Higher education funding rises around the world

At a time when governments are grappling with shrinking public budgets, most are still choosing to invest in higher education, according to a new report. The Organisation for Economic Co-operation and Development’s (OECD) findings reinforce the view that good education and skills are extremely valuable and have helped to insulate well educated workers from unemployment during the economic crisis.

Most OECD countries increased higher education (HE) funding (as a proportion of GDP) between 2000 and 2008, according to the report Education at a glance 2011. Out of 32 with comparable data, only Ireland, Israel and Sweden cut funding.

Private funding of higher education is growing rapidly

Private funds

However, the level of spending varied greatly. The OECD average spend on HE institutions, including both private and public funding, was 1.5 per cent of GDP in 2008. The US (2.7 per cent), Korea (2.6 per cent) and Canada (2.5 per cent) invested significantly more. The UK came in below average at 1.2 per cent, and only Italy, Slovenia and the Slovak Republic spent less.

‘While our universities are experiencing cuts, other nations are pumping billions more into their universities to gain a competitive edge,’ says Wendy Piatt, director-general of the Russell Group, which represents 20 research intensive UK universities. ‘We must aim to bring our investment in HE closer to that of our major competitors, whether through increased public funding, private investment, such as philanthropy, or tuition fees backed by a fair system of loans.’

The report reveals a new trend of increasing private funding for HE with its share increasing in 20 of the 26 countries with comparable data. This share increased by 6 per cent on average, and by more than 15 per cent in the UK, Portugal and the Slovak Republic.

Public good?

Meanwhile, the share of public funding for HE institutions fell, on average, from 74 per cent in 1995 to 67 per cent in 2008 among 19 comparable countries. This trend is mainly influenced by non-European countries, the report explains, where tuition fees are generally higher and businesses supply more grant money.

In terms of public money, on average, OECD countries spend 1 per cent of their GDP on HE. Scandinavian countries were the biggest spenders at around 1.4-1.6 per cent together with New Zealand (1.1 per cent) and Canada (1.5 per cent). The UK again fell below average at 0.6 per cent with only Japan spending less (0.5 per cent).

In 2009, an average of only 21 per cent of HE students received qualifications in science-related fields in OECD countries. The proportion varied from less than 15 per cent in Brazil, Iceland, the Netherlands and the US, to more than 30 per cent in Korea. More than one-third of students graduated in social sciences, business or law. This ranged from fewer than 25 per cent in Finland, Korea and Sweden to more than 50 per cent in the Russian Federation and Slovenia.

With the UK already performing badly in 2008 HE rankings it is set to fall much further in two to three years’ time, says Bahram Bekhradnia, director of the Oxford-based Higher Education Policy Institute. ‘Many countries, including Ireland, which was particularly badly affected by the global economic crisis, have protected educational expenditure at all costs,’ he says. ‘Unfortunately, the UK has not taken this view.’ He is also concerned that private funding is replacing public expenditure. ‘This is happening around the world but [the issue] is more accentuated here in the UK. There is very little scope for more private funding but public funding is not being protected. So, where will the money come from?’

As well as spending trends, the report looked at the value of HE education to the state and to the individual. It found that people with university degrees suffered far fewer job losses during the global economic crisis than those who left school without qualifications. Unemployment rates among university graduates stood at 4.4 per cent on average across OECD countries in 2009. People who did not complete high school faced unemployment rates of 11.5 per cent, up from 8.7 per cent the year before.

The OECD points out that the public benefit that HE graduates generate through higher income tax and social contributions far outweighs the public costs, says the University and College Union general-secretary, Sally Hunt. ‘Public investment in education repays itself many times over, but UK government policy means our workforce is poorly prepared for life in the new knowledge economy.’