OECD analysts see student aid as key to maintaining access as fees rise

OECD analysts have found the combination of tuition fees and financial support that seems to lead to the best outcomes for universities, students and society.

Following an in-depth analysis of data, they suggest that financing systems for higher education that charge a moderate level of tuition fees may stand a better chance of promoting access, equity, completion and positive outcomes for students if they are supported by means-tested grants and loans based on income-contingent repayments.

The second edition of the OECD’s Education Indicators in Focus (EIF) series examines countries’ relative success in controlling finances while continuing to promote access, equity and completion rates.

The report’s author, Jean-Daniel LaRock, says that many countries with strong university entry rates share one thing in common: robust student financial aid systems.

Four countries that have particularly well-developed systems – Australia, New Zealand, the United Kingdom and the United States – all have above-average university entry rates, despite having very high tuition fees.

And four low-tuition-fee countries that also support students with housing and other education-related expenses – Finland, Iceland, Norway and Sweden – have high entry rates as well.

But the type of aid is also critical. OECD research suggests that combining means-tested grants with income-contingent repayment of loans not only promotes access and equity but also leads to better outcomes for students.

“Australia and New Zealand have used this approach to mitigate the impact of high tuition fees, encourage disadvantaged students to enter higher education, and reduce the risks of high student loan indebtedness. By contrast, countries with no tuition fees but less-developed student aid systems – such as Ireland and Mexico – have lower entry rates.”

While the OECD research suggests that a “moderate” level of tuition fees backed by giving students opportunities to benefit from comprehensive financial aid increases access, makes best use of limited public funds and acknowledge the significant private returns to students, defining what “moderate” means is not easy.

The reports makes no predictions regarding the impact of the imminent steep rise in tuition fees in the UK. But the underlying message of the analysis suggests that if the higher fees are mitigated by robust financial support systems, neither university budgets nor access should be drastically affected.

A further trend is to differentiate between home and international students, or between fields of study, to keep fees overall at reasonable levels while generating enough income for higher education systems.

Countries such as Denmark and Sweden, with low or non-existent fees for their own students, have moved to increase tuition fees for students from outside the European Union.

And at least 14 OECD member and partner countries differentiate tuition fees among fields of study to account for the higher cost of operating some academic programmes. Australia has even attempted to link the level of fees to labour-market opportunities by lowering tuition fees for fields with skills shortages, in order to attract more students.