Growth of Sri Lanka’s private higher education sector

Sri Lanka is a key higher education market for the UK, particularly when it comes to transnational education (TNE). Globally, Sri Lanka recorded the third highest TNE student numbers for UK qualifications in recent years. The country is also experiencing socio-economic transformation, as a result of the economic crisis in 2022-23. This blog examines the current situation of the Sri Lanka's private higher education market, government directions, policy shifts, market dynamics and what these mean for the UK higher education sector. 

Context

Sri Lanka has one of the oldest free education systems in the world, established during the colonial period. Under this system, the government of Sri Lanka makes free education available for all children from pre-school to bachelor’s degree.    

The country has achieved a high enrolment rate of 99 per cent at secondary school level which is up to 11th grade. This however sharply drops to 21 per cent at tertiary level and is lower than the global enrolment average. The higher education provision has not been able to expand in the same proportion as the demand and the numbers of young Sri Lankans’ aspiration for higher studies. Each year, around 160,000 students are university ready and seek admission for tertiary education.

There are 20 public universities, called state universities, with limited spaces that can enrol only 42,000 students annually. Admission to state universities is based on the local General Certificate of Education Examination (GCE A/L).  Even though a high number of students pass this exam, only a small proportion are able to secure admission because of the limited available seats. It is usually the top 10 per cent students based on the merit and district quota system in each subject area that find a state university placement. In 2022, out of the 166,938 qualifying students, only 23 per cent of the students got university admission in state universities. The competition is tough for relatively few university places. 

It is estimated that nearly 29,000 students leave for higher education studies in overseas countries every year and another 60,000 engage in various type of courses and academic programmes mostly catered through TNE by the private higher education sector. Additionally, there are other available free vocational and technical education opportunities in public institutions which the students can access but are not that popular.  

It is worth noting that despite the high competition in university admission, Sri Lanka has a high female literacy and participation level in education. Women form 65 per cent of the total university enrolment in the state universities. This data in the private sector institutions is not available.

Capacity of the private higher education sector

The government approved private universities are more than the public universities. From the total 47 government approved universities and higher education institutes in Sri Lanka, 27 are private universities, called the non-state institutions and these have degree awarding power. They operate under the supervision of Ministry of Higher Education whilst 18 public universities under the purview of University Grants Commission (UGC), the government regulator for higher education and two other public universities under the Ministry of Higher Education.  

In addition, there are institutions in the private sector without the degree awarding power but are affiliated to other universities and do not need to be government approved. Between all types of non-state higher education institutes, they have the capacity to enrol 50,000 to 60,000 GCE A/L qualifying students per year. This is 42 per cent more than the students that find admission in the state universities.  According to the 2019 official data, private sector makes 12 per cent to the overall tertiary education enrolment rate of 21 per cent.

Degrees offered by foreign universities through local partners which are typically the non-state institutions are recognised by the government if those foreign universities are listed either in the International Handbook of Universities or Commonwealth Universities Yearbook published by International Association of Universities and Association of Commonwealth Universities respectively.  Other than the degree and other post graduate qualifications, foreign higher education institutions are also providing HND and diploma level programmes in partnership with local private institutions, but these are monitored and regulated by Tertiary and Vocational Education Commission of Sri Lanka.

Few of the government approved non-state higher education institutions came together to form an association of private higher education qualifications providers called the Sri Lanka Association of Non-State Higher Education Institutes (SLANSHEI).  It got set up in 2016 with the objective of increasing the capacity and quality of higher education in the country with the growing need for higher education.  The association has 17 members and almost all of them provide UK qualifications through TNE partnerships. Currently, they support over 25,000 students to study UK qualifications in Sri Lanka and over 5,000 students in the UK.

According to the National Human Resource Development Council of Sri Lanka 2021 data, Sri Lanka Institute of Information Technology (SLIIT) is the largest private HE provider with 10,402 students amongst the approved non-state institutions.  The other prominent providers are National Schools of Business Management (NSBM) with 2,812 students, Horizon College of Business and Technology with 1,182 students, CINEC Campus 1,838 students, SLTC Campus with 1,185 students. Recently, the government proposed to provide legal arrangements to accept four of these leading private campuses as fully fledged universities (only the government can grant the degree awarding status).  This includes SLIIT, Royal Institute, Horizon Campus, and NSBM.  They all have TNE or partnership arrangements with UK universities.

Education sector funding

Sri Lanka’s GDP allocation to education is considerably low in comparison to its regional and income peers. Government spending on higher education in the last decade has been under 2 per cent of its GDP except for a brief rise to 3 per cent in 2016.  The year 2022 recorded the lowest GDP allocation of 1.2 per cent to education in its history of 50 years.

It is observed that the household private spending on education is significantly higher in Sri Lanka. According to 2019 expenditure survey carried out by Department of Census and Statistics of Sri Lanka, it shows that on average a family spends Rs.2,401 on education which is 5.9 per cent  of total spending in a month. The majority spending goes towards private tuition (48%), stationary (14%) and higher educational activities (9%). This was severely impacted with the country’s economic crisis in 2022.

