Some European nations in ‘real trouble’ on HE funding, OECD warns

Higher education investment in a number of European countries is falling significantly behind other developed nations because governments are failing to tackle a funding shortage by either boosting public spending or allowing fees to rise, it has been warned.

Andreas Schleicher, the Organisation for Economic Cooperation and Development’s director for education and skills, said that a number of countries’ systems were in “real trouble” because of the “bind” they were in over which path to follow.

Mr Schleicher was speaking to Times Higher Education about the OECD’s latest Education at a Glance report, an annual snapshot of the state of education across the developed world, published on 12 September.

It shows spending per higher education student significantly falling behind the OECD average in a number of European countries such as Spain, Italy, Slovenia and Portugal, while even countries with reputations for strong university systems, such as Germany and Finland, are failing to keep pace with the US and UK.

More detailed figures show that in some nations this is being caused either by funding failing to keep pace with the continued expansion of student numbers or large drops in spending, and in some cases both.

Mr Schleicher said that many countries had set a goal of improving their higher education system, given the strong evidence there was for it fostering economic growth and prosperity, but at the same time had failed to back it up with a funding solution.

“There are a fair number of European countries…where you can see investment in higher education is declining. They have put themselves in this bind where they are not able or willing to put in more public money and they are not allowing institutions to charge tuition,” he said.

“It works either way. You can go the Swedish or Norwegian route, where you say it is a great investment for the public purse – people pay back with higher [taxes] – or you can take the UK route [and raise fees].

“What doesn’t work is what many other European countries have tried: basically, constraining higher education spending.”

Overall, the OECD figures show that the US spent the most on higher education in 2014 as a percentage of gross domestic product at 2.7 per cent – 0.9 per cent from public sources such as state investment and 1.7 per cent from private sources such as fees. Canada is second (2.6 per cent: 1.3 per cent public, 1.3 per cent private) and South Korea third (2.3 per cent: 1 per cent public; 1.2 per cent private).

The UK’s private investment in higher education in 2014 far outstripped public investment – 1.3 per cent compared with 0.6 per cent – reflecting the growing importance of fees as opposed to direct government funding. Spending per student is also rising in the country at a faster rate than in many nations, and it is now one of the highest in the OECD at just over $24,500 (£18,600).

Such a trend, driven by the hike in fees, is likely to raise questions about whether quality is improving at the same rate, especially given the debate raging in the UK about grade inflation and rising pay for vice-chancellors.

Mr Schleicher said that since there were no comparable data on learning outcomes for different countries, it was difficult to pinpoint whether the large per-student spends in some nations were actually improving quality.

However, he added that results from the OECD’s international school testing programme – the Programme for International Student Assessment (Pisa) – showed “that there is essentially no relationship between spending per student and school performance once you get beyond a certain threshold in spending”, a point that most OECD countries had already passed.

Although it was not clear if this could also be applied to higher education, he said that this did suggest that “some countries are making much more effective spending choices than others” although he also cautioned that “of course, if you take money out of a system you will most certainly see deteriorating results”.

Nick Hillman, director of the Higher Education Policy Institute, said that the “value for money” debate was bound to rage on, especially given the availability of new technology such as online courses. However, he added that the issues were often more complicated than people assumed.

“People want to learn from people as well as from technology, which is why massive open online courses have not had the full impact that many people predicted, and employing people tends to mean costs rising quite fast. Moreover, many world-class learning facilities can’t be bought on the cheap.”

simon.baker@timeshighereducation.com