1. Introduction

The landscape of Chinese higher education has undergone a profound transformation since the mid-20th century, marked by an unprecedented expansion in institutional capacity and student enrollment. From a tertiary gross enrolment ratio of 0.26% in 1949, China achieved a historic milestone of 60.2% in 2023, establishing the world's largest higher education system with over 44.3 million enrolled students [1]. This rapid growth, propelled by policies such as the 1999 university enrollment expansion and the 2015 "Double First-Class" initiative, has been accompanied by a structural paradox: while the system democratized access to education, it simultaneously triggered a surge in tuition fees—a 25-fold increase over two decades, far outpacing the 4-fold growth in urban residents' disposable income (adjusted for inflation) [2].

The drivers of this cost escalation are multifaceted. Government funding, once the primary financial pillar, has diminished in relative terms; for instance, per-student national subsidies peaked at 9,743 yuan in 1999 before declining by 7.9% annually for three consecutive years. [1] Concurrently, universities face mounting pressures to upgrade facilities and compete globally, exemplified by provincial institutions accumulating debt through campus expansions and research infrastructure investments.

Inflationary pressures further compound these challenges, with education costs in regions like Ningxia rising 34.17% between 2005-2012—significantly exceeding general CPI trends. This tuition surge has ignited intense societal debate. While proponents argue that fee increases sustain international competitiveness through MOOCs development (52,500 courses launched) and faculty recruitment, critics highlight regressive impacts: education expenses now consume 56.8% of low-income households' earnings versus 10.6% for affluent families. Even with government education expenditure maintaining over 4% of GDP since 2012, the "scissors gap" between fee growth and income stagnation exacerbates intergenerational inequality [3].

This paper examines the multi-stakeholder implications of tuition inflation through an institutional economics lens. By analyzing its effects on students' access equity, family financial resilience, university governance models, and the state's global education ambitions, the author aims to reconcile China's domestic education policy dilemmas with its aspirations for international academic leadership. The study further evaluates whether current cost-sharing mechanisms align with UNESCO's SDG4 targets, offering evidence-based recommendations for balancing educational quality and affordability.

2. Rising tuition fees’ impact on individuals and society

2.1. Rising tuition fees’ impact on educational accessibility

A growing body of research has documented the adverse effects of rising tuition fees on educational accessibility in China. Postiglione [4] revealed through a national survey that a 10% increase in tuition fees reduces rural students' admission probability to Double First-Class universities by 4.7 percentage points, compared to only 1.2 percentage points for urban students. This finding aligns with data from the China Family Panel Studies (CFPS): low-income families allocate 61.3% of their annual income to support one child’s tertiary education, whereas high-income families spend merely 9.8% [5]. Such financial pressures directly drive opportunity stratification—between 2010 and 2020, the proportion of low-income students in elite universities declined from 24.5% to 16.2%, while high-income counterparts surged from 33.7% to 42.1% [6].

The urban-rural educational divide has further widened under tuition pressures. Liu and Chen’s [6] longitudinal study demonstrates that rural enrollment rates in top-tier universities plummeted from 28.6% in 2010 to 17.4% in 2020, contrasting starkly with urban students’ stable 62.3% enrollment rate. Systemic barriers exacerbate this spatial inequality: rural students score 15% lower on the National College Entrance Examination (NCEE) compared to urban peers (Ministry of Education, 2021), and only 32% of rural families fully comprehend national student loan policies, far below the 68% awareness rate among urban households [6].

Regional disparities compound accessibility challenges. According to Ministry of Education data, rural families in western provinces like Guizhou spend 34.2% of their income on higher education, versus 8.9% in coastal Zhejiang province [1]. This financial burden correlates with a 24% higher first-year dropout rate among rural students in western regions, often occurring after family savings are depleted [1]. The new "geographic education lock-in" trend shows that academically capable students from poor areas are choosing to attend nearby schools because they can't afford to go elsewhere, which keeps the cycle of unequal development in those regions going.

2.2. Rising tuition fees’ impact on student debt and financial stress

The correlation between rising tuition fees and student debt has been a focal point in recent discussions. Research indicates that as tuition costs increase, students are more likely to take on loans to finance their education, leading to higher levels of debt upon graduation [7]. This financial burden can create significant stress for students and limit their career choices, potentially impacting China's economic development and productivity. Additionally, high levels of student debt can also hinder China's ability to attract and retain international students, who contribute to academic diversity and cultural exchange.

