Complementary Policies to Increase Poor People's Access to Higher Education: The Case of West Java,...

Working Paper in Economics and Development Studies

Department of EconomicsPadjadjaran University

Complementary Policies to Increase Poor People’s Access to Higher Education: The Case of West Java, Indonesia

Mohamad FahmiAchmad Maulana

No. 201301

Center for Economics and Development Studies,Department of Economics, Padjadjaran UniversityJalan Cimandiri no. 6, Bandung, Indonesia. Phone/Fax: +62-22-4204510http://www.ceds.fe.unpad.ac.id

For more titles on this series, visit:http://econpapers.repec.org/paper/unpwpaper/

Achmad MaulanaArief Anshory Yusuf

(Center for Economics and Development Studies CEDS)

Januari, 2013

31/12/2012

Complementary Policies to Increase

Poor People’s Access to Higher

Education: the Case of West Java,

Indonesia

Mohamad Fahmi, Achmad Maulana, and Arief A Yusuf

CEDS - Universitas Padjadjaran, INDONESIA

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Complementary Policies to Increase Poor People’s Access to Higher Education: the Case of West Java, Indonesia

ABSTRACT

We see a weakness of the merit-based government scholarship program for students from

poor families, Bidik Misi, as most of them fail to meet the minimum academic requirement.

This paper provide a policy simulation that compares two programs, private tutoring

voucher (PTV) and conditional cash transfer (CCT), to complement the Bidik Misi

scholarship to boost the number of poor students to get the support. To this end, we offer a

policy targeted for second and third year high school students at public schools. The data

sources that we used in this study are the Indonesia Family Life Survey (IFLS), the

Indonesia Social and Economic Survey (SUSENAS), and some primary data. To choose the

best alternatives, we compare the cost effectiveness of both program and we find that the

cost effectiveness per student in private tutoring voucher (PTV) is lower than conditional

cash transfer program. The PTV program is also more convincing than CCT as PTV could

directly influence the quality of instruction. We also check the robustness of the scenario

using two one way sensitivity analyses. The sensitivity analyses support our finding that

PTV program has more cost effective than the CCT.

JEL CODES: I24, I28

KEYWORDS: Policy Simulation, Cost Effectiveness Analysis, Sensitivity Analysis, Private

Tutoring Voucher, Conditional Cash Transfer.

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INTRODUCTION AND BACKGROUND

The World Bank, in 2010, reported that regional disparities of higher education in

Indonesia have been narrowing in past years. However, the accessibility of rich and poor to

access tertiary education is far from ideal. Less than 2% of youth aged 19-24 from

households of the lowest wealth quintile are enrolled in tertiary education institution

compare to 60% of the wealthiest household.

West Java as one of the most populous provinces in Indonesia is located in Java Island and

also the closest province to Jakarta Region. In 2009, it is only about 1.1 percent of poor

young people who live in urban area can access higher education, or only 3,179. One of the

rationale of low participation in higher education, is the high cost of education, either

directly or indirectly so most of the people, especially the poor, unable to access higher

education. Even though most of the universities are concentrated in urban areas, the poor

urban people still have limited access to universities. On the other hand, the dropout rate in

West Java in 2009/2010 is quite low or 2.87 percents. This dropout rate is lower than most

of other provinces and Indonesian average level that reached 3.27 percents. Hence,

dropout may not be the important factor of the low participation rate in higher education

in West Java.

To tackle the low participation of student from poor household in higher education, the

Government of Indonesia (GOI) and the private sectors have introduced several schemes of

scholarships. There are two main categories of scholarships available for student in higher

education; they are full and partial scholarships. Up until 2009, the full-scholarship scheme

is only provided by a few agencies from private companies and philanthropic foundations.

This scholarship conditions the awardees to have excellent academic achievement while

most scholarship for student from financially disadvantage students is partial scholarship.

In 2008 GOI introduced two scholarship schemes; the Improved Academic Achievement

scholarship (PPA) and the Student Learning Assistance scholarship (BBM). PPA is given to

university students who have excellent academic performance, while BBM is given to

university students who come from low SES background family. Until 2011, both schemes

have been given to about 240,000 university students. However, the amount of funds

provided is still not sufficient to cover educational and living expenses. Hence, many

students from poor family background did not finish their undergraduate education simply

because they didn’t have enough money to cover those expenses.

Additionally, GOI introduced Bidik Misi program in 2010. Bidik Misi is a scholarships

program that provides opportunities for poor students to access public universities. The

scholarship provided in this program consists of the cost of living assistance given to

students of at least Rp 600,000 (six hundred thousand rupiah) per month and tuition fees

Rp 2,400,000 (two million four hundred thousand rupiah) per semester. In 2010, GOI has

been given the scholarship to 19,675 and it was increased to 30,000 recipients in 2011. The

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Bidikmisi Scholarships are given to students who study at 117 public colleges and

universities. In 2012, GOI continue to award the Bidikmisi scholarship to about 30,000

students.

