Market forces at play: Tuition fees are a ‘game changer’

After a decade of tuition fees in Sweden for students from outside of Europe, scientific articles analysing the consequences of the tuition fees upon higher education have been published. Doctoral theses analysing the tuition fees have also been produced.

Some of these articles are published in peer-reviewed journals, making their analyses more scientifically grounded than the many policy, reform-oriented discussion papers produced by the government and other stakeholders as a part of the ongoing reform debates in Sweden.

Several of these studies are now investigating whether this more market-oriented supply side of Swedish higher education offers new courses of higher quality at higher prices for international fee-paying students with the generation of profit as a major motivating factor. This is seen in relation to the welfare-state model of higher education which promotes opportunity for all and education as a public good.

In an article in The European Journal of Higher Education in 2021, titled “Massification, unification, marketisation, internationalisation: A socio-political history of higher education in Sweden 1945–2020”, Mikael Börjesson and Tobias Dalberg say Sweden is an example of a country that over time has become “less national and more internationally oriented with the adoption of the Bologna model, the increased focus on institutional autonomy and the larger diffusion of market solutions.”

More recently, a paper has been prepared for the Consortium of Higher Education Researchers (CHER) conference in Vienna in 2023 and presented by Hans Lundin and Lars Geschwind at the KTH Royal Institute of Technology in Stockholm, entitled “Tuition fees for international students: A policy instrument of cost sharing and control or simply income generation?”

In this paper, due to be published in early 2024, but seen by University World News, there is empirical data on every higher education institution in Sweden that is receiving fee-paying students. Lundin and Geschwind have also given a status update on research that has been undertaken on the impact of introducing tuition fees.

They found that in in 2022, public spending on international students, through scholarships, reached a total of SEK225 million (US$21.5 million), which as “not even half of the estimated amount of public spending towards international students prior to the reform”. In relation to state allowances, public spending on international students only constituted 0.8% in 2022, as compared to approximately 2%, prior to the reform.

In the Journal of Interdisciplinary Studies in Education in October 2023 Per A Nilsson and Lars Westin of Umeå University published the article: “The Swedish Debate on Tuition Fees for International Students in Higher Education”.

Fee-paying students expect quality

Nilsson and Westin concluded that tuition “makes students more interested in the quality of their education and what a university actually delivers, compared to what it promises to deliver”. They said data for the academic year 2020-21 shows that the achievement rate now is high for tuition students: 88%, compared to 84% among those who did not pay tuition.

“Among the inbound tuition students, 97% studied a full programme and 3% through independent courses. The most common programmes are focused on technology and manufacturing, followed by social sciences, law, and business administration.” They argued that this shows that Swedish universities have managed to develop a “more internationally competitive supply of courses”.

On 16 November Universitetsläraren, an editorially independent magazine for members of the Swedish Association of University Teachers and Researchers (SULF), published an interview with Lundin who is a PhD candidate at KTH, with the headline: “The higher education institutions are starting to see tuition fees as a source of income”. Lundin here refers to the forthcoming [CHER conference] article by himself and Geschwind that analyses the effects of the introduction of tuition fees in Sweden.

In 2020 Jérôme Rickmann defended the subject of his doctoral thesis at the Catholic University of Milan: “Market smart, not market driven. Organisational processing at Swedish universities after the introduction of tuition fees for international non-EU students”.

Changing the nature of institutions

In the thesis Rickmann addresses the issue of the increased marketisation of higher education.

“The introduction of such fees has raised concerns that marketisation will have a negative impact on the fundamental nature of universities. That it undermines their purpose in research and education and prevents them from fulfilling their social mission,” he writes.

“The second major contribution of this study is the need for a more nuanced differentiation in research and commentary between marketisation as ‘ideology’ and marketisation as ‘application of business practices’.”

The thesis argues that the first is problematic as a dominant paradigm for higher education sector regulation because its theoretical premises are flawed.

Marketisation as ‘application of business practices’, however, provides universities with a toolbox for manoeuvring within the realities of a partially marketised global higher education landscape, evaluating threats and opportunities and planning for the future.

Rickmann applies a system theory approach to analyse how the three examined higher education institutions have responded to the introduction of fees. A special focus is if and how market-orientation increasingly exerted itself in these institutions.

