HIGHER EDUCATION FINANCE CHALLENGES: DATABASE AND METHODOLOGY (2)

METHODOLOGY (2)

Scale Development

The thirty four items/statements were selected for HE challenges based on strong literature support in consultation of practitioners and consultants in the field of financing HE. Pre-pilot and pilot survey was done to improve the questionnaire. Based on survey comments many items were added and deleted yielding the effective HE challenges to 34. These items were rated on seven-point Likert scale on two time horizons to measure the variability in the recorded responses. Later on improved questionnaire was subjected to large scale survey.

Scale Refinement

The questionnaire so developed was tested through pre-pilot and pilot survey. Later on large survey was done. The improved questionnaire responses were subjected to rigorous statistical analysis as follows:

Table 2: Scale statistics, corrected item-to-total correlation, and communality for Challenges of Higher Education Finance

Code Items/statements Scale mean if item deleted Scale variance if item deleted Correcteditem-totalcorrelation Alpha if item deleted Communality
Initial Extracted
A1 Growth of HE 174.8833 397.7678 .5760 .9218 1.000 .860
A2 Promotes HE 174.8917 402.7697 .5000 .9230 1.000 .744
A3 Enhancement 174.8750 403.8918 .5100 .9231 1.000 .792
A4 Active Role 174.8750 402.9674 .5000 .9228 1.000 .678
A5 Govt. Policies 174.9167 402.8165 .5000 .9234 1.000 .751
B1 ParentalContribution 175.4750 390.8565 .6063 .9212 1.000 .823
B2 Good Institutes 175.4333 391.7098 .6104 .9212 1.000 .937
B3 More Choice 175.4333 390.9199 .6371 .9208 1.000 .907
B4 IncreasedBorrowing 175.4500 394.4345 .5517 .9219 1.000 .854
B5 ProfessionalCourses 175.4333 397.0039 .5133 .9224 1.000 .787
B6 Increase in Demand 175.4500 389.8966 .6290 .9209 1.000 .905
C1 GuidanceDocuments 176.7083 396.1243 .5000 .9229 1.000 .953
C2 Interview for Loan 176.7167 397.0451 .5000 .9230 1.000 .892
C3 Margin Money 176.7000 397.1193 .5000 .9230 1.000 .922
C4 Unsafe Credit 176.6750 397.9523 .5000 .9232 1.000 .953
C5 No Multiple Loan 176.7167 394.2552 .5035 .9225 1.000 .938
C6 Type of Institute 176.7250 395.6632 .5000 .9227 1.000 .890
C7 Type of Course 176.6917 395.9798 .5000 .9227 1.000 .974
D1 Credit Worthiness 175.4500 402.8042 .5000 .9233 1.000 .729
D2 High Risk 175.4083 404.2604 .5004 .9236 1.000 .853
D3 Institute Rating 175.4583 396.5697 .5466 .9220 1.000 .819
D4 Loan Duration 175.4417 396.2151 .5753 .9217 1.000 .883
D5 Residence Proof 175.4500 401.0899 .5002 .9229 1.000 .745
D6 Low Return 175.4250 402.1792 .5086 .9231 1.000 .870
D7 Loan Servicing 175.4167 402.0266 .5076 .9230 1.000 .857
D8 Unemployment 175.4667 399.3938 .5020 .9227 1.000 .746
D9 Loan Reluctance 175.4500 399.2244 .5097 .9225 1.000 .871
D10 Risk Pass 175.4500 399.0563 .5174 .9224 1.000 .824
D11 Income Source 175.4333 398.7350 .5368 .9222 1.000 .864
E1 Student Benefit 176.4333 391.9787 .5029 .9226 1.000 .942
E2 Unsubsidized Loan 176.4333 393.3401 .5044 .9228 1.000 .936
E3 Policical Pressure 176.4333 392.8359 .5022 .9226 1.000 .914
E4 Private Loan 176.4333 397.3737 .5005 .9237 1.000 .877
E5N of C Statisti Reliabi Professional Courses ases = 120.0 cs for Scale: Mean= lity Coefficients Alph 176.3917181.0917 V a = .9247 398.0890riance = 420.9 .5038747, Std Dev .923920.5177, N 1.000o of Varia .942bles = 34.

Item and scale reliability analysis was performed to retain and delete the scale items for the purpose of developing a reliability scale. Here, scale reliability (Cronbach’s Alpha), communality, item-to-total and inter-item correlation was applied. The items with low correlation were subject to deletion. The corrected-to-total correlation range from 0.5 to 0.6371, communality range from 0.678 to 0.974, and Cronbach’s Alpha=0.9247. Here, it is pertinent to mention that communality >0.5, Cronbach’s alpha >0.7, item-to-total correlation >0.5 and inter-item correlation >0.3 is good enough for doing research in social sciences (hair et al., 2009). In this phase all the requirements were met for conducting factor analysis as shown in Table 2 & 3.

