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OECD – Fees and public support for tertiary students

OECD and G20 countries vary significantly in the amount of tuition fees charged by their tertiary institutions. For instance, in eight OECD countries, public institutions charge no tuition fees, but in one-third public institutions charge annual fees in excess of US$1,500 for national students.

Countries with high levels of tuition fees tend to be those where private entities (for example, enterprises) also contribute the most to funding tertiary institutions, according to the OECD’s 2012 Education at a Glance report. This is an extract from the report.

An increasing number of OECD countries are charging higher tuition fees for international students than for national students, and many also differentiate tuition fees by field of education, largely because of the difference in the public cost of studies.

An average of 21% of public spending on tertiary education is devoted to supporting students, households and other private entities.

In Australia, Chile, The Netherlands, New Zealand, Norway and the United Kingdom, grants-scholarships and loans are particularly developed, and public support to households account for at least 27% of public tertiary education budgets.

Many countries have similar goals for tertiary education, such as strengthening the knowledge economy, increasing access for students, encouraging high completion rates, and ensuring the financial stability of their higher education systems.

Yet OECD countries differ dramatically in the way the cost of higher education is shared between governments, students and their families and other private entities, and in the financial support they provide to students.

Public support to students

Policy decisions relating to tuition fees affect both the cost of tertiary education to students and the resources available to tertiary institutions.

Public support to students and their families also enables governments to encourage participation in education, particularly among low-income students, by covering part of the cost of education and related expenses.

In this way, governments can address issues of access and equality of opportunity. The impact of such support must therefore be judged, at least partly, by examining tertiary education participation, retention and completion.

Public support to students also indirectly funds tertiary institutions. Channelling funding to institutions through students may also help increase competition among institutions. Since aid to students for living costs can serve as a substitute for income from work, public subsidies may enhance educational attainment by enabling students to work less.

Public support for students comes in many forms: as means-based subsidies, family allowances for students, tax allowances for students or their parents, or other household transfers.

Based on a given amount of subsidies, public support such as tax reductions or family allowances may provide less support for low-income students than means-tested subsidies, as the former are not targeted specifically to support low-income students. However, they may still help to reduce financial disparities among households with and without children in education.

Tuition fees

Among the European countries for which data are available, only public tertiary institutions in Italy, The Netherlands, Portugal and the United Kingdom (government-dependent private institutions) charge annual tuition fees of more than US$1,200 per full-time national student.

The high entry rates into tertiary education in some countries that charge no tuition fees likely result in part from their highly developed student financial support systems to cover living expenses, not just the absence of tuition fees.

OECD countries in which students are required to pay tuition fees but can benefit from sizeable financial support do not have below-average levels of access to tertiary-type A (theoretical) education.

Student financial support systems that offer loans with income-contingent repayment to all students combined with means-tested grants can be an effective way to promote access and equity while sharing the costs of higher education between the state and students.

Since 1995, 14 out of the 25 countries with available information had implemented reforms to tuition fees. Most of these reforms led to an increase in the average level of tuition fees charged by tertiary education institutions. In all of the 14 countries except Iceland and the Slovak Republic, the reforms were combined with a change in the level of public support available to students.

Since 2009, further changes have been made to tuition fees and public support systems in various countries.

For example, in the UK, tuition fees are scheduled to double or nearly triple in some universities in 2012, as part of a government plan to stabilise university finances.

Similarly, in 2011 Korea implemented reforms to increase the level of public support available to students for higher education, with the goal of strengthening access and equity in tertiary-type A education.

Fee levels and student aid are hotly debated issues

The cost of higher education and the best way to support students in paying for it are among the most hotly debated public policy topics in education today.

The level of tuition fees charged by tertiary institutions as well as the level and type of financial assistance countries provide through their student support systems can have dramatic repercussions for access and equity in tertiary education.

Striking the right balance between providing sufficient support to institutions through tuition fees and maintaining access and equity is not easy.

On the one hand, higher tuition fees increase the resources available to educational institutions, support their efforts to maintain quality academic programmes and develop new ones, and can help institutions accommodate increases in student enrolment.

However, higher tuition fees may also restrict access to higher education for students, particularly those from low-income backgrounds, in the absence of a strong system of public support to help them pay or reimburse the cost of their studies.

In addition, high tuition fees may prevent some students from pursuing fields that require extended periods of study if labour market opportunities are not sufficient.

On the other hand, lower tuition fees can help promote student access and equity in higher education, particularly among disadvantaged populations. However, lower tuition fees may also constrain the ability of tertiary institutions to maintain an appropriate quality of education, especially in the light of the massive expansion of tertiary education in all OECD countries in recent years.

Moreover, budgetary pressures stemming from the global economic crisis may make it more difficult for countries that have lower tuition fees to sustain this model in the future. There are large differences among countries in the average tuition fees charged by tertiary-type A institutions for national students.

In the five Nordic countries with more progressive tax structures – Denmark, Finland, Iceland, Norway and Sweden – and in the Czech Republic and Mexico, public institutions do not charge tuition fees. Ireland could also be included in this category, as the tuition fees charged by public institutions (for full-time undergraduate students from the European Union) are paid directly by the government.

By contrast, tuition fees are higher in one-third of the countries and they reach more than $5,000 in Korea and the United States. Meanwhile, in Austria, Belgium, France, Ireland, Italy, Portugal, Switzerland and Spain, students pay small tuition fees for tertiary type A education.

Among the EU21 countries for which data are available, only The Netherlands and the United Kingdom have annual tuition fees that exceed $1,500 per full-time national student.
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