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For human capital or social justice? Indonesia’s study abroad scholarships fall short either way

Governments around the world subsidise study abroad programs with various motives: to promote cultural exchange, contribute to the development of recipient countries, or create a network of future leaders as part of public diplomacy efforts. The internationalisation of higher education is also an integral part of the globalising economy and labour movements. These motives are easily understood if the education is funded by a government or institution of a developed country aiming to attract foreign nationals, typically those from developing countries.

When study-abroad programs are provided by a developing country for its own citizens, it is more difficult to pinpoint the necessity. LPDP, the Indonesian government’s flagship international scholarship program, and its scholarship recipients have intermittently come under pressure to justify their use of public funds. LPDP has sent a total of 24,929 Indonesians abroad for postgraduate education, more than 3,500 per year since 2013. The large number of LPDP recipients looks especially jarring when juxtaposed with the fact that only 9.4 percent of Indonesians aged over 25 had at least a bachelor’s degree in 2018, the lowest ratio in Southeast Asia.

Faced with limited public resources and under-achievements in inclusive education at home, LPDP recipients are constantly reminded not to waste the state funds. LPDP materials are replete with terms such as kontribusi (contribution) or pengabdian (serve the country)—essentially a call for the recipients to give back to their country. However, it is unclear how an LPDP recipient is supposed to pay the nation back for financing their higher education.

In this article, we outline two different rationales that commonly underpin the decision of governments from developing countries to provide international education to their citizens. These are the desire on one hand to invest in human capital and on the other the goal of promoting social justice and equitable access to opportunity, objectives that are to some degree inherently in tension with one another. While we try to locate LPDP in either rationale to interrogate the effectiveness of the policy, we find that LPDP presently is effective in promoting neither human capital nor social justice.

Investing in human capital

One of the most common rationales for financing study abroad is to invest in citizens with great potential, hoping that education in a developed country will grow their knowledge and talents for the sending countries to later reap. Like every investment, there is always a risk of loss. To send your finest individuals abroad is to entrust them to the host country’s custody: to believe in their management of your assets in exchange for paying an entry fee of tuition costs and transferring a (possibly high-income) consumer base. The quite literal return on investment is expected when these students come home after study with newly accumulated knowledge and skills.

Scholarship programs working in this investment paradigm understandably often have a return policy in place—to extend the analogy, this is perhaps equal to a deposit insurance scheme. Without a return policy, the sending country risks losing its investment if the students decide to settle abroad after study. Scholarship programs often require recipients to sign an agreement which stipulates the repayment of the scholarship in the event of non-return. In order to guarantee repayment ability, some programs require applicants to demonstrate the possession of assets equal in financial value to the scholarship fund as collateral or name several financial guarantors. Of course, the latter way of enforcing the return policy means that only people with considerable financial resources are able to apply.

Inequality of access, however, is a fundamental part of the investment model of funding higher education. Governments invest in individuals with the best academic achievements, many who would have benefitted from education in the best secondary schools in the country and a high-income family background. This combination of qualities, whether intentionally considered or not in scholarship selection, is viewed by many governments as likely to lead to the highest possibility of gain in terms of total accumulated knowledge and skills, economic resources, and networks that these individuals bring to the country of origin.

Ensuring that students return home after study might be effective in preventing brain drain, but it does not necessarily guarantee that the investment will pay off. Scholarship programs sometimes have an additional arrangement to connect returnees to the job market to ensure distribution according to their expertise. The Bolashak scholarship for Kazakhstanis, for example, requires applicants be employed and, after they graduate, to work for the same employer for five years. The requirement shows what scholarship as an investment basically is: an extravagant way of recruiting high-quality talent for an industry or public agencies. Indeed, scholarship as human capital investment probably makes the best sense when considered as a procurement of services. The government or the industry is the service user; the scholarship recipients are the providers.

Promoting social justice

The second rationale views higher education in terms of social justice and equity. Scholarships are a way to ensure that common citizens and people from disadvantaged groups can access quality education regardless of socioeconomic position. The paradigm is taken up by the Ford Foundation, for example, who focusses their mission on help peopling from marginalised groups access graduate programs despite age and geographical barriers. The scholarship aims to create new leaders who can bring social change in their communities.  In this case, the purpose of higher education is not so much to contribute to the national economy through the supposed multiplier effects of having highly-educated elites, but to give people their rightful share in education.