There are two paths if a poor student wants to have a Bidik Misi Scholarship. The first path

is the national entrance examination path. In the entrance examination path, students have

to meet a certain grade on national or a public university entrance examination if they want

to get the scholarship. They also have to be among the best 30 in their senior high school at

semester 4 and 5. The second path is a talent scouting scheme. By this scheme academically

talented students are invited by the public universities to study there without test. They

also have to maintain their academic performance in semester 3, 4, and 5 in senior high

school. For example, if a student studies in a “B” grade school then they have to be among

the best 30 in their school to be eligible to get the scholarship.

Despite Bidik Misi program is a good incentive for poor students to access public university,

most of them are fail to meet the minimum academic requirement as students from high

socio economic status background outperform the students from poor family in high school

and in public university entrance examination.

This policy simulation proposes two alternatives to complement the Bidik Misi scholarship

to increase the number of poor students who eligible to get the scholarship. Those

alternatives are private tutoring voucher and conditional cash transfer.

LITERATURE REVIEW

In response to rapid demand in higher education, many governments introduce cost

sharing instead of free tuition fees to increase the capacity and quality of their higher

education. On the other hand, they are also providing financial assistance to create more

opportunities for young talented student from poor and rural areas to enroll in

universities.

The most visible barrier for young people from poor and rural areas to access higher

education is their inability to pay tuition fees and cover the living costs and other fees.

Their low family income background also correlates with other the other barrier to access

of higher education, such as such as completion in secondary school, rural or remote

location, ethnic or linguistic minority status, and higher educational aspiration. In many

countries for many years, admission and financial assistance to enroll to universities public

universities was based mainly on academic merit. University attendance and also merit-

based financial assistance is received by young people from middle and upper-income

families. People from low income families or rural areas, often have low performance in

admission test as they graduated from poorer quality secondary school. However, Bloom

and Rosovsky (2006) argues that merit based criteria cannot be relaxed as giving access to

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people who do not deserve them cannot be in public interest. They believe a strategy that

attract people from low income families as well as provide a sufficient funding will be the

answer to the problem.

To help students financing post-secondary education, many countries typically provide two

types of financial aid; merit-based aid and need-based aid. Merit-based aid or scholarships

is awarded for those who have outstanding academic achievement, special talent or

leadership capabilities. Need-based financial aid is given for those who lack of funding to

pay tuition fees, education and living cost to attend universities. In Canada, need-based is

consist of student loans, grants, loan remission payments Berger and Baldwin (2009). Most

of students loans are offered with interest-free when the student still in university. Student

loan is one of the costs sharing policy to reduce government subsidies to students and their

families. These days, students are pushed to take students loans and use their own money

to finance their study rather than grant and scholarships (Campaigne and Hossler 1998;

Reimers, Da Silva et al. 2006; Fahmi 2007). According to Monks (2009), most recent studies

generally concluded that grant is the most Important financial aid to help student to attend

university followed by loans and work-study. In addition, several studies, for example

Avery and Hoxby (2007) finds that merit-based aid has a bigger impact on increasing

enrollment probabilities than need-based aid. In some countries, where many students are

still living with their parents, government provides indirect assistance to parents in the

form of income tax. However, this government support is criticized because it is difficult

define the outcome of the assistance and some parents do not always transfer the benefit to

their children (Fahmi 2011).

Another form of government intervention in increasing higher education participation by

poor students is private tutoring. According to Dang and Rogers (2008) policy maker

around the world have different position on private tutoring. Some countries, such as

Cambodia, Korea, Mauritius, and Myanmar, are banned the practice (Bray 1999). On the

other hand, some other countries are ignore and even support it (Dang and Rogers 2008).

One of the country that formally support the private tutoring is Israel (Lavy and Schlosser

2005). Since 1999, Israel conducted a remedial education program for underperforming

high-school students. The objective of the program was to increase the number of students

who can access higher education. Using a difference-indifference method Lavy and

Schlosser (2005) find that the private tutoring program in Israel increased the probability

of participating students finish their high school by 12 percents.

The last form of the government intervention in education that used by some countries is

the conditional cash transfer scheme. According to Rawling and Rubio (2009) the

conditional cash transfer is a modern social assistance program that has three key design:

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“First, they provide grants directly to poor households, thereby changing accountability

relationships among the national government, service providers, and the poor. Second,

they seek to exploit complementarities between elements of human capital development

through their inclusion of health, nutrition, and education components. Third, the use of

cash is promoted as efficient and flexible”.

