[Excerpt] A widespread phenomenon in developing countries has been the rapid growth of schools and institutions of higher learning resulting in a so-called ‘education explosion’. One possible explanation for the education explosion is that education is a profitable personal investment, as evidenced by high private rates of return. The high private returns are translated into demands on politicians for additional schooling spaces. To gain or maintain public favour, each politician uses his influence to try to increase the number of schools in his constituency. By this chain of events, growth of educational systems might be anticipated as long as private rates of return remain high. This would add to the already high fiscal burden of providing education and might prove to be a drain on the resources of the governments of many less developed countries.
In a recent paper Rogers calculates private rates of return to investment in post-secondary schooling based on 1966 Government salary scales and 1968 cost figures. Three recent developments—large salary increases for Civil Servants with post-secondary schooling, growing unemployment and underemployment of secondary school leavers, and a decline in the average cost of higher levels of schooling— combine to raise substantially the private rates of return of higher levels of schooling. The purpose of this article is to analyze the effects of these changes on the private rates of return of higher levels of schooling and to assess the fiscal and equity implications of alternative loan programmes. The higher levels of education considered here are university, secondary teacher training, primary teacher training and higher secondary education.