philanthropy and Charity in Education Although

anecdotal evidence shows that charity in education has been a common practice for
several decades (e.g. students suffering from natural disaster often receive donations
from community), the philanthropy does not contribute significantly for the overall
income of universities in Vietnam. For instance, available data show that about 90%
of total revenue from Vietnam National University-Hanoi, one of the most reputable
higher education institutions in Vietnam, comes from state allocation and tuition fees.

According to current scheme, the amount allocated to undergraduate students at regular govern-
5

ment-subsidized programmes is 6,133,680 VND per year (Nguyen, 2014a, b).

5 Financing Vietnamese Higher Education: From a Wholly Government-Subsidized… 81

Table 5.3 Comparison of dual track fee system between Vietnam’s public higher education
institutions and Johnstone’s (2004)
Vietnam’s Johnstone’s (2004)
Track 1 Students have to pay tuition fee as indicated in Free
Table 5.1 but still receive subsidy from government
Track 2 Students have to pay tuition fees that cover the Students have to pay tuition
whole cost fees that cover the whole cost
Source: Author synthesized

It does mean that the remaining revenue, including science-technology transfer and
donations, only accounts of 10%.
The modest share of income from donations might stem from two reasons:
First, for several years, there has been a lack of appropriate policies in encour-
aging advantaged people to involve in philanthropy activities. Decree No.
30/2012/NĐ-CP was regarded as the first comprehensive policy that aims to
mobilize the endowment and donations from society for higher education sector
as well as other public service sectors. Notable features promulgated by Decree
No. 30/2012/NĐ-CP includes tax deduction and the student’s right in receiving
additional state allocation apart from self-raising fund. Nevertheless, the limita-
tion of Decree No. 30/2012/NĐ-CP is that it only allows philanthropists to donate
money to charity funds rather than to universities directly. Thus, this regulation
results in unnecessary complexity in terms of procedure and, in many cases, dis-
courages people who want to donate money.
The second reason refers to cultural factor. Many education observers argued
that Vietnamese culture is a key factor inhibiting the development of philan-
thropy and charity activities in Vietnam. For instance, in a round-table conducted
in 2014, Giap Van Duong, Hanoi-based famous educator, asserted that “endow-
ment is familiar with European and American people, but alien from the culture
of Eastern people, especially Vietnamese people” (Nguyen 2014b). Duong con-
cluded that, within Vietnamese culture, people have tendency to invest on their
descendants rather than on community.

 urrent Debate on Higher Education Financing Mechanism

C
in Vietnam

Financing mechanism for higher education institutions in Vietnam has undergone

radical changes over previous decades. From a wholly government-subsidized sys-
tem in the late 1980s, we can find an array of cost-sharing mechanisms such as
tuition fee, student loan or dual track fee system at the current time. However, in
official documents released by Vietnamese authorities, the term “cost sharing” is
rarely recognized and officially utilized. Instead, policy-makers have selected
82 H.-H. Pham and H.-M. Vu

Fig. 5.1 Seven aspects in

Increased
current debate on higher
higher
education financing
education
mechanism. (Source: output
author synthesized and Tradition
extended from ADB 2009) Market
and
failure
Culture
Debate on
higher
education
financing
mechanism
Efficiency Equity

Financial
Quality Sustainab
-ility

“socialization” as a euphemistic term to refer to cost sharing. A review of the cur-

rent debate on higher education financing mechanism in Vietnam in this section will
provide us the insights into why this euphemism is used. The debate, as identical to
other countries across the world, involves two opposite groups: proponents to sub-
sidy and proponents to cost sharing. To illustrate this debate, we adopt and extend
the ADB’s (2009) framework with seven perspectives: (1) increased higher educa-
tion student output; (2) market failure/merit good; (3) equity; (4) financial sustain-
ability; (5) quality; (6) efficiency and (7) tradition and culture6 (see Fig. 5.1).

Increased Higher Education Student Output

Consensus is widely achieved that higher education in Vietnam is suffering from

underinvestment. Without sufficient funding, Vietnamese higher education institu-
tions are unlikely to be able to pay competitive salaries for qualified faculty nor
afford modern infrastructure and facilities. These disadvantages will continue to
churn out graduate students who do not meet the increasingly demanding socio-­
economic growth. Among the identified weak outputs, increasingly jobless gradu-
ates and graduate unemployment rate are given the most attention and criticism
from public (see Tran, Chap. 6). A report issued by Institute of Science Labour and
Society estimated that in the first quarter of 2015, the number of jobless graduates
with a bachelor’s or a master’s degree was 178,000, which increased 10% compared

