Beyond University Bailouts
Sher Ahmed Durrani
Quetta: Pakistan’s public universities are facing one of the gravest financial crises in their history. Across the country, universities struggle to pay salaries, maintain laboratories, finance research, and retain talented faculty. Delayed government grants have become routine, while young academics increasingly seek opportunities abroad. Students, in turn, are losing confidence in the country’s higher education system.
This is not merely an institutional crisis. It is a national development challenge.
Universities produce the human capital, scientific knowledge, technological innovation and policy expertise upon which modern economies depend. When higher education weakens, long-term economic competitiveness weakens with it. The debate, therefore, should move beyond annual budget allocations and address a more fundamental question: How should Pakistan finance its universities in the twenty-first century?
For decades, Pakistan has relied on a funding model in which public universities depend overwhelmingly on government grants. Whenever fiscal pressures intensify—as they frequently do because of debt servicing, energy subsidies, inflation, security expenditures and limited tax revenues, higher education becomes one of the first casualties.
Demanding larger public allocations is understandable, but fiscal realities make it increasingly unrealistic. Pakistan requires a structural transformation in the financing of higher education rather than a perpetual cycle of emergency bailouts.
One of the most instructive international examples comes from the United States’ Land-Grant University system established under the Morrill Act of 1862. Instead of providing universities with temporary financial assistance, the federal government transferred productive public assets—primarily land—to states for establishing institutions dedicated to agriculture, engineering, science and applied research.
The genius of the Morrill Act was not simply the transfer of land; it was the creation of self-sustaining institutions. Universities were encouraged to generate income through research farms, technology development, industrial partnerships and public service. Over time, institutions such as Texas A&M University, Iowa State University, Michigan State University and Cornell University became global centres of innovation while simultaneously serving regional economic development.
Pakistan cannot simply copy the American experience. Historical, political and economic contexts differ substantially. Yet the underlying principle remains highly relevant: universities should be equipped to create wealth through knowledge rather than survive solely through annual government appropriations.
A modern Higher Education Development Act could adapt this philosophy to Pakistan’s circumstances.
Agricultural universities should be supported with research farms, seed development centres, livestock innovation facilities and climate-resilient agriculture programmes. Engineering universities should develop technology parks, industrial design centres and startup incubators. Medical universities should expand biotechnology research, diagnostic laboratories and translational medical innovation. Universities possessing substantial land holdings should be encouraged to establish solar farms, research parks and professional training centres capable of generating recurring revenue.
However, productive assets must never become speculative real estate ventures. Any land allocated to universities should remain legally protected from sale and be utilised exclusively for education, research, technology development or carefully regulated long-term leasing arrangements that generate sustainable institutional income.
Financial sustainability also requires a much closer relationship between universities and industry. Pakistan continues to suffer from a disconnect between academic research and industrial production. Universities frequently publish research with little commercial relevance, while industries import technologies that domestic researchers could potentially develop.
Bridging this gap requires institutional reform rather than isolated projects. Every major university should establish a professionally managed Technology Transfer Office responsible for patenting discoveries, commercialising research, negotiating licensing agreements and facilitating university-industry partnerships. Research must increasingly be evaluated not only by publications but also by patents, innovation, entrepreneurship and measurable contributions to national productivity.
Another largely untapped resource lies within university alumni.
Globally, alumni philanthropy constitutes one of the strongest pillars of university finance. Leading universities maintain lifelong relationships with graduates, many of whom contribute generously towards scholarships, endowed professorships, laboratories and research centres. Institutions such as Texas A&M University have built multibillion-dollar endowments through sustained alumni engagement over decades.
In Pakistan, however, institutional relationships with graduates often end once degrees are awarded. Universities must establish professional alumni offices capable of cultivating long-term engagement and developing permanent endowment funds. Even modest annual contributions from a relatively small proportion of graduates could substantially strengthen institutional finances while fostering a culture of academic philanthropy.
Equally important is the revival of university endowments.
Historically, Muslim societies financed educational institutions, libraries and hospitals through charitable endowments (waqf). Contemporary Pakistan has largely abandoned this tradition within higher education.
Introducing tax incentives for philanthropic contributions could encourage individuals, corporations and overseas Pakistanis to establish endowed chairs, scholarships and research funds that continue supporting universities across generations.
Yet perhaps the most transformative reform would be establishing a National University Endowment Fund.
Unlike annual budgetary allocations, an endowment preserves its principal while investing it professionally to generate sustainable returns. Only investment income finances academic activities. Many of the world’s leading universities have achieved financial resilience through precisely this model.
Pakistan’s proposed national endowment should operate under an independent Board of Trustees comprising economists, scientists, financial experts, industrial leaders, jurists and distinguished academics.
Legal safeguards must ensure that neither governments nor political interests can divert its capital for unrelated fiscal purposes. Such protection is essential if the fund is to become a genuine national asset rather than another public account vulnerable to short-term political pressures.
Governance reforms are equally indispensable.
Vice-chancellors should no longer be evaluated solely as academic administrators but also as institutional leaders capable of mobilising research funding, cultivating international partnerships, attracting philanthropic donations and building productive engagement with industry.
Similarly, the Higher Education Commission should evolve beyond its traditional grant-distribution role to become a strategic national research funding agency that attracts international research investment, promotes technology commercialisation and facilitates global academic collaboration.
Performance-based funding should gradually replace uniform grant allocation. Public investment should increasingly reward research excellence, industrial collaboration, graduate employability, patent generation, societal impact and international competitiveness.
Financial autonomy, however, must never be confused with commercialisation.
Universities do not exist to maximize profit. Their fundamental mission remains the creation, preservation and dissemination of knowledge. Financial sustainability is valuable because it protects academic freedom, enables long-term planning and insulates research from recurring fiscal uncertainty.
Ultimately, Pakistan’s economic future will depend not only on sound macroeconomic management but also on the quality of its knowledge institutions. The world’s most successful economies have transformed universities into engines of innovation, entrepreneurship and technological progress.
South Korea, Singapore and China each invested strategically in higher education as a foundation for national development rather than treating universities as recurrent fiscal liabilities.
Pakistan faces a similar choice.
It can continue responding to university crises through periodic emergency grants and incremental budget negotiations, or it can adopt a new financial compact that empowers universities to become partially self-sustaining while preserving strong public investment in teaching and research.
The objective should not be to reduce the state’s responsibility but to multiply the financial foundations upon which higher education rests. Government support, productive institutional assets, industry partnerships, alumni philanthropy, research commercialisation and professionally managed endowments must together form a diversified financing ecosystem.
A nation that aspires to compete in the knowledge economy cannot build its future on financially fragile universities.
Sustainable universities create knowledge; knowledge creates innovation; innovation drives productivity; and productivity ultimately strengthens national prosperity.
Pakistan’s path towards economic transformation will not begin in the Ministry of Finance alone. It will begin in university classrooms, laboratories, research farms and technology parks. Investing in universities is therefore not simply an educational policy—it is the country’s most important long-term economic strategy.
Sher Ahmed Durrani is a senior lecturer in Political Science at the University of Loralai, Pakistan, and a PhD candidate at Quaid-i-Azam University. His research focuses on socio-political systems and sustainable development in South Asia. He can be reached at sherahmed.durrani@gmail.com.
The article is the writer’s opinion, it may or may not adhere to the organization’s editorial policy.