An education conditional cash transfers are given to students, from elementary to senior

high school, with the some conditions. The conditions usually school enrollment and school

attendance. In some countries (Honduras, Mexico, and Turkey) the education grant covers

direct education cost and opportunity cost sending children to school rather than work

(Fahmi 2009).

Rawling and Rubio (2005) found that, in Mexico, Nicaragua, and Colombia, conditional cash

transfer programs have a positive effect on education outcome. In Mexico, primary school

enrollment rates increase from 0.74 to 1.07 percentage points for boys and it increase from

0.96 to 1.45 percentage points for girls. In Nicaragua, CCT program increased the average

primary school enrollment rates by nearly 22 percentage points. In Colombia, the CCT

program had no effect on primary school enrollment rates while it boosts the secondary

school enrollment rates by 5.5 and 14 percentage points in rural areas and urban areas,

respectively. However, Rawling and Rubio (2005) found that the impact of CCT programs

on attendance is mixed. In Nicaragua, the CCT program has a larger impact on attendance

than on enrollment rates. On the other hand, in Mexico the CCT program has larger impact

on enrollment than attendance.

In Indonesia, one of the earliest forms of CCT that has been implemented is the Indonesian

school scholarship and grant program (Jaring Pengamanan Sosial or JPS). This CCT

program provided scholarships and block grants to both students and schools. The JPS was

implemented in 1998/1999 as a response to the economic crisis and was funded for three

years (Cameron, 2002). The main objective of the program was to offset threats to

enrolment rates among poor children in the period of economic crisis. The GOI believes

that the program could discourage poor families to withdraw their children from school in

order to put them in the labor market to supplement household income. Implicitly, the

scholarships may replace or compensate the opportunity cost of sending children to school

(Reimers, Da Silva et al. 2006). Cameron (2002) found that the scholarships are effective to

reduce the dropout rate in lower secondary education by about 3 percentage points.

However the program had no impact on dropout rate in primary and upper secondary

education.

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POLICY GOAL AND ALTERNATIVES

The total quota of bidik misi scholarship in 2012 is 30,000 seats, whereas 2,400 of them are

available for poor students in West Java Province. However, in 2010, it is estimated that

only 1,848 or 77 percents seats are claimed by poor students from West Java. The 23

percent of total quota, or 552, are taken by non poor students. Those seats were not

claimed by poor students as they could not pass the national entrance or fulfill the

minimum academic requirement to attend public universities. It is estimated from 552

unclaimed seats there are about 380 seats were not claimed by poor students from urban

area.

The goal of this policy simulation is to provide a complementary policy of Bidik Misi

Program to increase public universities attendance, by poor students, particularly who

come from urban area, in 2013. To increase the probability of urban poor students in

accessing public universities, we offer two following policy alternatives: Private Tutoring

Voucher and Conditional Cash Transfers.

PRIVATE TUTORING VOUCHER

According to Dang and Rogers (2008):

“Private tutoring is a fee-based tutoring that provides supplementary instruction to

children in academic subjects they study in the mainstream education system.”

One of the most important factor that high SES outperform the low SES (poor) students in

entrance examination test is high SES students most likely participate in private tutoring as

their parent have more money to pay the fees.

To overcome this gap the GOI could offer a private tutoring voucher. With this option, the

GOI provides the vouchers to pay private tutoring program for urban poor students who

include in the best 30 in their school. Students and their families cannot exchange and

Non Poor

552

(23%)

Rural

31%Urban

69%

Poor

1,848 (77%)

Graph 1 Composition of Bidik Misi Grantee in West Java 2010

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trade their voucher to anyone else. The best 30 poor students from urban area could get

the 1 year voucher from semester 5 or the first semester of their third year in high school.

CONDITIONAL CASH TRANSFER (CCT)

According to World Bank (2009), conditional cash transfers (CCTs) are

“..programs that transfer cash, generally to poor households, on the condition that those

households make prespecified investments in the human capital of their children.”

According to Reimers, Da Silva et al. (2006), there are theories that relate conditional cash

transfer to school enrolment, attendance , and attainment. CCT is seen as incentives and

mechanism to ensure that parents send their children to school, instead of working for

their family. These theories assume that students who attend school will have better

academics performance than those who are not in school. These theories regard school as a

“black box” as the cash transfer could affect the educational outcome without intervening

in quality of education or school infrastructures.

With the CCT scheme, the Government of West Java will provides conditional cash transfer

to urban poor family who has a high school student that include in the best 30 in their

school. With this conditional cash transfer, students who are in between the best 30

percents of their school are expected to stay at school and maintain their academic rank in

their schools.

