Education Financing of Rural Households in China

The purpose of this paper was to examine children’s education financing alternatives among households in rural China. Data on education financing was from a household survey conducted in three poverty villages in Guizhou, China. The difference in financing education by households was verified through non-parametric testing. Findings show that private savings is dominant in financing education of children in school. Formal loans are almost absent even in the highest wealth group examined. The findings implied that the extension of financial services to children’s education could motivate parents to send their children for more education, increase disposable income of rural households by reducing precautionary savings, and provide better-educated labors in rural China.