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Abstract: Education is both a private and social investment that is shared by individuals – students, their families, employers; government; and other groups, including international agencies. The sharing arrangement varies considerably from country to country both in the proportion of public and private funds allocated to education and in the mechanism by which the cost of education is financed. The problem of adequate funding of education in Nigeria and its effect on the quality of education, combined with continued strong private demand for higher education have led policymakers and higher institution authorities to consider the possibility of alternative modes of financing. This study examines the alternative mode of financing higher education through cost recovery measures, specifically user fees and willingness of private households to pay for increases in fees for higher education. Multi-stage stratified sampling techniques were used to administer 2000 questionnaires among 40 households in 50 enumerated areas in Oyo State, Nigeria. Descriptive statistics and probit regression analysis were employed to analyse the data. The descriptive statistics reveal the mean value of the price of schooling, household income, household size and the sex of children in higher education. Further analysis indicates that in households where the parents have a tertiary education background (49% for fathers, 41% for mothers), there is a positive and increased effect on the willingness of the household to pay for higher education. The willingness to pay result shows that irrespective of the location (rural or urban) and school type (private or public), households are willing to share the cost of education. It also shows empirically the positive directions and high magnitude or importance of user fees as alternative mode of financing tertiary education in Nigeria.
The study, however, explains the policy implication of charging user fees as an alternative means of financing higher education in Nigeria. This will depend on three characteristics: the magnitude of the initial excess demand; the responsiveness of enrolment to fee increases and the unit cost of education; as well as the introduction of student loans or vouchers to eliminate access problem.

JEL Classification: I22, I23

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