The world's leading economies are experiencing the worst financial crisis since the Great Depression. Output has shrunk, jobs have been lost, and unemployment has been mounting, causing untold misery and pushing millions of people below the poverty line. This paper analyses the impact of the economic crisis on higher education. The higher education sector receives revenue from, and its expenditures contributes substantially to, income and employment generation in other sectors. This economic role of higher education becomes all the more important during crisis periods, when other sectors tend to contract. Policy responses to education in a period of crisis will vary among countries. Some governments cut higher education budgets, some maintain them at the same level, while others increase them. Many higher education institutions are in the process of restructuring - laying off employees, freezing recruitment, and readjusting student support systems to survive the crisis. Yet, one positive trend is that higher education enrolments are surging and cross-border education expanding, despite the budgetary constraints brought on by the crisis. This paper argues that supportive public policies, a successful institutional restructuring process, and positive household responses (capacity and willingness to invest) have contributed to this surge in enrolment. What is more important to note is the fact that the higher education sector, once an easy target for budget cuts, appears to be more protected during the current crisis period than in previous ones. It can be argued that this reflects a major change in attitude towards investing in higher education - a greater recognition of the contributions of higher education and research to economic growth and national competitiveness. Thus, education, especially higher education, is now seen as part of the solution and is being included as an element in recovery plans and stimulus packages.
