It is undervalued how significant out-of-pocket household spending on education is; Although the amount spent to ensure that their children have access to education of the highest possible quality varies with household wealth, ambition, and peer pressure, it still sheds light on how equitable government spending is, in particular how low it is on education, forcing parents to pay for services that would otherwise be available free of charge. In other words, the higher the share of households in total education spending, the larger the risk of inequality in learning.
The share of education in total household spending varies across countries, ranging from less than 1% to more than 6%, especially in countries with a high percentage of private schools — that is, the higher the percentage of private schools, the higher the share of education in total household spending. In low- and middle-income countries, household spending on education accounts for a considerable share of total household income; On average, households allocated 3.2% of their total expenditure to education, according to an analysis of reports from approximately 100 low- and middle-income countries between 2009 and 2020, and this share remained relatively stable over time, despite a few cases where the share rose.
The share also varies across income groups, with richer households more likely to spend a higher proportion of their income on education and poorer households less likely to be able to afford to pay for education services. In 30 of 33 countries with data available, households from the richest quintile spent a higher share of their total expenditure on education than those from the poorest quintile, with the average shares being 4.2% and 2.4% respectively.
In many countries, households account for a major share of total education spending. However, there is significant variation between countries in the share of household education spending in total education spending and within each respective income group. Households account for more than half of education spending in 39% of low-income and 26% of lower-middle-income countries, as opposed to just 6% of upper-middle-income and 2% of high-income countries. Overall, households whose children attend private schools account for the majority of total education spending.
It is worth mentioning that high education spending levels mean that households must save or borrow for education. About one in six families in low- and middle-income countries saves to pay school fees, while about 8% of households also borrow, with shares ranging from 6% in high-income countries to 12% in low-income countries. In low- and lower-middle-income countries, similar shares of the poorest 40% and richest 60% of households borrow to pay fees, albeit slightly more of the richest manage to save. This doubles the fact that there is a greater risk of learning disparity the higher the share of households in total education spending.