6
Given the importance of culture in all socio-economic aspects, we include culture as one of the
important dimensions into the ADB (2009)’s framework, along with tradition.
5 Financing Vietnamese Higher Education: From a Wholly Government-Subsidized… 83

to the correspondent figure in 2014 (Thanh Hoa 2015). Similarly, data obtained by
Tradingeconomics (2016) also revealed that unemployment rate among youth popu-
lation increased significantly over the last 5 years (from 5.17% in the fourth quarter
of 2011 to 7.30% in the third quarter of 2015).
However, discrepancy on solution to this issue has still been a topic for debate
between proponents to governmental subsidy and those favouring cost-sharing
mechanism. In recent years, there has been an increase of scholars suggesting
cost-­sharing-­like mechanism to solve the problem of underinvestment in higher
education. For instance, in a working paper, Pham (2012) computed that a rea-
sonable unit cost (i.e. total investment per student per year from governmental
subsidy, tuition fee and other sources) for developing countries like Vietnam
should be around 120% the correspondent GDP per capita, much higher than the
actual proportion of 57% (as estimated by Pham in 2009). To fulfil the gap
between the estimation (120%) and the actual figure (57%), Pham suggested a
so-called “two high” policy, i.e. high tuition fee coupled with high loan or schol-
arship for students. Components of “two high” policy, indeed, are features of
cost-sharing mechanism as described above. Since the suggestion of Pham
(2012), scholars and experts also recommended similar solutions (Nguyen and
Pham 2014; Hayden et al. 2012; Vietnam Education Dialogue 2015). However,
the suggestion of such cost-sharing mechanism often becomes subject of criti-
cism by the public as well as educators. For instance, the recommendation of
Vietnam Education Dialogue (2015)7 to dismantle the predefined cap of tuition
fees applying for all public higher education institutions ignited a heated debate
on Vietnamese media in 2015 between proponents and opponents of cost-sharing
policy in higher education.
In analogous to the majority part of the world, the above debate in Vietnam
remains unresolvable. However, while empirical studies undertaken in different
countries have proved counterproductive of free higher education policy (e.g. Ben
2008; Bergh and Fink 2008), there has been yet any research on the correlation
between equity and tuition fee using actual data obtained in Vietnam context. Given
this, such study is worthwhile and would, without any doubt, provide insights for
policy-makers and educators in Vietnam.

Market Failure

ADB (2009) mentioned two dimensions of market failure while discussing about the
issue of cost sharing in higher education. These are: (1) the positive externalities as a
nature of higher education accrue to students; and (2) the principle of higher

7
Vietnam Education Dialogue (VED) is an initiative led by famous Prof. Ngo Bao Chau, mathe-
matics Field awardee in 2010. VED, unified by a dozen of Vietnamese scholars living in Vietnam
and abroad, aims to provide policy-makers and governments proposals for the reform of higher
education in particular and education in general.
84 H.-H. Pham and H.-M. Vu

education as market imperfections. The former relies on the comparison between the
social rate of return and personal rate of return appearing when an individual com-
pletes his or her university education. If the social benefit is higher than a personal
one, public expenditure is a favoured mechanism and vice versa. The latter bases on
the assumption that within higher education context, the consumer (i.e. student) does
not have enough information about the service providers (i.e. institutes of higher
education), and therefore he or she would bear a “short-sighted” behaviour and reluc-
tant to invest in education that does not ensure a reasonable return in the long run.
Few numbers of proponents to governmental subsidy solution have argued the
topic from the perspective of market failure. For instance, Pham (2009) emphasized
the role of public intervention on higher education, given the nature of market fail-
ure of the sector.
Among proponents to cost-sharing mechanism, “Vietnam: Higher education and
skills for growth” (World Bank 2012) is one of the first attempts that tried to con-
duct an empirical analysis from the perspective of positive externalities. Based on
the 2004 Vietnam Household Living Standards Survey (VHLSS)8 data, the authors
of the World Bank’s report revealed that an additional year of schooling at tertiary
level might lead to an increase in earnings of approximately 10%. Although this
report does not compute the social rate of return bearing with a university graduate,
the result with high personal rate of return on higher education implies that cost
sharing is an appropriate mechanism that would be suitable for Vietnam’s higher
education financing system.

Equity

In terms of equity, data obtained from ADB (2012) indicates that the most dilemma
that Vietnam is facing is the widening gap in opportunities to access in higher edu-
cation between students from richer and poorer families but not other issues (e.g.
gender equality). Supporters of governmental subsidy argue that if state support is
cut down, students from lower income families would not afford the cost of study,
and therefore, would be excluded from higher education. This point of view also
reflects the opinion of policy-makers in Vietnam over previous three decades.
Indeed, in previous decade, Vietnam is an outlier case in Asian region in which
growth in per-­student support from government outpaces the growth of student pop-
ulation. Between 2001 and 2008, student enrolment in Vietnam rose 1.7-folds from
974,100 to 1,675,700 while recurrent per-student subsidy increased 2.83-folds from
1,845,806 VND to 5,222,892 VND per year (ADB 2012). However, Pham and Tran
(2014) argued that, given the current capacity of higher education providers that
under match the student demands, increasing governmental allocation only results

