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Educational Challenges - Financial Aid

China has made great achievements in rural education over the past decade—especially in compulsory education. Compulsory education in China ends with grade 9. In the past five years, fiscal input by the national government has made grades 1 to 9 almost free. This effort—and other factors—have contributed to making compulsory education nearly universal. Almost all children between the ages of 7 and 12 are in school. Girls attend elementary and middle schools at rates almost equal to boys (Hannum, Wang and Adams, 2010).

Although there has also been progress in promoting higher education—both high school and tertiary education—this is not due to reductions in tuition and fees. At the same time that tuition and fees were reduced for elementary school and junior high, they were raised for high school and college/university. School costs are not trivial for middle-class urban parents, and they are extraordinarily high for families in poor rural areas.

How high are high school tuition and fees? According to a recent survey by REAP, high school tuition, room, board and other fees in rural areas cost around 4,000 yuan per year. High school students from remote villages and townships almost invariably have to live at school. Thus, three years of high school costs 12,000 yuan or more. For a family that is living at the poverty line, this is equivalent to 15 times per capita annual income. 

Sending a student to university for four years is more than twice as expensive as high school. The total cost of attending university in China is 10,000 to 12,000 yuan per year, meaning that a family living at the poverty line must borrow and/or save more than 60 times per capita income to pay for university.

See Financial and Information Constraints on Rural High School Students Seeking Higher Education in China ( 274.24 KB ) for a summary of REAP's 2007 survey results.

Calculating the benefit side of secondary and tertiary education

Despite these high expenses, the vast majority of families in China—urban and rural, including parents of households from the poorest, most remote parts of China—would like to send their child to high school and college. However, the decision to do so depends on an assessment of the benefits:

  • When a child goes to high school instead of entering the workforce, they are foregoing a wage. In addition to "out-of-pocket" expenses, these sometimes substantial foregone earnings essentially make the cost of high school higher. 
  • The wage that a student can earn after attending high school (if not continuing to university, or to a technical training/professional school) is about the same as the wage they would earn if they entered the work force after junior high (Li et al, 2004).
  • The probability of passing the university entrance exam in poor, rural areas is very low. A recent study found that only 12 percent of randomly selected poor students in Shaanxi province passed the university entrance exam in 2008 (Liu et al, 2008).
  • Vocational/technical training schools exist, but they are even more expensive to attend than university and, until recently at least, there was little financial aid.

For poor families, evaluating the tradeoffs involved in sending a child to high school is complicated and uncertain. Increasing household income may sometimes be at odds with sending a child to high school. When a family does decide to send their child to high school and beyond, they often have to take difficult steps to support them. Poor families frequently must sell scarce assets or borrow from relatives, friends, and neighbors. Increasingly, families rely on high interest loans from local money lenders.

Not surprisingly, high school enrollment rates in poor rural areas are low. The wide gap between rural and urban educational attainment endures. Furthermore, this is occurring at a when China—given its need to increasingly compete in more skilled wage industries—needs its workforce to be better trained.

What about financial aid for high school and college?

Scholarships and financial aid for high school students are almost non-existent in poor, rural areas. At universities across China, the limited scholarships available pale in comparison to the numbers of students who ask for support. According to a recent survey by REAP, only 2 percent of high school students received financial aid. More than 20 percent applied (Sharbono et al, 2007).

University funding, though, is a different case. More financial aid and scholarships are available today than there were five years ago. Some universities claim that anyone requiring financial aid can recieve it.

Even if this were true, students from poor rural areas are not aware of this. REAP found that there was enormouse misinformation about school financing among rural students. Students are not aware of the resources that are available for them. They also believe that it is more expensive to go to better schools in large municipalities than to lower-quality schools in regional cities. In fact, in most cases, the reverse is true. There are programs to help poor, rural students with their funding needs, but rural students usually do not know about them and often are unable to take advantage of them.

However, a recent REAP study found that university scholarships and financial aid are also unevenly distributed across universities. There are a substantial number of scholarships—funded by both government sources and private donations—at China's centrally-funded and most prominent universities. Unfortunately, these institutions have the fewest number of poor, rural students. In contrast, universities with larger numbers of student from poor, rural areas are far from having enough aid. When REAP researchers interviewed university administrators at these schools, many laughed in response to the claim that anyone needing university financial aid could receive it.

Many financial aid programs are also poorly designed. For example, banks are supposed to provide educational loans, but few students have been able to take advantage of them. Banks are frequently unwilling to provide guaranteed student loans because the government guarantee backing these loans is not strong enough. Banks have instated many rules in an attempt to overcome perceived--though unproven--repayment problems. Students also can only apply for loans at banks in their hometowns. However, poor, rural students are by definition from poor, rural areas, and banks in these areas are generally the least willing and able to make students loans.

In addition, China's government scholarship and grant funding is all channeled through the university system. This means that students cannot obtain access to aid until they enter university. In fact, in most universities, first-year students are not awarded scholarships until well into their second semester. Thus, families not only have to find a way to finance the first year of college, but also must make the decision of whether or not to enter university without knowing how many years they will need to pay for. Students must decide where to go to college and what to major in without knowing what their financial aid package will be. With such uncertainty, many students choose to go to less expensive teacher-training colleges or military schools, even though they are not interested in a career in education or the military.

