PhD scholarship policy needs rethinking

How are we going to pay for our PhD?

The Ananda Mahidol Foundation, established by His Majesty the King to promote higher education, is in danger of running out its capital fund of Bt600 million in eight years. Prasarn Trairatvorakul, the foundation’s fund manager, is having headaches over how to raise enough money and how to invest the money smartly enough to keep this scholarship fund going.

There are now 50 Thai students studying at top universities abroad. Each is getting about Bt1.5 million a year, resulting in an outflow of the scholarship fund by around Bt75 million a year. With the exchange rate volatility and the continuing rise of tuition fees, the cost of financing the King’s scholars to complete their PhD degrees in eight scientific and medical fields is becoming more expensive.

Prasarn, who is also president of Kasikornthai Bank, is not sure himself as to how to save the Ananda Mahidol Foundation from depleting its capital fund. One way of doing so, he said in a recent Post Today article, might be to cut back on the number of scholarship students.

Kanda Naknoi, an assistant professor of economics at Purdue University, has put forward an interesting idea about a need for the Thai government to reform its scholarship policy.
Kanda won scholarships to study in Japan before earning her PhD in economics from Stanford University. She is now an expert in international finance and the foreign exchange policy. She completed her higher education without a need of financial support from her parents.

She said that there is no need for the government to offer scholarship for PhD education. “It is expensive, but US and European universities are willing to finance it. They are not doing this purely based on goodwill. PhD students are their investment. For scientific fields, the investment returns come in the form of patent rights for technological innovations. In the social science and liberal art fields, the return is the creation of new ideas and these powerful people of the future. This brings them reputation and credibility. Then universities can raise funds by charging undergraduate and master’s students and by getting grants and donations from outside institutions,” Kanda pointed out to Bangkokian.

“The Thai government will save a lot of money and can use that for lower levels education in Thailand. How much money can we save? Stanford PhD programmes charge over US$30,000 [Bt1.2 million] a year. With living expenses, the annual cost of funding a PhD at top schools is $50,000 a year. A sixyear period means US$300,000. That’s Bt12 million.
“Bt12 million will not create a new airport, but I am sure it will create many positive things in Thai education system. My example is based on producing one PhD graduate. Multiply this y 10, then you will get Bt120 million. This can be used to raise public elementary school teachers’ salary.

“Spending 120 million on raising quality of public elementary schools is a better idea than sending 10 Thais to get PhDs overseas, I think. Even if we do not send 10 Thais to get PhDs overseas, they can earn it. As a matter fact, so many Chinese students are doing precisely just that.

“We cannot upgrade quality of education without attracting good teachers. There is no free lunch, and good education comes at a cost. We just have to figure out how to finance the cost wisely. Upgrading the education system should begin at the lowest level, ie, primary education, not at the top. Thailand cannot become a developed country without that. I went to a private small elementary school, and I am grateful for that. But after that, the only private school I went was Stanford. I do not disagree that our secondary and higher education system also needs work. But it’s about priority. We cannot do it all at once. I am positive there are many more brilliant children who did not make it simply because they had no good opportunities at the elementary level.”

Bangkokian thinks Kanda’s idea is quite interesting. Probably the Ananda Mahidol Foundation may only finance their scholars at the bachelor’s or master’s degree level. Beyond that the scholars must try to get the scholarships from the universities they go to for their PhDs.

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Comment from Pakorn
Stanford, California
Scholarships help lead to increased competitiveness
Re: “PhD scholarship policy needs some serious rethinking”, Opinion, December 12.
I would like to clarify a few things. The Ananda Mahidol Foundation Scholarship and the King’s Scholarship are quite separate programmes. The King’s Scholarships, initiated by King Rama V, are granted to, at most, nine high-school students each year. They can then use the fund to further their undergraduate education abroad. On the other hand, the Ananda Mahidol Foundation Scholarships are awarded to students in Thai universities for their PhD education abroad. Thus, per Kanda Naknoi’s suggestion, if one were to cancel the PhD scholarship entirely, then that would be tantamount to cancelling the scholarship programme from the Ananda Mahidol Foundation.

In my opinion, the problem about the funding shortfall for the Ananda Mahidol Foundation seems to have everything to do with the nature of philanthropy in Thailand and how the programme should raise fund more effectively and not much about whether the programme as it is should be altered. In the United States, it is very common for wealthy individuals to donate large sums of money to public institutions.

One may debate whether this is a part of the American culture or simply a tax strategy motivated by self-interest, but it is undeniable that the private funding makes a great deal of difference and benefits the common good. In this regard, Thailand has much to learn. It appears to me that for Thais, collectively at least, charity donations are primarily directed to religious establishments. The few charity baht trickle down to education and other secular causes only as an afterthought. Perhaps the government could implement some tax incentives to encourage large-scale charity. The foundation would also do well to publicise its mission and “market” itself to would-be donors.

A separate issue is whether the government should fund the scholarship programme at all. This has always been an emotional issue for those few who care. Many critics would argue that a merit-based scholarship is a privilege to the very few at the expense of the many and that the money would be better spent on more immediate needs elsewhere. Perhaps because I was once a beneficiary of the programme, I am of a different opinion. It is true that the scholarship programme incurs a big cost up front with uncertain returns in the distant future. It is a leap of faith really, because one never knows what the future contributions of the graduates will be. Looking at an individual student, she or he will probably graduate and come back to work as an academic. The net return over his or her entire career will probably be just about break-even at best.

However, if the government were to fund a decent number of students in diverse fields, chances are there would be a few individuals whose contributions more than made up for the cost of funding the whole batch. This idea is similar to how modern investment portfolios are managed.

If one looks at the scholarship programme this way, it doesn’t look so bad at all. If the government funded a diverse-enough portfolio of qualified students, there would be limited downsides (given that the students who failed to complete the programme would have to reimburse the government for the cost and more, this would be virtually guarded against) and a potential for a big upside. No one knows the future. Expertise in a given field is not a commodity that you can buy only when you need it. A case in point would be the biotechnology boom that is all the rage in the world right now. The Thai government clearly has a desire to be a biotechnology centre, but it is not like we can buy that capability like we buy an aeroplane.

If the government of 20 years ago had made a big investment in biotechnology, Thailand would now have a lot more options on what to do. Who knows, we might be the world leader in stem-cell research instead of South Korea. The fact is that somehow we didn’t make that investment in our human-resources portfolio, and thus we have limited options at the present. Again, it is risky, undoubtedly. But high rewards do not come to the risk-averse