The mechanism of this scheme is illustrated as follows. The poor students who have good

academic performance and include in the 30 in their school are identified by the provincial

government through its local educational office in urban area.

The conditional cash transfer is provided for urban poor household for three semesters,

from semester 4 to 6.

DATA AND METHODOLOGY

There are two data sources that we used in this study, that are the Indonesia Family Life

Survey (IFLS), a longitudinal household survey that started in 1993, and the National

Socioeconomic Survey. Specifically, we use the last wave of IFLS data that covered

approximately 13,000 households scattered in 13 provinces1 and 2009 Indonesia Social

and Economic Survey (SUSENAS), a nationwide survey served as source of monitoring

1 There are currently three full follow-up waves of IFLS that were conducted in 1997, 2000, and 2007. The first

round of IFLS covered approximately 7,200 households in 27 provinces. In the last wave, the number of household

interviewed grew to 13,000 households. The household attrition is quite low, estimated around 5 percent

households are lost between waves.

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social and economic progress in the Indonesian households. There are two sections of data

in 2009 SUSENAS data, the regular (core) and the module. In 2009, the module contains

elaborate information on social life, culture and education. The sample size for this 2009

data consisted of more than 290,000 households. While IFLS only covers 13 provinces,

SUSENAS covers all provinces in Indonesia.

Our main objective of this paper is to find out what are the complementary policy

alternatives that government can use as to increase urban poor participation in tertiary

education. To this end, we offer a policy targeted for second and third year high school

students at public schools.

In calculating an estimated cost for this, we need a reliable estimate on how much poor

students are actually enroll in the public senior secondary school. We use 2009 SUSENAS

education module to calculate the number of students. To find the number of students, we

employ the following steps. We started by combining households in the core SUSENAS and

individuals information from the module SUSENAS as these recorded important

information; households’ expenditures and educational participation, respectively. Next,

we limit our sample into individuals who live in West Java. We classified them into two

groups using a question stipulated in the survey that asked whether the households receive

conditional cash transfer from the government or not, poor and non-poor. Simultaneously,

we extracted individuals below the age of 16 and above 18 years old who were either not

yet attend and those already leave schools. From this step, we get a proxy for individuals

who were active in senior secondary schools. We then classify them into type of school

providers and then keep individuals who were in the second grade. We found that a pupil is

either attends senior secondary schools under coordination of Ministry of Education

(MONE) or Ministry of Religious Affairs (MORA) or private providers. The last step was

dropping individuals that attended private providers and grouped to two groups; poor and

non-poor.

Table 1 shows the number of observations that survived during each step of the above

process. After dropping individuals who are not meet our criteria, the final sample consists

of 228 individuals that equivalent with 126,558 West Java pupils in second grade senior

secondary schools and 18,750 of them came from poor households.

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Table 1 Sample Construction

Step Sample Sample with weight

1 Integration between core and module

# Number of households from core 291,753 58,255,544

# Individuals 1,155,566 230,868,429

2 Of which live in West Java 78,278 41,902,385

3 Defining the poor

a Of which grouped into Conditional Cash transfer criteria

# Individuals classified as non poor 61,748 33,107,501

# classified as poor 16,530 8,794,884

B Of which between 15 and 19

(i). Not yet attend school 24 11,814

(ii). In school 4,470 2,440,094

(iii). leave school 5,211 2,774,420

4 Of which attend 2 grade in senior secondary

(i). MONE 167 93,140

(ii). MORA 44 25,580

(iii). Other MONE 17 7,838

(iv). Private 136 74,108

5 Of which attended public schools

Non poor 196 107,808

Poor 32 18,750

Total Sample 126,558

Source: authors’ calculation from 2009 SUSENAS.

Our next step is to find students that come from poor household who have a good academic

standing. As the SUSENAS data does not have any questions in their questionnaire that

could act as variable to represent this, we decided to use wave 3 of the IFLS data. We

classify a student in a good academic standing if he or she is on the 70th percentile or above,

by using his or her junior secondary national exam score held in year of 2007.

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Table 2

Target population West Java

Number of Senior High School students of second grade (2009) 126,558

Percentage coming from 'poor' families 14.82%

Number of Senior High School students of second grade coming from 'poor' families 18,750

Percentage belonging to 30% best in his/her school 7%

Number of Senior High School students of second grade coming from 'poor' families and the

best 30

1,294

RESULTS

PRIVATE TUTORING VOUCHER

As we mentioned in the Goal and Policy Alternative section, there will be about 380 seats of

Bidik Misi quota were not claimed by the urban poor in 2013. We assume that there is no

significant change from year of 2011 to year 2013 in the proportion of rich-poor students

who get the bidik misi scholarships.

