Education Minister Wijit Srisa-an yesterday proposed merging the two existing student-loan programmes and steering the result mainly towards poor students, with an education tax to solve universities' budget shortages.

Speaking after a meeting with University Presidents' Council of Thailand president Pratya Vesarach, Wijit said the funding system for institutions of higher education should be thoroughly reviewed because they had faced shortfalls after the criteria for budget allocation were shifted from the supply side (size of the university) to the demand side (number of students).

Wijit said the problem would persist since the budget allocation was insufficient no matter what method was used to calculate it, though the demand-based method particularly hurt less popular universities.

He said universities should get sufficient support and he personally felt there should be tax earmarked for education, for example an increase in value-added tax by 1 per cent to 8 per cent or death duties.

Only then need a decision be made on which budget allocation system would be better, he said.

Wijit said the Student Loan Fund and the Income-Contingent Loan should be merged into one programme with a new set of rules to better accommodate borrowers.

Because of the government's limited budget, the programme should focus on assisting the poor rather than applicants from all income groups, he said, which could be done by either lending only to poor students or restricting the monthly allowance to poor students while letting all students borrow for tuition fees.