Since the turn of the twenty-first century, tertiary education enrollments have exploded globally, particularly in low- and middle-income countries. This expanding demand for tertiary education presents two central challenges for policy makers: managing the pressures on quality, relevance, governance, and equitable access; and managing the financing of the sector. Effective responses will involve substantial investments in infrastructure, training, diversification of delivery, and regulatory reforms.

Since the turn of the twenty-first century, opportunities to access tertiary education have exploded globally, particularly in low- and middle-income countries. In 1990, 52 million students were enrolled globally, of which 34 million (or 65 percent) were in low- and middle-income countries. In 2020, 228 million students were enrolled globally, with 173 million (or 76 percent) in low- and middle-income countries. Using demographic trends, we project that by 2040, 447 million students will be enrolled in tertiary education globally, out of whom 365 million (or 82 percent) will be enrolled in low- and middle-income countries. Global expansion of tertiary education follows patterns of growth seen in primary and secondary education, which are now nearly universal around the world, and is expected to continue due to high demand. Just like in high-income countries, tertiary education in low- and middle-income countries is often associated with better job prospects, higher wages, improved marriage prospects, and better educational outcomes for children.

The Twin Challenges for Tertiary Education Policy Makers: Expansion and Financing

Two central challenges for policy makers will define the era of tertiary education reforms to come: managing the inevitability of expansion, and managing the resultant financial costs. The first challenge involves addressing the pressures on quality, relevance, governance, and equitable access that come with rapid expansion, especially in low- and middle-income countries. Overcrowded classrooms, insufficient resources, and a strain on academic staff are just a few of the challenges facing institutions, which must continue to strive to deliver quality and relevant programs in the face of these strains. In low- and middle-income countries, as much as in high-income countries, a rapid expansion of tertiary education also comes with changing political demands on tertiary education systems, which often involve difficult tradeoffs for policy makers.

The second challenge is managing the financial cost of expansion, determining where to focus public resources and how to balance these costs between taxpayers, students, and families. Governments in low- and middle-income countries currently spend just over a trillion dollars (1,042 billion purchasing power parity-adjusted US dollars, expressed in 2017 values). If governments maintain current levels of per-student funding, these budgets will rise by an additional 945 billion dollars (purchasing power parity-adjusted, expressed in 2017 values) in order to sustain this coming expansion. (Note that this is a conservative amount, unadjusted for inflation or for capital cost increases that are likely needed to fund this expansion). If governments prove unwilling to foot this bill, then these funds will need to come from households, with subsequent effects on affordability.

Approaches to addressing these challenges will vary by country and depend on a variety of economic, political, and social factors. In many countries, expansion necessitates substantial investments in infrastructure, such as lecture halls, laboratories, and digital tools, as well as the training and hiring of new faculty members. Effective responses will also involve changes to regulations around tuition fees, student financial aid, and market entry and exit of different providers. We will likely see more experiments with programs like “targeted free tuition,” income-contingent loans, and payback mechanisms, as well as greater acceptance of private tertiary education provision to meet demand and remove cost from public budgets. Managing these issues and the related costs of this expansion will perhaps be the single most challenging tertiary education reform effort undertaken in the two decades ahead.

Bespoke Solutions for Effective Reforms

It is important that we remain humble in our search for answers to these challenges. While we have a fairly good idea of the problem, we don’t know enough about the cure. There are many unanswered questions that research can help address, both in terms of policy and economics. In the policy domain, it would be helpful to better understand the distinct organization of tertiary education in low- and middle-income countries. Developing effective policy reforms requires robust data, as well as creativity and adaptability to support solving specific policy problems with contextually relevant policy solutions. It will be important to understand the kinds of institutional capacity that is required for policies like income-contingent loans, or how regulation for private sector tertiary education does (or does not) escape policy capture from elite public education or low-quality private institutions. The economics literature has perhaps even more work ahead, as it is just starting to recognize the value of tertiary education in low- and middle-income countries. Economists might focus their attention on better understanding the dynamics of higher education markets, including how supply evolves to meet an expanding and diversifying demand. There will be important questions about the effects of pricing policies and student affordability on extramarginal students, which may be quite distinct from the experience in high-income countries. By asking these questions, we will greatly expand our current knowledge of tertiary education. After all, the vast majority of students in the world now study in systems and institutions about which we still know very little.

Roberta Malee Bassett is global lead for tertiary education at the World Bank, Washington, DC, United States. E-mail: [email protected].

Koen Geven is tertiary education lead consultant at the World Bank, Washington, DC, United States. E-mail: [email protected].

Ideas/data within this article come from a forthcoming World Bank tertiary education report (Summer 2025).