What is the estimated success rate of the private tutoring program in West Java?

Universitas Padjadjaran (UNPAD) has a Corporate Social Responsibility (CSR) program that

provide a free test preparation program for high school graduates in surrounding area of

UNPAD’s campus in Jatinangor. Jatinangor in last 20 years has developed as a new urban

area in West Java. According to UNPAD’s CSR team, the probability of participants of the

program to pass the national entrance test is about 40%. With this probability rate, we

need to train about 950 urban poor students to secure 380 seats in public universities.

It needs only about 50 classes (1 class for 20 students) to train 950 students in private

tutoring program. According to www.info kursus.net, there are 203 private tutorial

providers in West Java in 2009 and most of them are located in urban area. With this

number, there will be no problem for private tutorial providers as averagely there will five

new additional students sent to each provider.

The estimated voucher cost is about Rp. 7 million per year per person. This estimated cost

is calculated from the average price of private tutoring in urban area of West java. With this

voucher, students are expected both to have more preparation when they took the national

entrance test and to maintain their academic performance rank in the best 30% in their

school. The government will spend about 7 trillion rupiahs per year (or only about

0.0023% of West Java’s GDRP) to send 1000 students to private tutorial providers. As the

size of the spending is relatively small, the West Java Government is encouraged to bear the

cost.

After the intervention, we may expect that 40 percent of the urban poor students who

participate in private tutoring class or participant could pass the national exam test. This

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intervention could increase the number of urban poor students who can access public

universities by 380 in 2013 or it increase about 2.22%.

Table 3 Cost Effectiveness Private Tutoring Program

Item West Java





Number of Senior High School students of second grade coming from 'poor' families and 30% best 1,294

Target: Number of unclaimed seats in bidik misi program by urban poor students 380

Success Rate of private tutoring program 40%

Number of potential urban poor students 950

Unit cost of sending into private tutoring for a year (Rp Million/student) 7.00

Total cost of sending into private tutoring (Rp Million) 6,650

Cost effectiveness per student (Rp Million) 17.50

CONDITIONAL CASH TRANSFER (CCT)

According to our estimation, the number of urban poor student who include in the best 30

in their school is only 7 percents or about 1000 students. The benefit structure is Rp.

500,000 per household per month for three semesters. The government will pay directly to

head of the family through local post office. The eligibility of students to get the CCT are

verify each semester. They have to maintain their enrollment and their position in the best

30 percents in their school to get CCT for the next semester. The total government

spending for this CCT is about 9 trillion rupiahs or about 0.003% of West Java’s GRDP. We

also propose to the Government of West Java to bear the cost as the total cost of CCT is

relatively small.

Table 4 Cost Effectiveness Conditional Cash Transfer

Item West Java





Number of Senior High School students of second grade coming from 'poor' families and 30% best 1,294

Target: Number of unclaimed seats in bidik misi program by urban poor students 380

Success Rate of CCT program 40%

Number of potential urban poor students 950

Unit cost of CCT for 3 semester (Rp Million/student) 18.00

Total cost of CCT (Rp Million) 17,100

Cost effectiveness per student (Rp Million) 45.00

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DISCUSSION

From Table 3 and Table 4 in the results section, we could see that the cost effectiveness per

student in private tutoring voucher (PTV) is lower than conditional cash transfer program.

The cost effectiveness of PTV is 17.5 million rupiahs per students whereas the cost

effectiveness of CCT is 45 million rupiahs. The PTV program is also more convincing than

CCT as PTV could directly influence the quality of instruction. As we mentioned in the

previous section, CCT is expected to influence the enrolment without directly affect the

quality of instruction.

Beside the cost effectiveness, Dang and Roger (2008) believe there some secondary

positive effects of PTV. First, PTV could provide a more individualized and more flexible

delivery mechanism than public schools. Second, private tutoring increases efficiency and

welfare.

Dang and Roger (2008) suggests some certain reasonable assumptions that should be

taken when we test or check a scenario. First, market for private tutoring is perfect

competition and that students are free to choose whether to purchase private tutoring.

Second, market for private tutoring is perfect competition and the supply curve for public

schooling perfectly inelastic after a certain point.

SENSITIVITY ANALYSIS

We also conduct a cost-benefit sensitivity analysis as we compare some scenarios of benefit

and cost of PTV and CCT. We provide two one-way sensitivity analyses. The first sensitivity

analysis focuses on the adjustment of cost and effectiveness of the Private Tutoring

Voucher program. While, the second analysis focuses on the adjustment of cost and

effectiveness of the Conditional Cash Transfer program.

