Abstract
Privatization of higher education in India is the outcome of increased demand, especially from the growing middle-income families, and the inability of state governments to step up public funding for higher education. This has resulted in rising enrolment in private unaided institutions, which increased from 25 percent in 2000–2001 to 58 percent in 2012–2013. Consequently, the burden of financing higher education has shifted from the state to the households. In the light of these developments, this study examines the alternative sources of financing higher education in India. The trends in public expenditure on higher education and the coping strategies adopted by the public institutions are discussed. The burden of higher education expenditure on households is examined using unit-level data from the National Sample Survey (NSS) on participation in education. The results reveal that the economic burden of expenditure is higher on households with lower incomes, which is a cause for concern. The study also explores whether student loans can serve as an alternative financing mechanism to ease the burden on the public as well as on the households. The rationale for cost sharing between the state and the households is also discussed.