How is government responding through policy and new initiatives?

The government is trying to bridge the gap in demand by expanding private education provision through promotion of several investor friendly policies such as inviting reputed foreign universities to open their branch campuses in Sri Lanka, recognising leading private institutions as universities, providing incentives for students to join degree programmes in non-state institutions and introducing new regulations to improve quality and recognition.  

It initiated several policy initiatives including introducing a new National Higher Education policy in 2019 as a part of wider national policy framework on education 2030. The policy proposes to liberalise higher education provision through private sector investments from local and international partners. It aims to increase access to higher education, identify new subjects/ disciplines, provide career guidance and counselling as a policy to control the mismatch between higher education and employment, student welfare and discipline, improve post graduate education and research and improve efficiency and effectiveness of academic and non-academic staff development.

In addition, the government aims to develop Sri Lanka as a HE hub in South Asia focusing on its geographical advantage in the region, higher literacy rate, cultural and environmental diversity, and opportunities for research and affordability. In June 2023, Port City Colombo (PCC) was established as a special economic zone in Colombo and called for an expression of interest inviting foreign universities to set up an international university in PCC.  The call identified six subject areas: business, accounting, finance, banking, IT, engineering and medicine.

Further, President Ranil Wickramasinghe in his address at the COP 28 summit in Dubai in 2023, proposed to establish an international climate change university in Sri Lanka to facilitate green, blue studies and facilitate scientists, environmentalists, researchers, policymakers, development practitioners and visiting researchers worldwide to study in Sri Lanka.

In addition, the President emphasised the need to improve the private share of the Sri Lankan higher education in the budget speech made in November 2023 (President’s budget speech 2023). This has become the key policy direction for the Sri Lankan higher education system. The government also proposed to set up a Quality Assurance and Accreditation Commission to ensure quality and accreditation of degree level courses delivered by the private higher education campuses, in a way suggesting a dedicated regulation may be on its way for the private higher education sector which so far has largely been outside the purview of the country’s HE regulator.

Other initiatives include continuation of interest free loan scheme for private sector students.  Prime Minister Dinesh Gunawardane whilst addressing the Parliament in October 2023 mentioned that ‘It is vital to give opportunities for students not only at state universities but also at private universities’. In 2023, five thousand students were awarded interest free loans to study in government approved private higher education institutions and most of these private institutes offer TNE qualifications as well.

It is worth mentioning that access to education loans from commercial banks which had become a challenge during the economic crisis is easing off.  Interest rates are coming down significantly with decline in inflation. This will have a positive impact on student numbers to study in private higher education institutions with wider access to financial resources to fund their studies.

Recent changes in perceptions and choices towards higher education and pathways

As a result of the economic crisis, there is change in social and parental perceptions.  Most of the middle-class parents are pushing their children to join degree pathways after their O/Ls rather sitting for local GCE A/L examination. Through this option, students can graduate at the age of around 20-21. Average graduation year in Sri Lanka is between age 24 to 25. With this alternate option students can save three to four years of their time and start their career early. Further these programmes provide transfer options to foreign universities after completing the first year of study or foundation programme which make this study pathway more popular among students.  With Sri Lankan employers highly valuing UK qualifications, jobs and employability prospects for students with UK qualification is greater in the private sector in Sri Lanka.

In the past few years, Sri Lankan government introduced new technology streams to GCE A/L examination in engineering technology and bio system technology to meet the global and local market demand in STEM areas. However, due to limited opportunity in the free government public universities, 80 percent of these students look for private HE pathways. This situation could create a new market opportunity for private providers focused on science and technology-based courses. 

Conclusion

Sri Lanka is progressing towards gradual economic recovery after receiving the IMF bailout package and finalising the local debt restructuring scheme in 2023. However, the fiscal situation is still tight even now and public spending on education is limited. The Sri Lankan government has limited flexibility to expand the free public higher education provision in near future. Under this backdrop, the government is compelled to find alternative solutions to meet the increased demand for higher education opportunities among youth. The Sri Lankan government has envisaged a clear policy on private higher education in order to provide wider opportunities to young people and meet wider social justice standards through improved fiscal balance. There are 77 per cent qualified youth in Sri Lanka who have both qualifications and aspirations to enter a university education but do not get an opportunity due to lack of access to free or affordable higher education.

Government of Sri Lanka is looking for investments with foreign universities to operate branch campuses in Sri Lanka. UK universities can use these positive developments to continue their business plans with local partners with strong market and proposed regulatory incentives from the government. UK universities can partner and invest in Sri Lankan market and keep a close eye on upcoming opportunities.

Finally, TNE and mobility pathways are well established in the Sri Lankan higher education system, whilst this will continue to grow in the coming years mainly due to internal push factors, the UK providers must be proactive to engage and focus on quality, consolidating UK’s position and reputation in Sri Lanka’s TNE space.