Financing for equity in higher education
1. Education resources to subnational governments
2. Education resources to institutions
3. Education resources to students
4. Support for students' living costs
Introduction
Key financing indicators (UIS Data)
The gross enrolment ratio for tertiary education for both sexes increased from 15.84 in 2010 to 20.74 in 2023. The initial government funding per tertiary student as a percentage of GDP per capita was 18.59 in 2010 to 26.48 in 2018, the most recent year for which UIS data are available. Data on initial household funding per tertiary student, as a percentage of GDP per capita, are not available from the UIS.
Tuition-free status
Public tertiary education in Sri Lanka is tuition-free for undergraduate students. Following the publication of the Report of the Special Committee on Education (Sessional Paper XXIV of 1943), which recommended abolishing tuition fees from kindergarten to university, free education was implemented across the public sector. The 1975 Constitution of the Democratic Socialist Republic of Sri Lanka formalized the state’s commitment to free education through Article 27(2)(h), which assures “all persons the right to universal and equal access to education at all levels."
Governance
The Ministry of Education, Higher Education and Vocational Education is responsible for higher education policy, sector planning, and coordinating with the General Treasury on financial planning for the tertiary education system.
1. Education resources to subnational governments
Sri Lanka's higher education financing operates through a centralized system rather than through transfers to local governments. The primary funding mechanisms are direct Central Government Allocation from the Ministry of Finance to the Ministry of Education, Higher Education and Vocational Education, which then coordinates with the University Grants Commission (UGC), established under the 1978 Universities Act No. 16. The UGC allocates funds to individual universities and higher educational institutions in accordance with the 1978 Act.
2. Education resources to institutions
Funding for private universities in the absence of public institutions
There is no direct government funding for private higher education institutions in Sri Lanka. Under Section 25A of the 1978 Universities Act No. 16, private institutions may obtain degree-awarding status upon ministerial recognition, subject to specified conditions. However, private universities and degree-awarding institutions operate as for-profit business organizations and must register as such under the Companies Act No. 07 of 2007. Private institutions are expected to be financially self-sustaining through tuition fees and other revenue sources. More recently, the 2019 National Policy Proposals on Higher Education recommend that the government "encourage PHEIs in provincial towns to serve rural/middle-class students excluded from state universities" and "provide concessionary loans/subsidized tuition/scholarships for needy/disadvantaged students".
Allocation and equity
Public higher education in Sri Lanka is financed through a centralized, non-formulaic model mandated by the 1978 Universities Act No. 16, under which the University Grants Commission (UGC) directs state funds to Higher Education Institutions (HEIs) for recurrent and capital expenditures. The allocation process, governed by five-year strategic plans and annual budgetary requests, does not use a standardized funding formula. Instead, it relies on historical precedent, institutional reputation, and program-specific costs. The 2019 National Policy Proposals on Higher Education recommend transitioning to a transparent, need-based and performance-oriented funding system that incorporates minimum standards, performance contracts, and equalization provisions to address inequities in the funding of HEIs.
3. Education resources to students
Admission for vulnerable groups
Under the legislative authority of the Universities Act No. 16 of 1978, the University Grants Commission (UGC) is mandated to define and regulate admission criteria for the public higher education sector. These regulatory standards and procedural methodologies are codified and disseminated annually through official administrative handbooks, ensuring transparency in the selection process.
To address historical inequities and promote balanced regional representation, the national admissions policy employs a District Quota System. First implemented in 1974, this framework was designed to mitigate disparities in educational infrastructure and to reduce the concentration of higher-education access, which had previously favored the Colombo and Jaffna districts. The current admission allocation model comprises three distinct categories: merit-based access, accounting for 40 per cent of places and allocated on the basis of all-island academic performance; district-based representation, accounting for 55 per cent of places and allocated according to administrative districts in proportion to their population densities; and targeted equity measures, accounting for 5 per cent of places and reserved specifically for students from sixteen educationally disadvantaged districts identified by the UGC to support under-served regions.
Scholarships, grants and loans for vulnerable groups
The Mahapola Higher Education Scholarship Trust Fund, established under Act No. 66 of 1981, provides need-based and merit-based financial assistance to state university students. Scholarships are allocated in two categories: 90% are ordinary scholarships targeted at students from families with annual incomes below LKR 500,000, and 10% are merit scholarships awarded exclusively on academic performance.
Student loan provision is governed by two parallel legislative frameworks: one for state institutions and the other for non-state institutions. For students enrolled in state universities and government-funded higher education institutions, the 1983 Student (Higher Education) Loans Act No. 50 establishes a loan scheme, mandating specified banks to provide loans under ministerial direction. Under this framework, the Minister of Education issues written directives to institutional heads regarding eligibility conditions, loan amounts, and procedural requirements, with university governing authorities preparing and approving lists of eligible students in consultation with banking managers. For non-state institutions, the Interest-Free Student Loan Scheme (IFSLS), administered by the Student Loans Division of the Ministry of Education, provides access to degree programs at approved private higher education institutions. Eligibility is determined by performance in the General Certificate of Education (Advanced Level) examinations. Maximum loan amounts vary by discipline, and repayment begins after a one-year grace period following graduation, with equal instalments over seven to eight years.
4. Support for students’ living costs
Transportation
Support for student transportation at the tertiary level is provided primarily through concessionary public transport schemes rather than direct cash subsidies. State universities facilitate the issuance of season tickets at reduced fares for registered students on Sri Lanka Railways and Sri Lanka Transport Board services, typically within a defined travel radius of the institution. These concessions are implemented in coordination with the Ministry of Education, Higher Education and Vocational Education, and public transport authorities, and are intended to lower the indirect cost of accessing tuition-free higher education, particularly for students commuting from rural areas.
Accommodation
Student accommodation support in Sri Lanka’s public higher education system is delivered mainly through heavily subsidised hostel facilities owned or leased by state universities. Universities may provide dormitory housing at fees substantially below market rental rates, often with priority given to students from low-income households and students residing far from campus. Hostel operations and capital investments are financed through government subsidies administered by the University Grants Commission. A national policy on university hostel standards is currently under development, led by the Ministry of Education, Higher Education and Vocational Education in collaboration with the UGC to promote more equitable and adequate housing provision across institutions.
Textbooks
There is no nationwide scheme providing free textbooks to university students in Sri Lanka. For students from low-income backgrounds, financial assistance provided through Mahapola scholarships and university bursaries can help offset textbook and learning material costs.
