An Uncertain Financing Future for Higher Education in the Global South

External funding plays an important role in the financing of higher education in many low- and middle-income countries. With many countries withdrawing from their development commitments (most dramatically the United States), governments and institutions are now under pressure to identify new, more sustainable sources of funding. However, it is unclear how this might work in practical terms. It will be vital to monitor the impacts of these changes in both the short and long term.

External funding has long played an important role in the financing of higher education systems across the Global South. After years of relative neglect by international organizations and bilateral donors, higher education is now prioritized in most national development strategies and is supported by a broad range of multilateral, bilateral, and private donors. Donor support for higher education has also evolved into a more complex, multipolar space during this period, with a number of former aid recipient countries (e.g., China, India) and private donors (e.g., MasterCard Foundation) assuming newly important roles in the sector. External funding supports all aspects of higher education in low- and middle-income countries and takes a wide range of forms: from individual student scholarships to national and regional capacity-building initiatives to partnership funding for institutions working on collaborative research projects. Although support for higher education is generally quite a small proportion of the overall funding for overseas development assistance, in relative terms, external support is particularly important for the higher education sector in many low- and middle-income countries, given the challenges in raising sufficient public funding to support higher education, particularly in rapidly massifying contexts.

External support for higher education in lower-income contexts is also a highly uneven landscape, with certain donors playing an outsized role. International and supranational organizations, such as the World Bank and the European Union, are particularly influential, as are a handful of bilateral and private donors, which provide significant funding for higher education institutions in Africa, South Asia, and Southeast Asia. In recent years, the United States, along with Germany and Japan, has provided the largest amount of bilateral support for institutions based in the Global South. As a result, the Trump administration’s January 2025 decision to freeze nearly all US development assistance will have a dramatic impact on higher education systems and institutions around the world.

The disappearance of US development assistance has exposed the precarity of national and institutional budgets that rely excessively on foreign support. Many have rightfully argued that the current moment offers an opportunity for higher education systems across the Global South to finally move away from foreign assistance and reclaim the ability to assert their own priorities. However, the pragmatic reality is that alternative sources of funding are not without their own drawbacks and challenges, nor is it guaranteed that they will materialize. Multilateral organizations may be able to fill some gaps left by the withdrawal of the United States, but this is not guaranteed, given that US contributions to international organizations are also questionable for at least the next four years. It also seems unlikely that European institutions, such as the European Commission, will be able to step in, given rising populism in the region, as well as the likelihood of increased spending needs in other areas, e.g., defense. If any new support does arise, it is most likely to come from newer donors, such as China, and/or from private actors. The question is what form such support will take and how much involvement recipient governments and institutions will have in determining how such funding can be used.

Clearly, the most sustainable alternative in the long-term is for governments to move away from reliance on foreign support for higher education. However, this, too, is easier said than done. The prospect of increasing public support for higher education is certainly very unlikely in many lower-income contexts, particularly given that the US freeze on development assistance will have a significant impact on national budgets overall. Without external support nor public funding, institutions are likely to be forced to either raise their own revenue—either via tuition or other forms of commodification—or significantly reduce their costs, perhaps by limiting their support for nonteaching activities or by attempting to leverage technology to reduce the cost of operations. Either of these alternatives could be detrimental for equity, student learning, and research capacity, with potentially disastrous consequences for the countries involved.

If there is any good news, it is that we know more about financing models for higher education today than we have at any other moment in history, given the explosion of higher education research around the world over the past few decades. This wealth of knowledge offers leaders a remarkable opportunity to make evidence-informed decisions when seeking to address the current crisis. Whether that opportunity is taken up will be an important question to ask in the coming months and years. Regardless, it will be imperative for researchers to carefully document the changes in flows of external support for higher education that will likely continue to occur over the next few years, as well as to monitor the impacts that such changes will have on recipient governments and institutions around the world.

Rebecca Schendel is associate professor of the practice and managing director of the Center for International Higher Education, Boston College, United States. E-mail: [email protected].