Radar | Aug 23,2025
For over two decades, the universities' cost-sharing system has run on a promise. Students can study first and pay later. The Ministry of Education’s push to create a new entity to oversee this system reveals that the promise has outgrown the machinery meant to enforce it.
The Ministry is now looking to establish a new institution to administer the scheme, a form of admission that the state recovers only a small share of what universities spend each year on students. According to the Ministry's officials, the weakness lies in administration, where no system is in place to identify graduates, track when they begin work or compel them to repay what they owe.
The gap has left a 22-year-old financing policy looking unsustainable. Tuition is shared, while housing, food and administrative costs are covered during study and repaid later. Except for tuition, those remaining costs are borne by students. Repayment has sometimes come in cash and sometimes through service, especially by teachers and medical graduates. But the federal government's ability to manage these obligations has remained weaker than the rules imply.
The Education Ministry collects around 70 million Br a month, even though the state spends billions of Birr a year supporting university students.
According to Kora Tushune, state minister for education, the law is not the issue. Because there is no centralised mechanism to enforce collections, the Ministry has requested that an institution be established to run the process.
“It doesn't have a strict follow-up now,” Kora told Fortune.
Pressure has intensified as the cost of feeding students has climbed. Last year, the Ministry convinced the Ministry of Finance to raise the food allowance from 18 Br per meal to 100 Br a day. This change alone is expected to lift food-related cost-sharing to 30,000 Br over 10 months. For a student in a four-year programme, the food component could reach 120,000 Br.
Under the law, graduates are supposed to start repayment once they get hired. Interest is suspended for one year, 10pc of the gross salary is meant to be deducted until the debt is cleared.
According to Biruk Negussu, a tax expert, the interest rate on cost-sharing tracks the average student loan deposit rate. Yet officials and tax experts called the collection framework "fragmented, weakened by poor records, unclear responsibility and limited coordination."
The struggle over collections exposed a larger imbalance in education finance. Governance over general education is divided among federal, regional and sub-regional authorities. They handle spending, teacher recruitment and curriculum, but remain dependent on the Ministry for policy and finance. Universities have some autonomy, but they still depend on federal budgets, and many key decisions remain concentrated at the Ministry.
Public education spending accounted for 23pc of total public expenditure of 1.93 trillion Br, above the sub-Saharan African average of 17pc, according to a World Bank study. About four percent of GDP goes to education, but the distribution is uneven. Primary education, which serves 63pc of all students, receives 23pc of public funding. Tertiary education, which serves only three percent of students, receives 40pc.
The same review found that spending per student rises sharply, from 1,803 Br at the primary level to 66,381 Br at the tertiary level. It argued that higher education should generate more non-public revenue if the country is to free resources for basic and secondary education. Since the benefits of tertiary education are largely captured later through wages, the case for stronger repayment has become harder for policymakers to ignore.
Students cover only 15pc of higher education operating costs. According to the review, if students covered half of those costs, resources equal to about 0.4pc of GDP could be redirected to other parts of the education system. If cost sharing mirrored pre-primary education, where households cover 59pc of costs, the sector would have gained 14.6 billion Br, equal to 14pc of recurring expenditure in 2022, for improvements in access and quality.
Still, not everyone is convinced that creating another agency is the right response. According to an education expert, who asked not to be named, the cost-benefit analysis should be examined carefully before a decision is made. Universities are moving toward autonomy, and that shift could allow them to require students to pay up front rather than depend on post-graduation recovery. He believes that stronger coordination between the ministries of Education and Revenue, possibly through a dedicated department instead of a standalone body, would do more to close the gap.
“The current ministries can bring efficiency,” he said.
Biruk reaches the same conclusion. He has urged the Ministry of Revenue to build a centralised database linked to a national data warehouse so that a manual collection process can be automated. The system depends on temporary decrees, paid receipts, cost-sharing letters and clearance documents. Student loans are centrally managed and can be accessed digitally through information provided by universities, whereas cost-sharing revenues lack a unified platform.
“The loan can be accessed in digital form,” he said.
Biruk stated that linking university access to the data warehouse through students’ Taxpayer Identification Numbers (TIN), while warning that the system would need to be upgraded. Employers are supposed to deduct and remit cost-sharing payments once workers disclose their obligations, but follow-up is limited.
For Biruk, the core problem is ownership. Cost-sharing funds are disbursed by the Ministry of Finance to universities and belong to the Ministry of Education, yet collection remains decentralised. Clerks still ask graduates to present student loan letters because Ministry data are not considered reliable, adding another hurdle. His remedy is public awareness campaigns, incentives for collection, stricter follow-up and a stronger central system.
“There is no need for new institutions; it just needs attention,” he said.
PUBLISHED ON
Apr 19,2026 [ VOL
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