The first analysis is conducted for the following variations:

1. Sensitivity of PTV program to a decrease in the probable effectiveness value

(success rate) from 40% to 29%.

2. Sensitivity of PTV program to an increase in a unit cost per program (Rp

Million/student) from 7 to 12 million rupiahs.

3. Sensitivity of PTV program as a combination of a decrease in the probable

effectiveness value (success rate) from 40% to 29% and an increase in a unit

cost per program (Rp Million/student) from 7 to 12 million rupiahs.

On the other hand, the second analysis is conducted for the following variations:

1. Sensitivity of CCT program to an increase in the probable effectiveness value

(success rate) from 40% to 60%.

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2. Sensitivity of CCT program to a decrease in a unit cost per program (Rp

Million/student) from 18 to 12 million rupiahs.

3. Sensitivity of CCT program as a combination of a increase in the probable

effectiveness value (success rate) from 40% to 60% and a decrease in a unit cost

per program (Rp Million/student) from 18 to 12 million rupiahs.

Table 5 shows the result of the one-way sensitivity analysis of benefit-cost of PTV program

compares to the base case of CCT program.

In the first scenario, the decrease of success rate from 40% to 29% increases the total

spending of the program from 6,650 million rupiahs to 9,058 since the number of

participating students is increase from 950 to 1,294. In this scenario, the government will

include all the students from poor families who among in the best 30% in their schools. It is

assumed that the number of students who is accepted in public university is decrease to

about 29%. In the base case scenario of PTV, the government has to select only 950

students out of 1,294 as it assumed that the success rate is 40%. As a result, the cost

effectiveness increases from 18 to 24 million rupiahs per student. Even though the cost

effectiveness is increase to 24 million rupiahs per student, the cost effectiveness of PTV

program is still lower than the cost effectiveness of CCT program (40 million rupiahs per

student).

In the second scenario, an increase in a unit cost per program (Rp Million/student) from 7

to 12 million rupiahs increases the total spending of the program from 6,650 to 11,400

million rupiahs. As a result, the cost effectiveness increases from 18 to 30 million rupiahs

per student. Even though the cost effectiveness is increase to 30 million rupiahs per

student, the cost effectiveness of PTV program is still lower than the cost effectiveness of

base case CCT program (40 million rupiahs per student).

In the third scenario, the decrease of success rate from 40% to 29% and an increase in a

unit cost per program (Rp Million/student) from 7 to 12 million rupiahs increases the total

spending of the program from 6,650 to 15,528 million rupiahs. The third scenario is a

combination of the first and second scenarios. As a result, the cost effectiveness increases

from 18 to 41 million rupiahs per student. Even though the cost effectiveness is increase to

41 million rupiahs per student, the cost effectiveness of PTV program is still lower than the

cost effectiveness of CCT program (40 million rupiahs per student).

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Table 5 One-Way Sensitivity Analysis on the Adjustment of PTV Program

PTV CCT

Item Base Case Decrease

Effectiveness

Increase

Cost per

Student

Decrease

Effectiveness and

Increase Cost per

Student

Base Case

Number of Senior High

School students of

second grade (2009)

126,558 126,558 126,558 126,558 126,558

Percentage coming from

'poor' families

14.82% 14.82% 14.82% 14.82% 14.82%


School students of

second grade coming

from 'poor' families

18,750 18,750 18,750 18,750 18,750

Percentage belonging to

30% best in his/her

school

7% 7% 7% 7% 7%


School students of

second grade coming

from 'poor' families and

30% best

1,294 1,294 1,294 1,294 1,294

Target: Number of

unclaimed seats in bidik

misi program by urban

poor students

380 380 380 380 380

Success Rate 40% 29% 40% 29% 40%

Number of potential

urban poor students

950 1,294 950 1,294 950

Unit cost per program

(Rp Million/student)

7 7 12 12 18

Total cost (Rp Million) 6,650 9,058 11,400 15,528 17,100

Cost effectiveness per

student (Rp Million)

18 24 30 41 45

Table 6 shows the result of the one-way sensitivity analysis of benefit-cost of CCT program

compare to the base case of PTV program.

In the first scenario of CCT program, an increase in the probable effectiveness value

(success rate) from 40% to 60% decreases the total spending of the program from 17,100

to 11,400 million rupiahs since the number of participating students is decrease from 950

to 633 students. As a result, the cost effectiveness of CCT program decreases from 45 to 30

million rupiahs per student. Even though the cost effectiveness is decrease to 30 million

rupiahs per student, the cost effectiveness of CCT is still higher than the cost effectiveness

of the base case of PTV (18 million rupiahs per student).

