Devolution of student financial assistance in Latvia
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This dissertation study focuses on devolution of student financial assistance in Latvia which takes place via participation of municipalities in sharing costs of higher education. Municipalities in Latvia assume a share of publicly born costs of higher education by providing direct student subsidies in the forms of local grants and local direct loans as well as by providing indirect subsidies in the form of primary student loan guarantees within the scope of the national student loan program. Since 1991, the sector of higher education in Latvia has experienced a rapid growth in terms of the number of students and institutions of higher education. This expansion has been accompanied by introduction of tuition and diminishing national subsidies to students. Currently national grants are merit-based and available to only a small portion of students without any consideration of student need. There is also no national assistance to low-income students in obtaining student loans which requires providing individual primary loan guarantees. In turn, the national government has implicitly encouraged local governments to provide primary loan guarantees to low-income students. Thus, local governments are effectively designated to incur full risk of student lending. At the same time, municipal involvement in direct or indirect student financial assistance is a local decision, not mandated by the central government. This is a case study research which seeks to understand the rationales and outcomes for municipal involvement in higher education student financial assistance in light of national and institutional student financial assistance policies. This issue is looked at via examining perceptions of local student aid policy stakeholders in Latvia. Data findings in this study are interpreted in the conceptual framework provided by the theory of cost-sharing and the theory of fiscal federalism. This case study concludes with analysis of intergovernmental cost and risk-sharing as pertains to student financial assistance.