Funding Challenges in Sri Lanka’s Open University System

Open universities serve as lifelines for millions of learners who cannot access traditional higher education due to work commitments, geographic barriers, or financial limitations. In Sri Lanka, the Open University of Sri Lanka (OUSL) stands as the nation’s only dedicated distance learning institution, offering pathways from certificates to doctoral degrees. However, despite its critical role in democratizing education, OUSL faces persistent funding challenges that threaten its mission of accessible, quality learning for all.

Government funding: growing recognition, limited resources 🔗

The Sri Lankan government has gradually increased its financial support for higher education, signaling a growing acknowledgment of the sector’s importance. The government currently sponsors 70-80% of course fees at OUSL, making education significantly more affordable for enrolled students. The University Grants Commission (UGC) serves as the apex body responsible for planning, coordination, and fund allocation to higher educational institutions, including OUSL.

However, despite these efforts, the funding remains critically insufficient. Sri Lanka’s allocation for higher education currently stands at a meagre 0.44% of GDP, far below what is needed to support institutional growth and modernization. The broader education sector has received between 1.5% and 2% of GDP over the past fifteen years-the lowest among South Asian nations. Countries like India, Maldives, and Afghanistan invest over 4% of their GDP in public education, while Bhutan leads the region with an impressive 8% allocation.

The government has expressed commitment to change this trajectory. According to Prime Minister Harini Amarasuriya, Rs. 704 billion (approximately 2.04% of GDP) has been allocated for education in the 2026 budget-described as the highest allocation in many years. Additionally, the overall higher education budget has been estimated at Rs. 120 billion. While these increases represent progress, reaching the aspirational target of 6% of GDP remains a distant goal given current economic constraints.

How student fees impact educational access 🔗

When government funding falls short, the burden often shifts to students through increased fees. This creates a significant barrier to access, particularly for learners from economically disadvantaged backgrounds-the very population that distance education aims to serve.

Research consistently demonstrates that financial constraints rank among the leading causes of student dropout. A community-based study in rural Sri Lanka found that 28% of school dropouts cited financial difficulties as their primary reason for leaving education. While this study focused on secondary education, similar patterns emerge in higher education, where the combination of direct costs (tuition, materials) and opportunity costs (foregone income) creates substantial hurdles.

The challenge is particularly acute for distance learners, who often juggle studies with employment and family responsibilities. Students from low-income families frequently face high dropout rates due to work obligations, personal commitments, and study-related expenses. When educational costs rise without corresponding income support, even motivated learners may be forced to abandon their studies.

The hidden costs of distance learning 🔗

Beyond tuition, distance learners face expenses that traditional funding models often overlook. These include technology requirements (computers, internet access), travel costs for periodic face-to-face sessions, examination fees, and study materials. For students in remote areas or from marginalized communities, these cumulative costs can become prohibitive, effectively excluding them from educational opportunities despite the nominal affordability of distance programmes.

Rethinking allocation metrics: the FTE approach 🔗

One potential solution to OUSL’s funding challenges lies in revising how resources are distributed within the institution. Traditional funding formulas often fail to reflect the true costs and needs of distance education programmes, leading to misallocated resources and institutional inefficiencies.

Full-time equivalent (FTE) students represents a key metric for measuring enrollment in higher education institutions worldwide. Unlike simple headcount, FTE converts the various enrollment statuses (full-time, part-time, occasional) into a standardized measure of institutional workload. A student enrolled full-time counts as 1.0 FTE, while a half-time student represents 0.5 FTE.

For distance education institutions like OUSL, FTE calculations require careful consideration. FTE is typically calculated by dividing attempted units by 15 for undergraduate students and by 12 for graduate students. This standardization allows for meaningful comparisons across programmes and helps administrators allocate resources proportionally to actual educational workload.

Challenges with FTE-based funding 🔗

However, FTE-based funding formulas present complications for institutions serving predominantly part-time students. The gap between FTE enrollment and headcount enrollment is typically much larger at open universities and community colleges than at traditional four-year institutions. While instructional costs (classroom space, faculty time) correlate well with FTE, many other institutional expenses-student services, administrative support, library resources-scale with headcount rather than FTE.