8
VHLSS is a longitudinal survey conducted by General Statistics Office of Vietnam, asking more
than 30,000 Vietnamese households on income, expenditures, economic activity, education,
healthcare and available infrastructure.
5 Financing Vietnamese Higher Education: From a Wholly Government-Subsidized… 85

120

100 2011
2004
80

60

40

20

0
1

5
Q

Q
1+

2+

3+

4+
Q

Q
1+

2+

3+
Q

Q
1+

2+
Q

Q
1+
Q
Fig. 5.2 Lorentz concentration curves in accessibility of Vietnam’s higher education in 2004 and
2011 (Q1 represents the poorest 20% population of Vietnam while Q5 represents the richest quin-
tile) (Pham and Tran 2014)

in regressive consequence in equity. Through drawing Lorentz concentration curves

of student shares between five different quintiles according to their families’ income
in 2004 and 2011, Pham and Tran (2014) revealed that the level of inequity in higher
education opportunities across household wealth quintiles has been widening over
the period from 2004 to 2011. In other words, economic disparity has become a
more and more visible trouble for Vietnam’s higher education system (Fig. 5.2).

Financial Sustainability

State budget has been the main source of income of higher education institutions
in Vietnam. Currently, even with increasing tuition fee, the government still con-
tributes approximately 55% flow of revenue for public higher education institu-
tions (Hayden et al. 2012). However, the central role of state budget is only
justified and viable within the context that unit cost is maintained as low as per se
(i.e. around 500–700 USD per year). Anecdotal evidences have shown that all
endeavours to enhance unit cost via increasing state allocation in Vietnam are not
sustainable due to limited resources and commitments of government. Table 5.4
summarizes two most recent and notable initiatives funded by Vietnamese
Government agencies that aim to enhance the quality of higher education since
2007. The purpose of these two projects, one hosted by Ministry of Education and
Training and another hosted by Vietnam National University – Hanoi, is to
86 H.-H. Pham and H.-M. Vu

Table 5.4 Two selected projects funded by government with high per-student investment
Average per-­
student
Source of governmental
No. Name of project Scope of project funding subsidy
1 Advanced Some selected undergraduate Ministry of 38,000,000 VND
programmes (in courses at nine leading Education and per year
Vietnamese: Chương higher education institutions Training
trình tiên tiến)
2 Strategy programmes Some selected undergraduate Ministry of 24,000,000 VND
(in Vietnamese: and graduate courses at Finance per year
Nhiệm vụ chiến lược) Vietnam National University,
Hanoi
Source: Author adopted from Nguyen (2014a, b)
1 USD~22,000 VND

establish several university courses that meet international standards. The strate-
gies of these two projects are similar and their key activities are three-folds: (1)
Adopting curriculum, syllabus and textbook from a partner university from devel-
oped countries such as the USA, France and Singapore; (2) inviting professors
from partner university to Vietnam and give lectures to students and mentor local
lecturers in pedagogy or conduct co-research; and (3) sending local lecturers to
partner university for internship or short-course trainings. However, by mid-2016,
both these two initiatives have arrived the final steps of the projects and there have
been any signals that Vietnamese Government would continue to invest or extend
these two programmes. Thus, this implies that government does not have both
adequate resources and commitment to maintain qualified higher education sys-
tem. Given the current difficulties of government budget, cost sharing is widely
recognized as a more feasible and more sustainable solution from a perspective in
which unit cost is increased to provide enough resources for higher quality of
education and this increasing cost is to be shared by different stakeholders, includ-
ing government, students, parents and society.

Quality

Traditionally, most proponents to government subsidy have insisted on the central

role of government and call on the government to allocate more resources to pro-
mote higher education quality. However, an increasing number of proponents to
cost sharing express their hope in emerging private providers to fix some part of
the hole-ridden system that almost public providers have failed to. Regardless of
differences in their points of view, however, both sides agree that the current qual-
ity of higher education is poor, and more investment is therefore prerequisite and
urgent. The number of Vietnamese universities listed in Top 350 QS Asia 2016,
5 Financing Vietnamese Higher Education: From a Wholly Government-Subsidized… 87

Table 5.5 Results of Top 350 QS University Ranking Asia 2016 at some selected countries in
ASEAN
Number of higher education institutions Position of higher education
Country listed in Top 350 QS Asia 2016 institutions with highest ranking
The 8 70
Philippines
Indonesia 11 67
Malaysia 20 27
Thailand 13 45
Vietnam 5 139
Source: Author synthesized from QS (2016)

compared to other developing countries within the region, partly reflects the qual-
ity of status quo of quality of Vietnam’s higher education system (see Table 5.5).

