Foreign students attracted to a highly educated nation

The emphasis on education in Japan means it has a highly educated adult population, with 46% of 25- to 64-year-olds in 2011 having attained a higher education, says the OECD’s Education at a Glance 2013. This proportion is much larger than the OECD average of 32% and is the third highest among OECD countries, after Canada and Israel.

And tertiary attainment rates among younger adults continue to climb: in 2011, 59% of Japan’s 25- to 34-year-olds had a tertiary education, an 11 percentage-point increase since 2000. This is the second highest proportion among OECD countries after Korea, while the OECD average was 39% and the proportion in the US was 43%.

In the 1980s, Japan started to promote its higher education institutions overseas. The government set about improving the availability of scholarships for international students and relaxing immigration controls. After achieving its initial goal of inviting 100,000 students to study in Japan, the government announced in 2008 a plan to lure another 300,000, with the aim of tripling their numbers by 2020.

The report says that, in 2011, Japan attracted 3.5% of foreign tertiary students – the eighth biggest share among all the destination countries, and an exceptionally high figure given the language of instruction is mostly Japanese.

Although foreign tertiary student numbers in OECD countries have doubled over the past decade, Japan only increased its market share from 3.2% in 2000 to 3.5%. The US hosted the largest proportion in 2011 but its share had fallen from 23% to 16.5% between 2000 and 2011.

Among foreign students studying in Japan, 93% came from Asia, including 62% from China and 17% from Korea. Japan is the second most popular destination for Chinese students after the US, receiving 13% of those studying abroad.

Tertiary education brings considerable benefits to individuals and Japanese society. In 2007, the gross earning benefits of tertiary education over a lifetime were estimated at US$326,614 for men and US$231,306 for women. Furthermore, unemployment rates were 3% for degree-holders and 5% for those with an upper secondary qualification.

Japanese society also benefits from additional income tax receipts and social contributions, and financial gains from reduced unemployment rates amounting to US$100,562 for men and US$49,965 for women over a lifetime, the OECD report says.

It says that, despite these benefits, high tuition fees can act as a disincentive to investing in tertiary education. In Japan, tuition fees for tertiary-type A programmes are some of the highest among OECD countries, with an average annual fee to attend public tertiary institutions of US$5,019 during the academic year 2010-11.

This was the fifth highest annual fee, based on available data. But 75% of students in Japan were enrolled in private tertiary institutions whose average tuition fee was US$8,039. Tuition fees for both public and private institutions, however, have increased since the academic year 2008-09.

In response to rising fees, the proportion of students benefiting from public financial support has been increasing. In the academic year 2010-11, 37% of tertiary students received public loans and 3% received scholarships or grants. Yet, these proportions are still relatively small compared to other OECD countries with high tertiary tuition fees.

The financial crisis has affected students’ ability to repay the loans and, as the number of borrowers has increased, so has the growing amount of unpaid debt. The OECD says one way to strengthen student support would be to establish an income-contingent loan system because such a scheme takes into account differences in students’ ability to repay the loan after graduation:

“Hence, those who have access to high-paying jobs would receive less public subsidies,” the report states. “Japan’s national student loan programme recently introduced a scheme that provides some recipients with unlimited grace periods depending on their financial circumstances after graduation. Yet, this income-contingent repayment scheme comes with strict eligibility requirements, such as minimum academic performance as well as maximum household income, and is not available to all loan recipients.”

The report notes that, in 2011, 68% of Japanese women with tertiary-type A degrees were employed, which is a considerably smaller proportion than the OECD average of 79% and in contrast to the 92% of men with a similar degree.

Also, women who are employed tend to be working part-time involuntarily or are overqualified for the job. While 35% worked part-time, compared to the OECD average of 26%, 21% were temporary employees, compared to the OECD average of 12.5%.