Dr Rickmann, who is now a Senior Advisor for Global Engagement at Aalto University in Helsinki, Finland told University World News: “The starting point for my thesis was the notion that the concerns regarding the introduction of tuition fees and its positioning in a larger marketisation discourse share similar features as other critical discourses around ‘neoliberal’ reforms.”

Market-oriented recruitment approaches

He said all three universities that he studied adapted by adopting a more market-oriented approach to student attraction. This aspect supports a view that sees the global student market as an organisational field of its own right that displays isomorphic forces, leading to an increasing organisational homogenisation. In that sense: Tuition fees were an absolute ‘game changer’.

However, Rickmann cautioned: “On the other hand, it is also true that from a perspective that considers the whole university, not much has changed. Seeing the increased market-orientation as proof of how these universities have turned into businesses or are heading along this trajectory would grossly overstate the influence the policy shift had on overall organisational behaviour. If we only focus on one particular aspect, we tend to blow things easily out of proportion.”

He explained: “Swedish universities are not financially dependent on international student recruitment to fulfil their role in science, education, and the economy. They do not need to subdue any of the major institutional logics focusing on academic quality to economic imperatives necessary for organisational survival but can maintain if not further develop high standards.

“However, should their financial dependency increase, a tipping point may be reached, where balancing the different logics becomes increasingly difficult. This could lead to more negative effects than positive for the respective institutions,” he said.

Rickmann concluded: “More research regarding this ‘possible pathway’ would be highly relevant. Both Bryntesson and Lundin make a good point that in the long run Swedish universities may become victims of their own recruitment success. Meaning that they generate sufficient income for the government to be tempted to cut public funding.

“That being said, one should not paint the government as a neutral entity providing funds. There is also an argument to be made about diversification of university income strengthening their autonomy.”

André Bryntesson and Michael Borjesson published two significant studies on the tuition fee system, “Det svenska studieavgiftssystemets ekonomiska logik En kritisk diskussion (The Swedish tuition fee system’s economic logic: A critical discussion”) in 2018 and “Avgiftsreformens påverkan på inflödet av Studenter (The impact of the fee reform on the inflow of students)” in 2019.

Criticism of reforms

In these studies they take a critical stance that the design and implementation of the Swedish reform does not live up to the objective of increasing the influx of international students as a ‘cost-neutral’ measure for Swedish taxpayers. They argue that with other calculations, including the marginal costs of international students and their economic value to Swedish society, tuition fees would be much lower to align with such an objective.

In 2022 University World News provided a summary of the impact of the introduction of tuition fees upon higher education in Sweden.

A huge impact upon Swedish higher education was found by the report commissioned by the Swedish Institute. The report noted that international masters degree students constituted more than 40% of all degrees taken during the decade 2011 to 2021, corresponding to more than 4,000 per academic year.

Significant economic impact

It was estimated that in 2021 more than 12,300 international students who completed a degree from a Swedish university during 2011 to 2021 still lived in the country and had a significant impact on the Swedish economy amounting to billions of SEK. It was estimated that 7,200 of them had a masters degree.

Lundin said in the interview with Universitetsläraren: “The introduction of tuition fees for some international students [was] introduced in 2011 partly because the universities should ‘compete with quality’ and partly to gain control over the increasing number of incoming international students”.

Lundin later told University World News:“Some higher education institutions don’t really seem to care so much about tuition fee paying students, probably since they think they might have limited chances to attract many.

“Others may be keener on maintaining a body of international students, despite the fact that they have to pay tuition fees. Prior to reform they had more international students, but after reform they might be keen to set lower prices so as not to lose this student group.

“And finally, for some higher education institutions, that have a strong brand, has over time experienced that this student group start to constitute a new source of income.

Cost-based fees or market logic?

The core message is that according to the Swedish reform, fees would be cost-based, not market based. But with unclear definitions of how higher education institutions set prices one should be aware that a market-logic kicks in. That is to say that higher education institutions adopt prices differently – not interpreting the ‘full cost coverage’ the same, he said.

“When introducing tuition fees in 2011 this was a market-oriented reform that was characterised by the thought that all international students could not be funded by public money,” he said. Instead, he argued that public means should be used to get control over whom and how many international students should be funded by Swedish taxpayers’ money through grants.

“The costs of accepting international students should be shared by the students themselves and publicly funded grants,” he said.

“First and foremost, one wanted to prevent the increasing number of students mainly from Asia [displacing] Swedish students from the study places. The purpose was not to use the tuition fees as a tool for substituting reduced allocations from the government or expanding the sector,” Lundin argued.