Efficiency

Ziderman (2002) believed that, in general, students who have to pay fully or partly
the cost of their studies would be more committed to their choices and their study. In
the same vein, institutions which serve fee-paying students would have a tendency to
be more responsive and responsible to their students (ADB 2009). By contrast, the
regime in which universities receive funding recurrently from government is regarded
as the root of bureaucracy and inefficiency, which creates a more wasteful mecha-
nism. In Vietnam, Vietnam Education Dialogue’s (2015) report is among the few
endeavours considering the above issue from the efficiency perspective. In its report
submitting to the government, Vietnam Education Dialogue asserted: “market mech-
anism should be regarded as the most powerful motivation to enhance quality of
higher education, to mobilize income and utilize resources effectively. Adopting mar-
ket as motivation means granting higher autonomy, facilitating for universities (pub-
lic and private) to compete in educational quality, tuition fee and student enrolment;
and thus serve society better” (Vietnam Education Dialogue 2015).

Tradition and Culture

As discussed at the outset of this chapter, education, including higher education, has
been traditionally free in Vietnam. This stems from the depth culture of Vietnam,
which always highlights the importance of talents for national benefit. Given this
circumstance, it is not easy for the general population to accept a non-free higher
education landscape. This partly explains why policy-makers in Vietnam avoid
88 H.-H. Pham and H.-M. Vu

using term “cost sharing” in their regulative documents over previous decades.
Also, most current policy-makers and university leaders in Vietnam are now used to
being beneficiary of government subsidy higher education regime. Thus, these fac-
tors, without doubt, have resulted in significant obstacles for the transition to a full-
fledged cost-sharing mechanism.

Discussion and Conclusion

Over the last three decades, Vietnam has transitioned from a solely governmental
subsidized to a cost-sharing higher education system. This phenomenon is a reason-
able and necessary consequence of a rapid massification of higher education and
inability of the state in maintaining finance for the sector. Nevertheless, in official
term, cost sharing appears to be not widely used. Instead, “socialization” (xã hội hoá)
has been used as a euphemist term in mostly all regulative documents issued by gov-
ernment authorities. This, on the one hand, reflects an official unrecognition of
Vietnamese policy-makers towards cost-sharing policies in particular and the con-
cept of market-based higher education in general. On the other hand, this reflects the
insistence of Vietnam’s political leaders and policy-makers on the ideology of social-
ism in the country’s development: in a socialist-oriented country, there is no legiti-
mate room for cost sharing or the concept of education as private good. Regardless
of this unofficial recognition, cost sharing in Vietnamese higher education is still
alive and well, being practiced in the forms of tuition fee, student loan and private
higher education establishment, to name a few. It implies that with increasing demand
from learners, Vietnam’s policy-makers must unwillingly adopt a cost-sharing mech-
anism and refer to it with another term: “socialization”. Given this, we call the cur-
rent financing mechanism in Vietnam’s higher education a “passive” cost sharing.
The term “passive” denotes that the promulgation of policies in “socialization” over
previous decades has been a compelled response of policy-­makers to the increasing
demands from society in post-secondary education level. And because of its “pas-
sive” nature, Vietnamese policy-makers do not seem to fully exploit the advantages
of cost-sharing options in particular and dynamic features of market role in general.
Thus, among different objectives of higher education, the combination of
existing options of cost-sharing policies in Vietnam over previous decades seems
to result in only the increase of participation of higher education. The other
objectives, i.e. quality/outcome and equality, as discussed earlier in this chapter,
tend to be deteriorated and decline.
Under such circumstances, to attain a massive higher education system but quali-
fied and equal, it is suggested that Vietnamese policy-makers should adopt more
proactive cost-sharing choices. For instance, on the one hand, the current regulation
on cap of tuition fee applying for public higher education institutions might be dis-
mantled to help universities to seek enough financial source to maintain competitive
quality. On the other hand, the issue of inequality, which might emerge as a conse-
5 Financing Vietnamese Higher Education: From a Wholly Government-Subsidized… 89

quence of no tuition fee cap policy, might be resolved by need-based student loan
and merit-based scholarship programmes facilitated at the national level.
Whatever new cost-sharing option is to be determined, other caveats, which have
been untapped or under-tapped for a long time, should be addressed immediately by
policy-makers and researchers. These, as addressed throughout this chapter, are rel-
evant data, information and empirical analysis to the issue, such as Gini index (an
indicator representing the level of inequality in access to higher education) and
personal vs. social rate of return in different subjects in higher education or unit cost
analysis (a minimum investment per student that ensures competitive quality to
other countries). As cost sharing is still a controversial topic as emphasized by ADB
(2009), the collection of the above information is paramount because it would pro-
vide transparent evidence for both proponents and opponents of cost sharing.

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