ICELAND: OECD recovery package urges tuition fees

The OECD has reinforced its advice to Iceland to consider seriously the
introduction of tuition fees at public universities.

The organisation has previously recommended that Iceland's public universities should be empowered to charge tuition fees. But the epic banking crisis that precipitated a deep recession prompted it to repeat the advice in a recovery plan published earlier this month.

The Icelandic government sought international help for a medium-term adjustment programme to restore policy credibility and economic growth. The latest OECD economic survey found that much remains to be done in implementing the programme, despite some progress.

The survey identified tuition fees as one of the outstanding issues. It pointed out that Icelanders spend an unusually long time completing upper-secondary education, with most students taking the university entrance examination only at the age of 20.

It argued that as a result, relatively few students complete their studies, contributing to maintaining a persistent gap between the low skilled and high skilled in the labour force, despite high public spending by international comparison.

Resources for higher education have increased rapidly in recent years as the authorities have tried to offer a more comprehensive system, rather than encouraging Icelandic students to study overseas.

The OECD pointed out the shortcomings in its economic review of 2006, and recommended a series of measures which promised not only better outcomes but also lower costs.

"Such reforms should not be delayed any further," the organisation stated. Steps include cutting the duration of upper secondary education from four to three years, achieving significant savings while allowing young people to begin university studies one year earlier.

Consolidation in the higher education sector and the introduction of tuition fees at public universities, which are bound to face severe budget constraints, would avoid cutting back their programmes.

While Iceland's private institutions (the University of Reykjavik, Bifröst University and the Icelandic Academy of Arts) are free to charge tuition fees, public universities (the University of Iceland, University of Akureyri and the Iceland University College of Education) are restricted by law to levy registration fees at a level described by the OECD as "modest".

The OECD said evidence suggested that other countries that have combined an increase in education fees with an improvement in student loan facilities have not suffered a "significant" adverse effect on participation rates.

"A number of OECD member countries, including Finland and Sweden, are able to achieve higher educational outcomes at lower costs," the report said.

Earlier this year an international panel of experts, chaired by Christoffer Taxell, Chancellor of Åbo Akademi University in Finland, recommended introducing tuition fees at public universities. The panel, mandated by the Icelandic government, also recommended drastic streamlining of the country's higher education and research.

In particular it said that two universities should be created to replace the existing seven public and private institutions, with greater interaction between departments and stronger linkages with public research institutes and the private sector. It said competitive research funding needed to be overhauled, with priority given to quality assurance, accountability and delivery.

The panel concluded that Iceland's higher education had grown and diversified more quickly and more recently than almost any other OECD country. The desperate economic and fiscal circumstances required Iceland to adapt its system more quickly than others as well, it said.

While arguing that it was vital to maintain investment levels in all forms of education as much as possible, the panel recommended a much more transparent common system for funding universities.

"Concerning tuition fees in particular, they need to be broadly considered and perhaps introduced on a larger scale," the panel said.