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Table 6 One-Way Sensitivity Analysis on the Adjustment of PTV Program

CCT PTV

Item Base Case Increase

Effectiveness

Decrease

Cost per

Student

Increase

Effectiveness and

Decrease Cost per

Student

Base Case


School students of

second grade (2009)

126,558 126,558 126,558 126,558 126,558

Percentage coming from

'poor' families

14.82% 14.82% 14.82% 14.82% 14.82%


School students of

second grade coming

from 'poor' families

18,750 18,750 18,750 18,750 18,750

Percentage belonging to

30% best in his/her

school

7% 7% 7% 7% 7%


School students of

second grade coming

from 'poor' families and

30% best

1,294 1,294 1,294 1,294 1,294

Target: Number of

unclaimed seats in bidik

misi program by urban

poor students

380 380 380 380 380

Success Rate 40% 60% 40% 60% 40%

Number of potential

urban poor students

950 633 950 633 950

Unit cost per program

(Rp Million/student)

18 18 12 12 7

Total cost (Rp Million) 17,100 11,400 11,400 7,600 6,650

Cost effectiveness per

student (Rp Million)

45 30 30 20 18

In the second scenario of CCT program, a decrease in a unit cost per student from 18 to 12

million rupiahs decreases the total spending of the program from 40% to 60% decreases

the total spending of the program from 17,100 to 11,400. This result is similar with the

first scenario of CCT as the cost effectiveness is decrease to 30 million rupiahs per student;

however, its cost effectiveness is still higher than the base case of PTV.

The third scenario of CCT is a combination of the first and the second scenarios as there is

an increase in the probable success rate from 40% to 60% and a decrease in a unit cost per

student from 18 to 12 million rupiahs. The total spending of the program is decrease

Page | 16


dramatically from 17,100 to 6,500 million rupiahs. As a result, the cost effectiveness

decreases from 45 to 20 million rupiahs per student. However, the cost effectiveness of the

“ambitious” third scenario of CCT program is still slightly lower than the cost effectiveness

of the base PTV program.

Both one-way analyses conclude that PTV program has lower cost effectiveness than CCT

and they strengthen the result of cost effectiveness comparison.

CONCLUSION

We see a weakness of the merit government scholarship program for students from poor

families, Bidik Misi as most of them are fail to meet the minimum academic requirement.

This paper provide a policy simulation that compares two alternatives, private tutoring

voucher (PTV) and conditional cash transfer (CCT), to complement the Bidik Misi

scholarship to boost the number of poor students who eligible to get the scholarship.

To choose the best alternatives, we compare the cost effectiveness of both program and we

find that the PTV program is cheaper than the CCT. We also check the robustness of the

scenario using two one way sensitivity analyses. The sensitivity analyses support our

finding that PTV program has lower cost effectiveness than the CCT.

If the Government of West Java accepts our proposal, then this policy will be the first

private tutoring intervention to increase higher education participation in Indonesia. We

believe that with the low cost effectiveness this policy will be applicable and effective to fill

the gap in bidik misi scholarship allocation.

There are some potential challenges for the implementation of the program. First, if the

number of urban poor students that is ranked among the 30 best in their school is more

than 950, then the government may have a problem to allocate the vouchers equally.

One of the possible methods to evaluate impact of private tutoring voucher in west java is

impact analysis. To collect the data, we could have an interview and conduct an individual

test to each treatment and control group, before and after the implementation.

Page | 17


BIBLIOGRAPHY

Berger, J. and N. Baldwin (2009). Student financial assistance in Canada: Past, present and

future.

Bloom, D. E. and H. Rosovsky (2006). "Higher Education in Developing Countries."

International Handbook of Higher Education: 443-459.

Bray, M. (1999). The Private Costs of Public Schooling: Household and Community

Financing of Primary Education in Cambodia., Paris: United Nations Education, Scientific

and Cultural Organization, International Institute for Educational Planning.

Campaigne, D. and D. Hossler (1998). "How do loans affect the educational decisions of

students? Access, aspirations, college choice and persistence." Condemning students to

debt: College loans and public policy: 85-104.

Dang, H. A. and F. H. Rogers (2008). "The growing phenomenon of private tutoring: Does it

deepen human capital, widen inequalities, or waste resources?" The World Bank Research

Observer 23(2): 161-200.

Fahmi, M. (2007). "Equity on Access of Low SES Group in the Massification of Higher

Education in Indonesia." Working Papers in Economics and Development Studies

(WoPEDS).

Fahmi, M. (2007). "Indonesian higher education: the chronicle, recent development and the

new legal entity universities." Department of Economics Padjadjaran University, Working

Paper in Economics and Development Studies(200710).

