Higher Educational Accessibility and Financial Viability: The Role of Student Loans D. Bruce Johnstone ∗ Higher education at the start of the 21 ST century has become increasingly important. From the highly industrialized countries of the OECD, to the so-called transitional countries that are moving from centralized to market economies, to the middle and low income countries, higher education (or the more inclusive term, tertiary education) is seen nearly everywhere as an underpinning to democratic civil societies, an engine of economic growth, and a policy instrument for the advancement of individual economic mobility and social justice. However, in spite of this universally recognized importance, higher education at the start of the 21st century seems everywhere beset with some variation or variations on the theme of financial austerity. This austerity is caused principally by flat or declining governmental budgets in support of higher education and is manifested by overcrowded institutions, deteriorating physical plants, declining faculty-student ratios, increasingly demoralized and distracted faculty, and in many countries higher fees, greater student debt loads, and a restive student body. A common (albeit contested) prescription to this worldwide austerity is some form or forms of cost sharing. The perspective of cost-sharing, as developed and elaborated by Johnstone (1986, 2000, 2002, 2003, 2004a) posits that the costs of higher education are borne by four parties: governments (or taxpayers), parents, students, and philanthropists. 1 The policy of cost-sharing—particularly in response to the austerity posited above—is a deliberate, or policy-driven, shift in the bearing of these costs from a substantial reliance on government, or the general taxpayer (especially in continental Europe and in many of the current or former socialist/communist countries), to being shared as well by parents and students. Rationales for, and descriptions of, this shift have been set forth by Johnstone (as cited above), Woodhall (2002), Vossenstyne (2002, 2005), Ziderman and Albrecht (1994), and Ziderman (2002), as well as by many others. These rationales generally begin with the claim of greater equity to a financing scheme with some cost sharing. This claim, in turn, is based on the observation that in virtually all countries higher education is partaken of disproportionately by the sons and daughters of the more privileged, while the governmental revenue base supporting this expensive governmental benefit depends heavily on taxes that are born substantially (if not regressively) by the general taxpaying citizen. This general citizen/taxpayer may benefit from the considerable social returns to higher education but will not (by definition) benefit from the also considerable private ∗ D. Bruce Johnstone is University Professor of Higher and Comparative Education, Director of the Center for Comparative and Global Studies in Education, and Director of the International Comparative Higher Education Finance and Accessibility Project at the State University of New York at Buffalo. This paper was prepared for the World Report on Higher Education: The Financing of Universities II International Barcelona Conference on Higher Education, Global University Network for Innovation (GUNI) Barcelona, Spain, May 24-25 and November 28-30, 2005.