In the interview Lundin said that as soon as you start introducing tuition fees the logic of the market starts to play. And in contrast to the fixed allocations [from the government] higher education institutions are not setting the price only based on the cost of the education but adapt the price on how the global market is.

High variation in fees

One example is that the price on a two-year masters degree in engineering at KTH is SEK70,000 more expensive compared to Blekinge Institute of Technology, Lundin argues.

In their CHER paper, Lundin and Gschwind discuss the different practices among Swedish HE institutions to set the tuition fee levels.

“Comparing Sweden’s smallest and biggest technical universities provides an interesting insight to analyse this further. In 2022, the smaller and lower-ranked Blekinge Technical University charged an annual fee of SEK120,000 for their engineering masters programmes towards international students, with the lowest supplement charge among examined higher education institutions, 11%.

“As a comparison, the bigger and highly ranked KTH charged SEK155,000 for their engineering masters programmes the same year, implicating a 31% supplement charge. Whether one higher education institution has set a supplement charge too low, indirectly financing international students through state allowances, or the other higher education institutions too high, raising funds beyond the international students’ actual cost, is difficult to say.

“However, it is not likely that the additional cost to receive and recruit international students is so much higher at KTH. The inherent brand and factors of scale of KTH would on the contrary suggest a lower additional cost for KTH to recruit and educate international students.

“Thus, it appears evident that these two higher education institutions have interpreted ‘full cost coverage’ differently, probably based on their different conditions to compete in the global student market. This raises questions that the tuition fee reform for universities with good conditions to recruit tuition fee-paying students might be tempted to charge tuition fees beyond the actual cost of the students”.

Lundin also said: “The first year after the tuition fees were introduced, they did not give significant income to the higher education institutions, they cost more than they brought in. Now, more than ten years later we see that the income from tuition fees is exceeding SEK1 billion [US$ 97 million] nationally and for some of the institutions this income is accounting for more than the percent of the income from teaching.”

’Unplanned impact’ of fees reform

Lundin warned that the tuition fee reform might impact upon the internationalisation of higher education in Sweden in a way that was not planned for when introducing the fees.

“With the growth of this income I see evident signs that Swedish higher education is becoming an export commodity,” he said. “I therefore think that it is important that another decade shall not pass before one has found out if the tuition fee model introduced was the model one had planned for,” he added.

“If this is allowed one might lock [oneself] to a model like in Australia, where tuition fees are a necessary source of income for both each individual higher education institution as for the whole society,” Lundin told University World News.

“The tuition fees proportion of the total budget of KTH is continuously increasing, from 5% in 2013 to 12% in 2022. KTH has accumulated a significant surplus from tuition fee paying students, more than SEK47 million in 2020. And instead of lowering the accumulated surplus through lowering the fees, one is investing in ‘excellent higher education courses’ which may be a clear sign that the fees are going to expand more overarching activities.”

Bryntesson, research coordinator at the Higher Education and Research as Objects of Study at the Swedish Centre for Studies of the Internationalisation of Higher Education at Uppsala University told University World News: “I think it’s fair to highlight how the fee levels make an expansion possible through the surplus generated, in line with my argument about marginal costs as well as the adaptation to international fee levels that Lundin points out.

He explained further: “Fees generate a surplus, and since universities cannot generate private profits, the money has to be reinvested. Over time, this eventually starts amounting to significant resources, and it would be surprising if the government eventually doesn’t end up spending less on higher education than if tuition fees had never been introduced.

“Over time we are, therefore, moving closer towards higher education as an export and a revenue that will make possible a gradual reduction of public spending on higher education.”

’Dishonest’ claims of cost neutrality

On the question of whether tuition fees are a game changer, he said: “I would agree with you … but they are a very sneaky and gradual game changer because of how they were introduced. Claiming that fees are cost-neutral when they are not simply covering the marginal costs is dishonest and obscures the logic of the system.

“I doubt that the tuitions fees-bill would have ever passed if it had been clear to everyone that the fees would significantly exceed the costs and even be inflated to internationally comparable levels.

“Like I have highlighted before, this becomes particularly dishonest when it comes to the aid funded scholarships. Sweden essentially converts some of its foreign aid budget into excess revenues for its own higher education institutions.”

He clarified: “I do not mean to say that tuition fees are wrong or unjust as such. Some of the students who came to Sweden when there was no tuition would undoubtedly have been able to pay for it, and I am confident that higher education institutions can use the tuition fee- surplus to make some positive changes and investments.