Fahmi, M. (2009). The Effectiveness of Private Versus Public Schools in Indonesia:

Comment, Department of Economics, Padjadjaran University.

Fahmi, M. (2009). School choice and earnings: A case of indonesia, Department of

Economics, Padjadjaran University.

Fahmi, M. (2011). "Does High School Economics Course Affect Learning in the University

Principle of Economics?".

Lavy, V. C. and A. Schlosser (2005). "Targeted Remedial Education for Underperforming

Teenagers: Costs and Benefits." Journal of Labor Economics 23(4): 839-874.

Reimers, F., C. D. S. Da Silva, et al. (2006). Where is the" Education" in Conditional Cash

Transfers in Education?, UNESCO Institute for Statistics.

Page | 18


ANNEX 1 – UPDATED PBA

Education Total

2007 2008 2009 2010

Education total 14,295,606,229,67

4

15,777,654,445,72

5

13,080,731,119,66

0

20,207,993,523,79

3

Primary 3,041,790,675,025 6,468,998,879,061 819,476,211,779 4,261,172,804,089

Recurrent 2,344,130,555,386 5,509,090,267,484 413,960,995,770 3,932,554,367,851

Wages 78,123,215,142 97,801,729,444 91,496,080,141 3,573,755,916,368

Non-wages 2,266,007,340,244 5,411,288,538,040 322,464,915,629 358,798,451,483

Capital 697,660,119,639 959,908,611,577 405,515,216,009 328,618,436,238

Domestic 0 0 0 0

Donor 0 0 0 0

Secondary 771,404,490,255 605,766,062,838 419,811,222,381 618,451,412,883

Recurrent 693,558,674,475 527,700,159,007 354,902,462,306 557,070,697,507

Wages 287,452,931,778 440,831,685,199 39,802,533,969 355,518,239,769

Non-wages 406,105,742,697 86,868,473,808 315,099,928,337 201,552,457,738

Capital 77,845,815,780 78,065,903,831 64,908,760,075 61,380,715,376

Domestic 0 0 0 0

Donor 0 0 0 0

Tertiary 3,549,031,952,583 1,131,064,762,882 1,818,700,911,463 1,839,061,478,642

Recurrent 3,187,804,476,583 996,015,754,932 1,522,783,319,182 1,568,802,748,642

Wages 619,174,822,280 638,724,495,983 591,210,241,016 811,195,375,661

Non-wages 2,568,629,654,303 357,291,258,949 931,573,078,166 757,607,372,981

Capital 361,227,476,000 135,049,007,950 295,917,592,281 270,258,730,000

Domestic 0 0 0 0

Donor 0 0 0 0

Other Education 615,273,700,176 576,754,962,484 678,945,814,868 796,642,867,968

Recurrent 546,250,488,830 523,271,582,182 577,919,359,121 718,848,966,432

Wages 129,321,002,117 131,155,254,100 140,393,726,073 413,774,451,450

Non-wages 416,929,486,713 392,116,328,082 437,525,633,048 305,074,514,982

Capital 69,023,211,346 53,483,380,302 101,026,455,747 77,793,901,536

Domestic 0 0 0 0

Donor 0 0 0 0

Ministerial

REGIOADMINISTRATIO

N

6,318,105,411,635 6,995,069,778,460 9,343,796,959,169 12,692,664,960,21

1

Recurrent 6,286,403,259,621 6,940,294,693,763 9,309,236,819,099 12,637,633,718,12

6

Complementary Policies to Increase Poor People’s Access to Higher Education: the Case of West Java,

Education

2007

Wages 5,944,921,766,697

Non-wages 341,481,492,924

Capital 31,702,152,014

Domestic

Donor

49.38

41.97

8.66

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007

Wages, non-wages and capital spending

WAGES

17.45

72.38

10.18

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007

Wages, non-wages and capital spending by facility level

Wages

Complementary Policies to Increase Poor People’s Access to Higher Education: the Case of West Java,

Total

2007 2008 2009

5,944,921,766,697 6,800,566,747,702 4,661,726,859,776

341,481,492,924 139,727,946,061 4,647,509,959,323

31,702,152,014 54,775,084,697 34,560,140,070

0 0

0 0

51.40 42.23

87.69

40.48 50.87

8.38 8.12 6.90 3.92

2008 2009 2010

wages and capital spending - Education

NON-WAGES CAPITAL

56.47

32.5144.11

31.59

51.2241.20

11.94 16.27 14.70

2008 2009 2010

wages and capital spending by facility level – Tertiary

Wages Non-wages Capital

Page | 19


2010

4,661,726,859,776 12,566,463,755,65

9

4,647,509,959,323 71,169,962,467

34,560,140,070 55,031,242,085

0 0

0 0

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