Making a well-informed decision in regards to which university to attend is very difficult for a poor family, given their own financial limitations and systematic information constraints. Ultimately, higher education in China is a private, pay-as-you-go system. Students must base their decisions on whether their families can come up with the required amount on their own, an impossible task for many. That is, unless changes are made to the way the system works at the high school, college and university, and vocational and professional school levels.

Other Aid Challenges

Vocational/Professional Training (Dazhuan):

The discussion above reveals disheartening statistics. Due to the extremely competitive nature of college admission exams, limited space in the university system and the relatively poor quality of schooling that students from poor, rural areas receive, fewer than 15 to 20 percent of high school students from China's poor rural areas are able to pass the university entrance exam and continue their education (Liu et al, 2008). Even though many have proven themselves to be highly motivated, hardworking and talented enough to have made it through secondary school, the large majority of poor, rural students graduating from high school have little choice but to find a job in the unskilled labor market. Despite the academic abilities and appealing personal attributes many individuals demonstrate, low economic status often becomes entrenched.

Vocational and professional training has the potential to be an important new opportunity for students to learn skills valued in China's labor market. Vocational (or technical) education and professional schools are often seen as a means of servicing the large numbers of students not currently accommodated by the university system. Yet, while vocational schools are increasingly common for different trades, they are predominantly private. In many cases, attending vocational training/professional schools is even more costly than attending China's level-1 and level-2 universities.

Financial aid for vocational schools is still minimal, although it is growing. Both private and increasingly government financial aid programs are available, but they are not well known, and methods of allocating aid are unclear. Terms and conditions may make use the of financial aid restrictive. Families considering vocational schooling generally cannot count on financial aid. Furthermore, the rate of return to vocational training and professional school is unknown. Thus, the result in rural areas is a familiar one: vocational training is an opportunity, but only if your family can afford to pay for it under the status quo. Opportunities are not available for all, and there is evidence that young women are the least likely to receive advanced training.

Early Childhood Education

A recent REAP survey reveals that fewer than 40 percent of young children in poor rural areas are attending any kind of early childhood education program (Luo, Rozelle and Zhang, 2008), despite the many long-term benefits "early childhood school readiness" holds for formal educational attainment and ultimately social and economic success. In China's large and affluent urban areas, attendance rates are 90 percent. Low preschool attendance in poor areas occurs even though costs may not be high. However, early childhood education centers that do exist are private and, like other forms of non-compulsory education in rural areas, little if any private or public financial aid is made available to encourage and enable poor families to enroll their children (see Educational Challenges – Early Childhood Education, for a detailed description of this important issue).


REAP Takes Action

To assist poor, rural families in meeting the spiraling costs of education, REAP is implementing its own scholarship programs and partnering with others to evaluate their financial aid programs.

The objectives of this work are two-fold:

  • Help promising students by providing them with financial aid
  • Learn what the impacts are of different financial aid programs—both short-term and long-term—and draw policy lessons so policymakers can effectively change programs that are not working and scale up those that are

So what are we doing?

We are conducting or have completed six scholarship programs: 

  1. University Scholarships
    Hurdle Grants (IET/CORE Scholarship Program)
    Scholarships with and without Strings Attached – Promoting Community Service (Cyrus Tang Foundation's CaringHearts Program)
  2. High School Scholarships
    If High School Were Free? (SOAR Foundation)
  3. Middle School and High School Scholarships
    Scholarships with Strings Attached – Promoting Community Service (Cyrus Tang Foundation's CompassionateHearts Program)
  4. Vocational Training Vouchers
    Giving Her a Second Chance (in negotiation)
    (GAP Foundation Vocational Training and Internship Program)
  5. Preschool Vouchers
    Giving Rural Children in China a Head Start: Providing Families Pre-school Vouchers to Improve the Educational Readiness of Pre-school Age Children in Rural China



  • Hannum, E., M. Wang and J. Adams. 2010. "Urban-Rural Disparities in Access to Primary and Secondary Education under Market Reforms." pp. 125-146 in One Country, Two Societies?: Rural-Urban Inequality in Contemporary China, edited by Martin K. Whyte, Cambridge, MA: Harvard University Press.
  • Li H., W. Liu, N. Ma, J. Zhang. 2004 "Does Education Pay in Urban China? Estimating Returns to Education Using Twins" Discussion Papers, Chinese University of Hong Kong, Department of Economics.
  • Liu, C., S. Rozelle, L. Hongbin, B. Sharbono. 2008. "Is a First Year University Scholarship Enough? Results from an Experiment on Exam Performance, University Enrollment and University Choice in Northwest China" Working paper, Stanford University.
  • Luo, R., S. Rozelle, L. Zhang. 2008. "Availability of Early Childhood Education Centers in Northwest China and Attendance by Rural Children" Working paper, Stanford University.



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