“There is nothing inherently wrong with wanting well-off international students to help subsidise higher education and research. However, political changes should be transparent in order to make possible an enlightened discussion and decision.

“I know for a fact that there was insufficient information available for such an enlightened discussion to take place when fees were introduced, and believe the reform was presented in a dishonest way as cost neutral.”

Financial incentives

As to questions of market orientation, Bryntesson answered: “In the previous system there were few incentives for higher education institutions to recruit international students apart from wanting to recruit the best students irrespectively of origin and increase internationalisation in order to rise in rankings or increase the quality of higher education and research.

“There is no question about whether the tuition fees reform has made Swedish HE more market oriented. Financial incentives and market pressure have entered that weren’t part of the equation before.”

Professor Erik Renström, vice-chancellor of Lund University and vice-chair of the Association of Swedish Higher Education Institutions internationalisation expert group, told University World News: “At Lund University preparing our students for an international career is paramount. That in turn, requires international students on campus in order to create the multicultural learning environment we are striving for. While the absolute numbers in income from fee-paying students may be high, given the University’s size the relative share of fee-paying students is very low.”

Professor Carl Anders Safstrom, director of the Center of Public Education and Pedagogy at Maynooth university, Ireland, who had several academic positions in Sweden from 1994 to 2017, told University World News that his general concern is that such fees as well as the debate around it, are “a clear sign of the drift of the universities away from their scholarly mission and instead leaning heavily into a general capitalist worldview, with its fixation on ‘markets’ and expansion of those, something the universities of tradition have been alien to, at least not directly themselves being an integrated part of”.

‘Skewed’ by non-scholarly mission

“It could result in the humanities losing ground to science and technology, but there are of course always exceptions on an individual level. I just saw on LinkedIn a vice-rector from Uppsala University talking about the influx of business into supporting research in the university and meeting the critical question about basic research (grund forskning) that the companies do want to have more such research.

“When did it happen that businesses are telling the university what their main task should be? Are universities so lost in late capitalism that they need help understanding their own scholarly task?”

Agneta Bladh, former chair of the Swedish Research Council who chaired the internationalisation report of 2018 to 2019, told University World News: “The model of tuition fees for non-European students in Sweden, introduced some 10 years ago, has emerged as a game changer for some institutions, for which international tuition fee paying students are financially contributing to individual institutions. This is true for some institutions, but not for all.

“The benefits of tuition fees are not [merely] financial, as there after some years also has been a stronger focus on the quality of offered programmes. This is essential. In the long run you cannot have a more qualified training for tuition fee paying students than for Swedish and European students.”

Competition for study places

Regarding the number of studies on the influence of tuition fees, Bladh said: “The different articles mainly focus on the financial situation and the difference between Swedish institutions regarding the tuition fee. The number of students is restricted in Sweden. As a consequence, Swedish students compete with each other with their secondary school certificate or the result on special tests.

“The international students are competing in a similar manner. So, it is not just a competition between institutions. The acceptance rate is different between institutions, between programmes and between years, as it is based on the number of admitted students in relation to the number of applicants meeting the specific admission requirements.

“However, even if the number of international students to Swedish institutions now are larger than before the pandemic, it is another issue how things will develop in this polarised world. The prerequisites for international education are gradually changing, which is not mirrored in the articles.

“So, even if there is a recovery of the student flow after the pandemic at Swedish universities as well as in the world, there has been a stronger focus on non-western parts of higher education, which has led to a stronger regionalisation of higher education.

“Many Asian students prefer to study nearby their homelands instead of moving to the US or Europe. African students will be increasing [in number] as a consequence of the demographic changes, where the African continent will have an increasing young population, while the Asian countries will have a decreasing one.”

Bladh concluded: “The question is whether the behaviour of African students will be the same as has been the case for Asian students before the pandemic. I doubt this, both due to a lower income in African families compared to the Chinese families and to changing attitudes to western higher education.

“Therefore, internationalisation has to go beyond different mobility patterns and focus on true international collaboration, a partnership based on a more plural global setting.

“A way forward may be to have institutional collaboration aimed at supporting students in their home institutions instead of recruiting them to European or US institutions.

“Such a collaboration has to take onboard applications familiar to the students and useful for their home countries, and thus taking advantage of experiences of countries and economies.”