Most university students in OECD now pay tuition fees

Full-time university students in America pay the highest tuition fees among the 30 nations covered in the latest OECD report, Education at a Glance 2017. The United States is by far the most expensive with annual fees exceeding US$8,000 a year in public universities and more than US$20,000 in private institutions.

There is no surprise in these figures but the report also says that in a third of the countries evaluated, public universities do not impose any charge at all for bachelor degree students.

In addition, in 10 of the countries annual fees are equivalent to less than US$4,000, whereas in Australia, Canada, Chile, Japan, South Korea and New Zealand they exceed US$4,000 and are up to US$8,000 per year – that is, almost matching the US.

Private universities are less bound by government regulations but are also less supported by public funding, the OECD report states. That means the institutions are more dependent on tuition fees as a revenue source, which is why private universities in America, Australia and Italy charge far higher fees than their public counterparts. In fact, the costs are US$4,000 a year more than in public universities.

At least 75% of students in high-cost countries, however, have access to government-backed loans or scholarships and grants. Also, of the countries that impose tuition fees, half also vary the charges according to the field of study.

Engineering, manufacturing, construction, social sciences, journalism and information, together with health and welfare, tend to have the highest costs, while education and information and communication technologies or ICT tend to have the lowest.

“OECD and partner countries have different approaches to sharing tertiary education’s costs among governments, students and their families, and other private entities, and to providing financial support to students,” the report states.

“All countries want students to be able to afford to attend tertiary education, but some prefer to invest the resources they dedicate to this goal in lower tuition fees, while others decide to offer student loans and grants to cover the fees and living costs. Tuition fees bridge the gap between the costs incurred by universities and the revenues they receive from sources other than students and their families,” the report says.

The analysis found that institutions partly cover their costs, other than through charging students and their families, by tapping into internal resources such as endowments, or by raising revenue from other sources. The rest has to be met from fees.

“Some countries therefore prefer to let tertiary institutions charge higher tuition fees while providing financial support to students in other ways, particularly through grants and public loans. These are often available to students at better conditions than they could find on the private market, typically with lower interest rates and conditions under which the loan is remitted or forgiven,” the report says.

Financially backing students and their families enables governments to encourage participation in education, while also indirectly funding universities, the report says. Channelling funding to institutions through students may also help increase competition among the universities and encourage them to better respond to student needs.

The type of support that students receive comes in many forms, including means-based subsidies, family allowances, tax deductions for students or their parents, or via ‘other household transfers’.

“Governments strive to strike the right balance among these different subsidies, especially in periods of financial crisis.

“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 tax reductions or family allowances are not targeted specifically to low-income students. However, they may still help to reduce financial disparities between households with and without children in education,” the report says.

In most countries, except Australia, Chile, South Korea, Spain and the United States, tuition fees imposed by public universities in masters and doctoral programmes are generally not much higher than those charged for bachelor degrees.

Public vs private institutions

According to the OECD data, the difference in fees between public and private institutions tends to be very large in several countries. In Australia, Japan and South Korea, the average tuition fee for a bachelor degree is more than US$8,000 in private universities, compared with between US$4,500 and US$5,300 in the public institutions.

In the United States, the average annual tuition fee in independent private universities to complete a bachelor degree is more than two-and-a-half times the average charge in the public institutions.

In Italy, they are about three times as high and up to 60% higher in the French community of Belgium, and in Hungary and Israel.

Elsewhere, the difference at the bachelor level is much smaller or non-existent: Neither public nor private universities charge tuition fees in Finland, Slovenia and Sweden.

On average, public and private universities impose similar charges in Switzerland and in the Flemish community of Belgium, while in Austria, fees are capped in public and government-dependent private institutions, whereas in independent private ones they are at the discretion of individual universities.

A third of OECD countries charge similar tuition fees to full-time students in public universities regardless of the level of the programme – bachelor, masters or PhD. In public institutions in Denmark, Estonia, Finland, Norway, Poland, the Slovak Republic, Slovenia (except for doctoral programmes), Sweden and Turkey there are no fees.

In other countries, tuition fees differ depending on the level. In Austria, the difference is about US$920 between a bachelor and a masters degree; in the UK, it is a hefty US$12,800; in Italy, in government-dependent private institutions, the cost difference varies from US$1,700 to US$1,800, while in Japan the difference is US$5,200; and in Switzerland about US$1,170.

Substantial charges

On the other side, the charges to undertake a higher degree in some nations can be substantial. In Chile, South Korea and the United States, tuition fees for masters courses in public universities are about 30% higher than for a bachelor degree, while in Australia and Spain they are more than 50% higher.

The report notes that in a few countries tuition fees charged by public universities for their own students undertaking doctoral programmes are actually much lower than for bachelor and masters programmes. These include Australia, Hungary, Italy and Switzerland.

Most doctoral students in Australia are on scholarships or other forms of support so annual fees are either zero or around US$300, compared with US$4,763 for a bachelor degree. In Chile, South Korea, New Zealand, Slovenia and the US, fees for doctoral students in public universities are higher than for bachelor and masters degrees.

At least 75% of students in bachelor’s or equivalent level programmes in Australia, the UK, Norway and the United States benefit from public loans or scholarships and grants. With the exception of Norway, where tuition is free in public institutions and public support covers students’ living costs, these countries also have some of the highest tuition fees.