ABSTRACT
The present chapter examines arguments of the ‘neo-liberal’ economists and the economists believing in welfare state philosophy on issues relating to financing and cost recovery in social sectors like education. These two schools of thought present distinct arguments in favour and against many of the cost recovery methods being adopted nowadays. Specifically, it (i) looks at the several approaches of cost recovery in education; (ii) discusses the pros and cons of the several approaches, including their effects on equity and efficiency; and (iii) reviews the experience of some of the countries in this regard. The analysis helps in discerning some valuable lessons for educational policymakers and planners around the world faced with difficult policy choices. The chapter argues that all measures have certain strengths and certain weaknesses, but on balance, one may conclude that progressive taxation, and funding education out of general tax revenues, and financing of higher education probably out of general and specific tax revenues, may still be the best option. All others are only second best solutions.