3. Causes and effects of student debt

The primary driver of student debt is the increasing cost of higher education in China. As tuition fees have soared in recent years, students have been forced to rely on loans to finance their education. "Wang and Zhou [1] quantify this burden shift through provincial panel data: every 10% tuition increase correlates with a 6.8% decline in rural household savings rates. Families in western provinces like Guizhou allocate 34.2% of annual income to tertiary education, forcing trade-offs between children's education and healthcare/eldercare expenditures." The proportion of government funding for higher education has been declining, shifting the financial burden onto students and their families. The rising cost of living has made it more difficult for students to afford tuition and other expenses. The growing demand for higher education has led to increased competition for enrollment, driving up tuition fees.

Student debt can have a wide range of negative consequences for individuals and society. High levels of debt can lead to significant stress and anxiety for students and graduates, impacting their mental health and well-being. The burden of student debt can restrict career choices, leading graduates to prioritize jobs that offer higher salaries over those that align with their interests and skills. Student debt can delay important life milestones such as buying a home, getting married, and starting a family. High levels of student debt can hinder economic growth by limiting consumer spending and entrepreneurial activity.

4. Rising tuition fees’ impact on social mobility and global competition

4.1. The relationship between tuition fees and economic disparities

The literature also explores the relationship between tuition fees and economic disparities. Some scholars argue that the rising cost of higher education in China may contribute to the entrenchment of existing social hierarchies, as students from wealthier families are better positioned to afford the increased fees[7]. This could hinder social mobility and exacerbate income inequality, as access to quality higher education is often a critical factor in determining career opportunities and earnings potential. The widening income gap between urban and rural areas in China, and the potential role of rising tuition fees in exacerbating this trend, could have implications for social stability and national unity.

4.2. Social impact

The rising cost of tuition in Chinese universities has far-reaching social implications. It can exacerbate social inequalities, hinder social mobility, and reduce consumer spending. Additionally, high levels of student debt can impact career choices, innovation, and labor market dynamics. These effects can contribute to social instability and hinder China's economic development. The adjustment of tuition fees has a resonance effect with the regional economic strength. Universities in the developed eastern regions have received additional funding through the "floating mechanism of benchmark tuition fees" (e.g., tuition fees in Shanghai account for only 8.4% of the average cost per student), while tuition fees in Yunnan and Sichuan (10%-54%) have pushed education expenditure to more than 21% of rural household income, approaching the "education poverty line" defined by the World Bank. This regional disparity is further amplified in the digital age, where 65% of the tuition fees of a university in the Midwest are spent on bringing in international faculty, but it is difficult to change the dilemma that its graduates account for only 12% of the country's employment in emerging fields such as artificial intelligence.

4.3. Labor market implications

The impact of rising tuition fees on the labor market is another area of interest. While higher education is generally associated with better employment prospects and higher earnings, the increasing cost of education may affect the types of jobs that graduates pursue and their long-term career trajectories [8]. The financial burden of student debt can influence graduates' career choices, potentially leading to a misalignment between their skills and the needs of the labor market. This could impact China's economic competitiveness and its ability to meet the demands of a rapidly evolving global economy. The increase in tuition fees has a superimposed effect on the uneven distribution of educational resources. Most of the high-quality universities are concentrated in the developed areas in the east, while the household income in the economically underdeveloped areas in the central and western regions is already low (the per capita disposable income of rural residents in 2022 is only 20,000 yuan). Taking Yunnan and Sichuan as examples of tuition fee increases (10%-54%), families in the western region may have to use their savings for years to pay for school fees, and may even be forced to give up the opportunity for their children to study in prestigious universities in the east. This double gap between regional education resources and household payment ability will further widen the regional development gap and form an "education poverty trap".

4.4. International students and global competition

The rising cost of higher education in China could also impact the country's attractiveness to international students. China has made significant strides in recent years to become a destination for international students, offering a diverse range of academic programs and cultural experiences. However, rising tuition fees could deter potential students, especially those from developing countries, who may be seeking more affordable options. This could impact China's efforts to build strong international partnerships and enhance its soft power through educational exchange. This tuition-driven competitiveness gap aligns with Marginson's [9] analysis of global university hierarchies. China's tuition-to-GDP ratio (7.3%) now exceeds Germany (1.8%) but lags behind the US (15.6%), creating a 'middle trap' where affordability compromises both domestic access and international appeal. Strategic tuition subsidies for STEM fields could emulate South Korea's 2015 Global Korea Scholarship model that boosted foreign enrollments by 41%.

5. Discussion and policy recommendations

The discussion section of this paper synthesizes the findings from the literature review and case studies, highlighting the multifaceted nature of the issue. It is argued that while the rise in tuition fees is a complex phenomenon influenced by a variety of factors, its consequences for students and society are significant, with broader implications for China's position in the global higher education landscape. The discussion delves into the potential long-term effects of rising tuition fees on educational equity, economic stability, social cohesion, and China's competitiveness in the global knowledge economy. It also considers the role of government policy, institutional practices, and societal values in shaping the future of higher education in China and its relationship with the international community.

