ABSTRACT
The passage of the Universal Access to Quality Tertiary Education Act in 2017 (RA 10931) provided free tuition to all undergraduate students attending public higher education institutions in the Philippines. Although this legislation benefits more than 1.5 million Filipino students, this chapter argues that there are efficiency and equity concerns in this form of educational financing. Free tuition in public colleges and universities may threaten the viability of private universities through the mechanism of switching effect. Moreover, since private universities are key producers of research in the country, this legislation may impede the production of knowledge capital in a country already behind its ASEAN neighbours. An analysis and comparison of rates of return to higher education in public and private universities is utilized to show that this scheme of public financing of higher education is inefficient and inequitable. Lastly, a general equilibrium analysis is used to show the implications of this free tuition college education on the operation of private higher education institutions, quality of education, and the production of research and publications. The chapter concludes with a discussion of possible financing schemes that would make higher education in the Philippines more efficient and equitable.