For OUSL, adopting more nuanced allocation metrics could help address the mismatch between funding and actual institutional needs. This might involve weighted funding formulas that account for the unique requirements of distance learners, subject-specific cost variations, or performance-based components that reward student completion and success.

Pathways to sustainable funding 🔗

Addressing OUSL’s funding challenges requires a multi-pronged approach that combines increased government investment with innovative financing mechanisms. Several international models offer potential templates for Sri Lanka to consider.

Dedicated education levies 🔗

One approach involves establishing dedicated funding streams specifically for higher education. Nigeria’s Tertiary Education Trust Fund provides an instructive example, levying a 2% tax on profits of all registered companies to support university infrastructure, equipment, research, and staff development. Such a mechanism ensures consistent funding while distributing the cost across the business community that ultimately benefits from an educated workforce.

Progressive taxation models 🔗

The Nordic countries offer another model, funding their highly regarded higher education systems through progressive taxation. For Sri Lanka, this could involve implementing wealth taxes on property, luxury assets, and high-income earners, with a designated portion channeled directly to public higher education institutions including OUSL.

Asset-based university funding 🔗

A third option involves allocating underutilized state lands and assets to educational institutions. The historical example of American land-grant universities, established through the Morrill Acts of the nineteenth century, demonstrates how public land can be leveraged to fund university operations and development. This approach could provide OUSL with resources for expansion without requiring immediate budgetary outlays.

Public-private partnerships 🔗

Strategic partnerships with private enterprises can supplement government funding through scholarships, infrastructure development, and programme support. The AHEAD (Accelerating Higher Education Expansion and Development) operation has already demonstrated this approach, providing partial funding for OUSL’s expanded IT degree programmes. Industry associations like SLASSCOM have partnered to offer internships and scholarships, creating mutually beneficial relationships between education and employment sectors.

Building institutional resilience 🔗

Beyond external funding, OUSL can strengthen its financial position through internal efficiency improvements and revenue diversification. Leveraging technology to reduce per-student costs, developing fee-generating professional development programmes, and expanding international student enrollment are strategies that other open universities have employed successfully.

However, such measures must be balanced against the institution’s core mission of accessibility. Any revenue-generating activities should supplement rather than replace government funding, ensuring that OUSL remains a pathway to education for those who cannot afford traditional university costs.

The path forward 🔗

The funding challenges facing OUSL reflect broader tensions in Sri Lanka’s approach to higher education. With the government acknowledging that only 0.12% of GDP goes to research and development-compared to 1% in Malaysia and 4.6% in South Korea-the need for increased investment is clear. The question is whether political will can translate into sustained financial commitment.

For OUSL specifically, success will require advocacy for funding models that recognize the unique costs and contributions of distance education, diversification of income streams while maintaining accessibility, and strategic partnerships that leverage private sector resources without compromising educational integrity. The institution’s ability to serve over 40,000 students across nine regional centres and eighteen study centres demonstrates its reach and relevance. Ensuring adequate funding is essential to fulfilling its promise as a true “people’s university.”

What do you think? How might open universities in developing economies balance the need for sustainable funding with their mission of accessible education? What role should the private sector play in supporting public distance learning institutions?

References

1. https://en.wikipedia.org/wiki/Open_University_of_Sri_Lanka
2. https://www.ugc.ac.lk/
3. https://island.lk/state-funding-of-higher-education-and-research/
4. https://publicfinance.lk/en/topics/sri-lanka-s-government-education-spending-lowest-in-south-asia-1728553029
5. https://lankanewsweb.net/archives/148587/highest-ever-education-allocation-in-2026-budget-says-prime-minister-harini-amarasuriya/
6. https://www.sciencedirect.com/science/article/abs/pii/S0190740924006844
7. https://www.frontiersin.org/articles/10.3389/feduc.2021.727833
8. https://en.wikipedia.org/wiki/Full-time_equivalent
9. https://www.calstatela.edu/InstitutionalEffectiveness/ftes-explained
10. https://www.richmondfed.org/region_communities/regional_data_analysis/surveys/community_college/community_college_insights/2023/cc_20230929
11. http://ugc.ac.lk/ouslbse/