Table 3 : Correlation for Challenges of Higher Education Finance

A1 1A2 75 1A3 78 69 1A4 70 60 66 1A5 75 66 69 62 1B1 39 31 24 30 33 1B2 37 32 26 33 34 85 1B3 36 32 27 35 35 82 91 1

B4 33 24 19 27 27 78 86 85 1

B5 26 23 20 29 27 72 82 81 78 1

B6 37 31 25 31 33 84 92 89 83 78 1

C1 26 23 15 26 20 48 52 55 53 45 56 1

C2 20 17 09 21 14 42 47 51 49 41 51 90 1

C3 20 18 10 23 14 47 53 58 56 49 56 91 88 1

C4 17 16 09 23 13 42 48 53 52 46 50 93 90 94 1

C5 28 24 15 25 20 49 53 56 53 44 57 94 89 90 92 1

C6 27 24 15 27 20 45 49 52 50 41 53 90 85 87 89 90 1

C7 22 19 1 1 23 16 47 52 56 54 46 55 96 91 94 96 95 91 1

D1 24 10 20 19 09 01 – 04 – 02 – 08 – 04 – 003 – 10 – 06 – 1 1 – 10 – 09 – 05 – 08 1

D2 07 00 10 1 1 00 – 06 – 10 – 08 – 16 – 08 – 06 – 20 – 16 – 19 – 18 – 19 – 15 – 17 75 1

D3 31 19 25 23 17 16 10 09 01 04 15 – 09 – 08 – 14 – 15 – 06 – 05 – 09 72 77 1

D4 30 19 27 25 18 10 04 04 – 04 – 003 08 – 05 – 03 – 09 – 09 – 03 – 01 – 04 76 82 84 1

D5 19 09 18 18 08 – 01 – 07 – 05 – 12 – 07 – 03 – 17 – 14 – 18 – 17 – 16 – 12 – 15 77 85 80 85 1 1

D6 1 1 01 11 12 01 01 – 03 – 01 – 08 – 01 – 007 – 1 1 – 06 – 10 – 09 – 10 – 06 – 08 76 85 77 83 76 85 1

D7 31 19 26 23 17 09 03 02 – 06 – 03 08 – 06 – 04 – 10 – 11 – 03 – 01 – 05 67 72 77 79 70 75 73 1

D8 24 12 20 18 14 05 – 01 – 01 – 08 – 04 04 – 14 – 11 – 17 – 18 – 11 – 09 – 13 76 82 83 87 78 85 82 79 1

D9 24 13 21 20 15 12 06 07 – 01 04 10 – 13 – 10 – 15 – 15 – 1 1 – 08 – 12 73 80 78 82 74 82 80 74 83 1

D10 23 12 22 22 15 05 00 01 – 05 00 03 – 09 – 06 – 10 – 09 – 08 – 04 – 07 77 84 80 84 77 85 85 75 85 82 1

D1 1 32 29 23 17 19 23 20 21 19 13 18 – 08 – 04 – 07 – 08 – 01 – 05 – 07 19 25 33 34 31 26 21 23 32 31 31 1

E1 31 29 24 18 18 19 16 18 16 10 13 – 13 – 09 – 1 1 – 12 – 07 – 10 – 12 22 30 35 36 34 29 25 25 34 34 35 94 1

E2 25 23 18 13 13 21 19 21 20 15 16 – 07 – 03 – 04 – 05 – 02 – 05 – 06 22 30 33 35 33 29 26 23 33 33 35 91 90 1

E3 25 24 20 16 14 16 15 17 16 12 10 – 1 1 – 06 – 07 – 07 – 06 – 08 – 09 14 23 24 26 25 21 18 13 24 25 27 87 86 85 1

E4 16 18 14 10 08 12 11 14 13 10 07 – 17 – 11 – 12 – 11 – 12 – 14 – 15 18 29 26 29 29 26 24 16 27 29 32 91 91 90 88 1

Factor Analysis for financing higher education challenges

The maximum scale score would be 238 if all the 34 items were rated as 7. However, the mean score (Table 2) of 181.0917 indicates that 76.08% of the items indicated in the questionnaire support their applicability in organized NLR. The factor analysis was done with principal component analysis using varimax rotation. The value for Kaiser-Meyer-Olkin(KMO) Measure of Sampling Adequacy was 0.961, Cronbach’s Alpha for factors range from 0.9188 to 0.9872, the factor loadings range from 0.921 to 0.774, the vales for Bartlett’s Test of Sphericity were: Chi-square=5484.762, degree of freedom=561, and level of significance(p)=0.005. Here, it is pertinent to mention that KM0>0.7, Cronbach’s Alpha>0.7, p>0.05, and factor loading>0.5 is good for the validity of factor analysis results (Hair et al., 2009). The results for factor analysis are shown in Table 4.

Table 4 : Scale reliability and factor analysis results for Challenges of Higher Education Finance

Items/Statements Components
a(Credit worthiness ) b(Bank policy on HE loan) c(Reasons for Borrowing) d(Subsidization of HE loan) e(Growth of HE finance)
Loan Servicing .921
Low Return .920
Loan Reluctance .916
Loan Duration .915
Income Source .911
High Risk .906
Risk Pass .883
Institute Rating .874
Credit Worthiness .847
Residence Proof .845
Unemployment .844
Type of Course 943
Unsafe Credit 941
Guidance Documents 924
No Multiple Loan 919
Interview for Loan 914
Margin Money 904
Type of Institute 902
Good Institutes 900
Increase in Demand 869
More Choice 857
Professional Courses 842
Parental Contribution 841
Increased Borrowing 837
Professional Esteem 948
Student Benefit 932
Unsubsidized Loan 921
Political Pressure 919
Private Loan 917
Growth of HE .870
Enhancement .867
Govt. Policies .839
Promotes HE .826
Active Role .774
Scale Reliability Alpha 0.9188 0.9682 0.9872 0.9765 0.9776
Eigen Value 10.331 9.929 4.167 2.743 2.061
Variance % 30.385 29.202 12.256 8.068 6.062
Cumulative % variance 30.385 59.586 71.842 79.910 85.972
Kaiser-Meyer-Olkin Measure of Sampling Adequacy=0.961, Bartlett’s test of sphericity: Chi-square=5484.762, DF=561, level of significance=0.000.,No. of items=34, Cronbach’s Alpha=0.9247

Representative APR 391%

Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

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