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European Commission: a study on cost-sharing in higher education

This month the European Commission has published a report which looks into how public and private funding is managed in higher education systems in nine countries (Austria, Canada, UK-England, Finland, Germany, Hungary, Poland, Portugal and South Korea) in order to examine and understand the effects that cost-sharing changes have on students and higher education institutions. These changes mainly imply more reliance on private funding, whether through the introduction or increase of tuition fees, reduction of student support (grants and loans) or through national policies which focus on private institutions and back student enrolment in those with no state dependence. 

Although the main findings do confirm some of the recognised challenges in higher education, they also point to a number of misconceptions which have become widely accepted as truisms but do not necessarily reflect reality in the nine countries analysed in the study. 

For example, the study shows that rises in fees - unless the rise is extremely big - do not seem to have a visible negative effect on the overall demand and enrolment. Almost all of the nine countries examined have had increases in enrolment regardless of tuition policies. This is not surprising knowing that in most countries the rise in fees was followed by a rise in student aid. Moreover, the few cases of reduced enrolment are linked to demographic changes rather than fee rises. Equally, it appears that the fee-related income is not what makes higher education institutions more responsive to market and student demand. Responsiveness is rather attributed to other funding schemes such as those with a per-student approach, or to the questions of prestige universities claim, or simply to the developments in government policy making. The study finds that higher education institutions rarely have such a high level of autonomy to make radical changes in their activities. What does make a difference in market responsiveness, however, is the introduction of new universities or new, specific types of public institutions (as in the case of polytechnics in Finland in the 1990s or the Fachhochschulen in Germany).

Overall, tuition fees income is shown to contribute to the system by increasing the total of the resources available. However, the increased resources are not necessarily invested in improving the experience of students or the quality of teaching, best illustrated by the trend of the students-per-staff ratio to increase over time. It is partially because higher education institutions tend to focus more on expanding – having more students - than improving quality. Another reason is the cost-inflation of academic staff, while there is another factor at play, which is the rise in costs of non-instructional activities, such as administration and management in countries like Canada or England, or research activities, which are on the rise in most countries. 

In conclusion, what is once again confirmed by the study is a persisting lack of data in higher education, sometimes even of the most basic information like institutional income sources or the tuition fee payments. Even in the light of this scarcity, the study provides useful models of cost-sharing, their effects on institutions and students, as well as some trends in higher education with regard to participation and completion.