Funding stipends : a sensitivity test analysis

Abstract

This dissertation examines the effects of mortality and fertility changes on the future cost of stipends by projecting the number of University of Malta students and stipend paid per student. A deterministic model; based on best-estimate mortality, fertility, inflation and University application rates; is sensitivity tested with respect to mortality and fertility. The model confirms that the projected population is expected to decrease due to a lower crude fertility and higher crude mortality rates. However, due to the compounded inflation rate, the future costs of stipends are expected to increase in absolute but not relative terms. Sensitivity testing shows that an increase in fertility rate is more likely to adversely affect stipend cost than a decrease in mortality rates. Being aware of the effects of such demographic changes generates knowledge of fiscal future implications and helps the government in being proactive rather than reactive when planning the unfunded obligation of stipend cost.