How to fund mass higher education

This is admittedly an unashamedly Anglo-Saxon neoliberal perspective on the delivery of higher education globally – and is largely based on Reshaping the University: The rise of the regulated market in higher education, a 2014 book I wrote with Ted Tapper. Some may feel able to ignore all this unpleasant stuff, simply assuming it could never happen in their civilised country…

In essence the global trend is for higher education to descend from its Ivory Tower on the Acropolis and enter into the Agora, where it operated until a generous post-war welfare state consensus (over-)funded higher education as a free public good, creating the situation we find ourselves in today where most nations are unable to afford mass higher education.

Mass higher education is defined as around 50% of young people entering university compared to some 15% before massification. Moreover, governments are rightly asking awkward questions about higher education’s accountability for its use of taxpayer funding and about higher education’s efficiency and effectiveness.

Some governments are forcing the introduction of tuition fees to share the cost burden of higher education between the taxpayer and the student or family. This process is welcomed by some as the introduction of market competition and discipline, as enhancing ‘the student experience’ and countering the risk associated with creating a monolithic public-sector monopoly.

This ‘marketisation’ is a feature of the breakdown of the post-war corporatist and statist welfare consensus, something which ‘austerity’ has particularly highlighted.

Yet, clearly, marketisation brings with it the danger of market failure and hence the question of the degree to which the higher education market needs to be a ‘regulated market’ where government takes responsibility for the consumer protection of the fee-paying student, encouraging the student to become an informed and empowered consumer.

The simple public policy choice worldwide is that either the nation operates an overcrowded and underfunded, free, mass higher education provision or it moves along the cost-sharing trajectory.

Arguably, no country can now afford properly funded, free, public good, modern, mass higher education.

Cost-cutting to boost productivity

Higher education needs to address its severe case of Baumol’s Disease where its productivity as a craft industry has not much changed since the introduction of printing.

Time for cost-control, cost-reduction, outsourcing, the slaughtering of a whole herd of sacred cows and the use of MOOCs – massive open online courses – and digital-learning to achieve a productivity breakthrough: (better and more) teaching all year around, the speeding up of degrees, encouraging the entry of for-profit providers as a source of pedagogical innovation and price competition.

And what are the sacred cows of higher education? The reluctance to view and discuss modern, mass skills and competencies, vocational higher education as in effect tertiary education; to recognise the need to adjust the process to cater for a much wider cross-section of the population and hence for university professors to be teacher-trained?

Also, ending the pretence (and cost of pretending) that all professors and all universities are credibly research-active? Accepting there is no significant or demonstrable link between a professor being research-active and the quality of his or her undergraduate teaching?

The politics of higher education

But is there a magic answer to the balance of public and private funding of higher education? No, it is a matter of politics and the degree to which any political process values the contribution of higher education to society and the economy.

There is no right answer: the nearest we have as an attempt to assess the public/social benefit of higher education compared to the personal gain is from Professor Walter McMahon in his 2009 book Higher Learning, Greater Good, which broadly concludes that, since the benefits of higher education are assessed as about 50:50, its cost might be similarly split between taxpayer and student-consumer.

Thus, the provision of free higher education in some countries is probably too generous to its users (a group almost always dominated by the children of the better off socio-economic groups) and unfair on the many taxpayers from lower groups who do not see much benefit from mass higher education.

But to shift the entire cost from taxpayer to student-family is also unfair in terms of imposing too great an intergenerational burden upon the young emerging from higher education with a level of debt that makes their studies the next most expensive lifetime acquisition after buying a house or flat (and perhaps also a pension plan).

Ensuring effective market competition within higher education so as to bring down its cost/price would help, not least since it is a peculiar economic good where the university has too great an incentive to hide important information from the consumer, say, in relation to the (under-)employability of its graduates or the size of seminar groups.

Sadly, mass higher education is now a chunky item of GDP spend, is under-researched by academics compared to, say, schools, healthcare, transport or policing – mainly because it is embarrassing as an academic to be investigating too close to home and there is just no career path for higher education researchers.

David Palfreyman is bursar and fellow, New College, University of Oxford, UK; and director of the Oxford Centre for Higher Education Policy Studies. This article is based on a keynote speech he gave at a recent dialogue between higher education policy-makers and academics at Hotel Koldingfjord, Denmark.