Rationality and Performance of Government on Financing Higher Education in Iran

Higher education is subsidized by the state in almost all countries, including Iran. Why? The aim of this article is to answer this question and review the government performance on financing higher education in Iran. The results of an exploratory study show that the state subsidizes higher education for a variety of reasons, including the failure of the market to financing higher education, having a full social benefits, imperfect capital markets, equal distribution of education opportunities and redistribution of income and wealth. The survey results of state performance to higher education show that in Iran, state not only does not apply an appropriate method of financing higher education, but also considerably has declined their actual subsidy to higher education during the last decade. If this trend continues, it will lead to undermine the efficiency, effectiveness, fairness and balance in the Iran’s higher education economy.