Brennan and Naidoo (2008) argue that actions from institutions and the government aiming for equity and social justice through higher education should cover two aspects: ensuring equal access to education and that graduates can participate in the workforce arena afterwards. However, they suggest that as long as social structures do not offer equal opportunities, students from disadvantaged groups will likely derive limited advantages in terms of social mobility after graduation—higher education credentials are only one factor in social mobility. This framework challenges the modern, common viewpoint that higher education can be a determining factor in improving social mobility through the production of new groups of elites.

Evaluating LPDP 

At first, the LPDP scholarships appear to employ an investment rationale. The stated objective of LPDP is to prepare Indonesia’s future leaders and professionals, and it also has a return policy. However, LPDP’s implementation seems to be incomplete. First, it does not have a mechanism to enforce the return policy. Scholarship recipients are required to sign a legally binding agreement to return to Indonesia after graduation and repay the scholarship amount upon violation. However, there is no rule on collateral and seemingly no effective monitoring of the graduates’ whereabouts. When graduates do return (LPDP reports only 1 percent of its graduates were given a warning to return in 2018), the program is not linked to the job market to ensure the relevant placement of graduates. In other words, there is a risk of loss in LPDP’s investment from non-return and unemployment.

LPDP, however, has a second stated objective: to ensure sustainable funding is available for the next generation’s education. To finance its programs, LPDP manages its own endowment fund which, in Indonesian, is called dana abadi, literally “eternal fund.” Considered together with its large number of recipients, this appears to signal LPDP’s recognition of the value of higher education as a need—something that should be enjoyed not by a few select individuals in hopes of the systemic change that these educated elites will bring, but by as many Indonesians as possible. It is as if LPDP is working to ensure that higher education becomes the generational difference between future and past Indonesians.

The paradigmatic differences between the two objectives are not easy to reconcile. Investing in too many individuals defeats the purpose of investing in the first place due to cost inefficiency. As an investment, LPDP would ideally limit its awards to fewer people while ensuring that these recipients possess not only huge intellectual capability but also a strong presence in their respective fields even before they embark on their journeys abroad. Upon their return, LPDP’s task is to trace, recruit and place these individuals in strategic professional or policy-making posts deserving of the “leaders” designation. The fewer number of awards also directly serves to facilitate locating and re-identification of recipients.

If this framework seems familiar, it is because this strategy was the basis of the New Order’s technocratic governance model, where an elite group of Western-educated economists were recruited to help the military-backed regime impose a grand plan of development. Arguably, the strategy depended heavily on the degree of control the regime had on the technocrats, something that gradually diminished to the point that the educated elites branched into two competing factions—the economists and the engineers—toward the end of Suharto’s rule.

Control is perhaps where LPDP’s nationalistic flavour comes from. The notions of kontribusi or pengabdian are evoked not because one cannot give back or serve the country from abroad. It is possible for the government to conceive a nationalist image for citizens working entirely abroad, as exemplified by the “foreign exchange hero” branding of Indonesia’s migrant workers. Rather, the non-returning recipients are branded as un-nationalist because they refuse to follow the path designated by the government. However, with the lack of monitoring and control over career choices, LPDP’s call to return and serve the country is weakly enforced.

Meanwhile, if international higher education is seen as a means to improve equality, it is redundant to try to control recipients’ choices after they graduate or to quantify contribution in monetary terms. The redistributive aim of social justice is achieved for every unit of public resources spent on the education of a citizen who would otherwise not be able to afford it.

If LPDP chooses to see higher education as a basic need, the program would ideally set as its goal the proliferation of as many highly educated Indonesians as possible. But until 2019, LPDP distributed scholarship funding mostly to science and technology study programs and deprioritised social sciences study programs. Due to the COVID-19 pandemic, LPDP recently adjusted its policy to accept applications for all study programs but remains limited to so-called “leading world universities” mainly in the US and UK.

LPDP can more efficiently deliver on its promise to leverage the demographic bonus if it targets people from disadvantaged groups who can bring long-term impacts directly to their community after graduation. Although it does have an affirmative program specifically for this purpose, eligibility is given solely to the populations of underdeveloped and remote districts, overlooking the multifaceted nature of deprivation. The program should ideally consider other inequity aspects such as poverty and gender barriers.

LPDP has unquestionably realised life-changing educational experiences for thousands of young Indonesians and holds the door open for thousands more. For possibly the first time in Indonesian history, a government program has promised a continuous supply of highly educated individuals for the foreseeable future. However, as is the case with all public programs, resources are not infinite and effectiveness is always a looming question. With a lack of serious enforcement and specific policies to promote either the human capital or social justice objectives, LPDP has yet to excel in any of the goals it has set for itself.

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