Cost of degrees shifted onto students as participation soars

Public investment in higher education as a share of national wealth appears to be declining across developed nations even as participation hits new highs, a new report suggests.

The Organisation for Economic Cooperation and Development’s annual Education at a Glance data set also points to growing private investment in universities, with fees rising in a number of countries.

According to the report, published on 16 September, public spending on tertiary education as a share of gross domestic product fell 8 per cent on average across OECD countries between 2012 and 2018.

The share of funding for higher education institutions that was sourced from public rather than private sources also fell in more countries than it rose over the period.

“With public budgets tightening, many educational systems are turning increasingly towards the private sector for additional investment, particularly at tertiary level,” it adds.

The trend was also apparent from data on tuition fees. Charges for bachelor’s degrees for domestic students rose by more than 20 per cent over the last decade in real terms in about a third of nations with available data, including England, Italy and Spain.

The apparent shift away from public funding in some countries came as the share of 25- to 34-year-olds with a tertiary degree increased rapidly over the past decade; on average across OECD nations 45 per cent of this age group held a degree in 2020, up from 37 per cent in 2010.

It may lead to questions over whether expanding participation is fuelling public pressure for some nations to scale back higher education funding as costs to taxpayers rise.

Andreas Schleicher, the OECD’s director for education and skills, said that similar debates happened on school education 100 years ago, but “today people take it for granted that equipping all youths with strong baseline skills is an essential public and economic good”.

“As long as the public and fiscal returns to tertiary education remain strong…I think there is a strong case for continued public investment,” he said. 

Simon Marginson, professor of higher education at the University of Oxford, said there was no “iron law” that increased participation should lead to lower public investment and such a decision was “politically determined”.

He said that England, where the Westminster government’s rhetoric has moved against higher university participation in recent years, should not be taken as a yardstick for the rest of the world.

“Very many countries exceed UK levels of participation without pushback and some successful economies and societies – such as South Korea, Taiwan, Finland – have 80 per cent plus university participation without blinking,” he said.

Opponents of university funding may also seize on the latest OECD data on graduate wage premiums showing that the earnings advantage of tertiary-educated younger adults fell by 6 percentage points between 2013 and 2019.

The report says one factor could be younger generations facing “more competition in the labour market due to the rapid expansion of tertiary education”.

But Professor Marginson said basing funding decisions on this indicator would ignore important explanations for graduate premiums, including income inequality and non-graduates being poorly paid in some nations.

He said university sectors arguing for more public investment should instead “point out that higher education enriches in many ways every person who engages properly in it, which is why each year an ever-growing number of families and students want to access it, in the UK and across the world”.

simon.baker@timeshighereducation.com