Nearly 70 percent of Indonesian students study at private universities. However, the quality of private universities is still below state universities.

Private universities in Asia, including Indonesia, face four problems according to Asian Development Bank research . These problems are (1) expanding access to private campuses (increasing the number of students, providing lectures for financially disadvantaged and disabled people), (2) varying quality of private universities, (3) high costs at private universities, and (4) it is difficult to get financial support.

Expansion of access to lectures at PTS

Nationally, the number of private tertiary institutions (around 3,000) is far more than the national tertiary education institutions (122 units) . Of the 6.9 million Indonesian students , around 32% (2.2 million) study in state universities and 68% (4.7 million) in the private sector. Private universities increase community participation in obtaining tertiary education amid the limited capacity of the state campus.

Private universities play an important role in absorbing high school graduates, ensuring that Indonesia can truly take advantage of the demographic bonus , by expanding access to higher education.

The increase in access that is now urgent is to increase access for disadvantaged groups and people with disabilities. However, if the expansion of access is not accompanied by an increase in quality it is feared that it will increase the number of unemployed scholars.

Quality varies

The quality of private universities is good, but the majority of the quality is below state universities. The Ministry of Research, Technology and Higher Education composes the ranking of the quality of higher education institutions into five clusters based on the quality of human resources, institutions, student activities, research and community service, and innovation.

Until now there are no private universities that have entered cluster 1 (top) ranking of the best non-vocational universities version of Kemenristek Dikti 2018 .

There are fourteen universities that are in cluster 1, all state universities. This is understandable because they first entered the higher education market and were supported by quality academic resources, as well as the state budget. Until now, private universities have just entered the cluster 2 ranking of Kemenristek Dikti 2018 .

Expensive education costs

If you look at the context of business, competition universities in Indonesia, including the category of gray areas and no camouflage ( disguise ) . Unlike the context in developed countries that explicitly categorizes education into the realm of for-profit business , the Indonesian Higher Education Act normatively states that higher education is a non-profit institution.

It is called disguise because in fact private universities are for profit organizations, but because in Indonesia they adhere to the law that higher education is a non-profit institution, so inevitably the PTS organizers in writing must remain non-profit ( non-profit ). The institution is legally nonprofit but its actions and behavior are like for-profit institutions .

However, at the 2019 National Work Meeting, the Ministry of Research, Technology and Higher Education in its presentation on the strategic inflection point stated that higher education also entered the realm of business, especially the service business.

In fact, private universities tend to be more suitable to enter the realm of business because they meet their own needs with the funds they are trying to earn themselves either through student contributions, donations, cooperation or other businesses. They can only develop universities if there is a “profit” from the income they receive minus their expenses. Therefore the costs of private universities tend to be more expensive than state universities, which still get a lot of financial assistance from the government .

When compared to neighboring countries that might have better quality education such as Malaysia, the average tuition fees at private universities to graduate in Indonesia are twice as expensive as tuition fees at PTS Malaysia. According to ADB research , the average tuition fees (costs up to four years average) in PTS Indonesia amounted to US $ 10,168 (around Rp145 million), compared with Malaysia ranging from US $ 5,496-US $ 8,765 (around Rp78 million-Rp125 million) .

Financial problems at private universities

Tight competition, especially in fighting for students and resources, occurs in the higher education environment. Funds obtained from tuition fees paid by students are important energy to revive higher education. If a university gets a lot of students, meaning that it also gets more funding, the funds can be used to increase the quality of education both by increasing the capacity of lecturers and by adding learning support facilities.

It is not only private universities that are autonomous in financial management. Since 2000 four major state universities (University of Indonesia, Gadjah Mada University, Bogor Agricultural Institute, and Bandung Institute of Technology) have changed to PTN-BH (state-owned PTNs) and have autonomy in financial management mechanisms. As a result, competition between state and private universities is getting tougher, which has an impact on competition to get income from student contributions.

For example, competition for new students. PTN legal entities open new student seats more than before . In fact, ITB has developed a wider campus since a few years ago , including in Jatinangor Sumedang. In the next 10-20 years, ITB will increase the number of students from 20,000 (generating 3,000 undergraduates per year) to 50,000-100,000 students(producing 5000-10,000 scholars). UI also does the same thing by opening vocational classes , as well as UGM .

This shows that universities also consider tuition fees from students to be a significant financial source. In the context of PTS, financial resources are a serious problem for paying lecturers, support staff, overhead , and building infrastructure to support good institutional knowledge governance. If private campuses continue to live and excel competitively, they must prepare themselves quickly and planned to be able to produce innovations that support the continuation of their education business.

In terms of funding, the PTS merger policy might solve the problem of financial shortages in the short term so that universities that are less financially sound get a solution .

What policy is right?

The problem above requires a comprehensive solution and involves many parties. Private universities cannot be left alone struggling to overcome the problem. The government has an important role as a regulator and creates a competitive higher education ecosystem while developing. The following are policy recommendations to strengthen PTS in Indonesia:

1. The need for policy support to develop PTS operations. The policy, one of which, reduced the number of PTSs which were now too much through smelting. Small private colleges, for example, only have one or two study programs, do not need to be maintained alive. If several small PTS are merged into one university , it can be at least 10 study programs that can be managed better and efficiently.
2. The need for support to ensure the quality of the higher education accreditation system through the development of PTS resource centers and databases. It should be mapped which PTS is good in research and which PTS is more focused on teaching. The quality of management of private universities can be seen from knowledge governance which includes how PTS produces knowledge, stores knowledge, distributes knowledge and applies that knowledge to PTS. If the knowledge management of private universities is good, it will affect their superiority in competing for the long term.
3. The need for government support in order to seek alternative funding models for PTS. There needs to be a regulation that provides incentives to companies that contribute PTS , including private universities built by BUMN foundations. Companies that contribute PTS have not received tax deductions.
4. There is a system to support international cooperation for PTS both in research collaboration, funding and increasing knowledge management capacity. PTS international cooperation has been carried out by several universities, including Telkom University and Binus University with Australian universities . Similar cooperation needs to be improved.

In the midst of increasingly fierce competition, managers of private universities need to develop innovations at both the management and study programs to remain relevant to the changing digital era.

Author Bio: Astadi Pangarso is an Administrative Science Doctoral Candidate at the University of Brawijaya