Funding mechanisms and resource allocation in higher education

In this paper, the Funding mechanisms and resource allocation in higher education was examined. In general various mechanisms were employed in higher education system of different countries. Providing a range of public funding and private funding can be observed in different countries, as in most European universities, public funding and in the U.S. universities, private funding is the dominant form of financing. In association with the resource allocation mechanism, some states subsidize the supply side (higher education institutions), a number of them subsidize demand side (customers), and some countries subsidize both sides.Generally, allocation is based on negotiation and bargaining, a formula, staff, student, per capita and the performance which are some mechanisms that have been used in this context. The results of this study shows that the funding mechanisms of higher education has the potential for policy making and guiding the behavior of different actors; in addition, it can affect the performance of universities and institutions of higher education at macro and micro (individual) levels. Graduates must participate in the funding of higher education. To increase efficiency and equity, and to achieve more equitable access, performance-based allocation mechanisms should be used.