The driving force of higher education tuition fees needs to be analyzed from the dual dimensions of cost drive and policy regulation. According to the "Discussion and Research on the Relationship between the Cost of Running a University and the Rise in Tuition Fees"1, the increase in the per capita education cost of students after the expansion of enrollment (e.g., the average annual increase of 12.5% in teacher salaries and the increase in the proportion of scientific research investment to 30%) directly pushed up the pricing of tuition fees, while the proportion of government financial allocation decreased from 60% to 40% (2000-2010)[5], forcing universities to turn to tuition dependence. This "cost pass-through" mechanism has further alienated into a market-oriented logic in private universities, for example, some institutions maximize profits through high-tuition majors (such as international business schools).

However, the limitations of policy regulation (e.g., ambiguity in cost accounting and formalization of hearings) have led to an imbalance in the "government-university-family" tripartite game: although the expansion of enrollment meets the needs of scale, the dilution of resources leads to the risk of quality decline (e.g., the student-teacher ratio exceeds 18:1)2, and the vicious circle of shrinking financial investment and rising tuition fees has exacerbated the pressure on education payment for families in the central and western regions.[3]

A multifaceted approach of policy interventions is required to address the challenges posed by rising tuition fees. Li and Yang's [2] provincial analysis demonstrates a nonlinear relationship between tuition and quality. Universities with tuition exceeding 20,000 yuan/year show 18% higher graduate starting salaries but 23% lower socioeconomic diversity. This suggests an optimal tuition threshold exists where quality improvements don't disproportionately exclude disadvantaged groups.

The government should increase investment in higher education to alleviate the financial burden on students and ensure educational equity, both for domestic and international students. This could involve allocating more funding for scholarships and financial aid programs, and increasing grants for university research and infrastructure development.

Implement More Effective Financial Aid Programs: Financial aid programs should be more effectively targeted to students in need, including international students, and ensure they receive adequate support to pay tuition fees. This could involve developing needs-based scholarships and grants, and expanding loan programs with favorable terms for low-income students.

Encourage Universities to Implement Cost-Control Measures: Universities should take measures to control costs, such as improving operational efficiency, optimizing resource allocation, and exploring new sources of income, to ensure they remain financially sustainable and able to attract international students. This could involve streamlining administrative processes, adopting energy-efficient practices, and developing partnerships with private sector entities.

Enhance Transparency in Higher Education: Universities should provide transparent information about tuition fees, financial aid, and graduate employment prospects to enable students, both domestic and international, to make informed decisions. This could involve publishing clear and accessible information about the cost of attendance, available financial aid options, and job placement rates for different programs.

Promote Diversification in Higher Education: The development of different types of higher education institutions should be encouraged to meet the needs of different students and promote educational equity, including providing opportunities for international students. This could involve supporting the development of vocational and technical education, as well as community colleges, to provide more affordable and accessible options for students.

Develop Policies to Attract and Retain International Students: The government and universities should develop policies to attract and retain international students, such as offering scholarships and financial aid, providing language support services, and creating a welcoming and inclusive environment for international students. This could involve establishing a national scholarship program for international students, improving the visa application process, and providing support for international students to integrate into the local community.

6. Conclusion

In conclusion, this paper underscores the importance of addressing the challenges posed by rising tuition fees in Chinese universities. It is suggested that a multi-pronged approach is needed to ensure that higher education remains accessible and equitable, while also maintaining China's position as a leading destination for international students and a key player in the global higher education landscape. This includes increasing government investment in higher education, implementing more effective financial aid programs, encouraging universities to adopt cost-control measures, and developing policies to attract and retain international students. The paper also emphasizes the need for ongoing research to monitor the evolving landscape of higher education financing and its implications for students, society, and China's position in the world.

Beyond the aforementioned discussion, future research can explore the following areas. Firstly, different types of universities (e.g., public universities, private universities, key universities, and local universities) may respond to rising tuition fees differently. Future research can investigate the impact of tuition fee increases on different types of universities and assess their effects on access for different student groups, including international students.

Secondly, tuition fee increases may lead universities to face financial pressures, potentially affecting education quality. Future research can investigate the impact of tuition fee increases on faculty, courses, facilities, and student support services, and explore how these changes might impact the overall quality of education in China.

Thirdly, the internationalization of higher education in China is rapidly developing, and an increasing number of international students are choosing to study in China. Future research can investigate the impact of tuition fee increases on international student access and academic performance, and explore how China can maintain its attractiveness as a destination for international students.

Finally, tuition fee increases may have a negative impact on the sustainability of higher education. Future research can explore the impact of tuition fee increases on university financial health, educational equity, and the long-term development of the higher education system, including its role in promoting China's global competitiveness.