Cost-Sharing as Policy Issue

Higher education systems have been and are continuing to be faced with the task of accommodating growing numbers of students without compromising the quality of education, and without creating undesired inequalities of access. The Council of the European Union stated in its strategy document for 2020 that “high quality will only be achieved through the efficient and sustainable use of resources—both public and private, as appropriate”, whilst stressing that educational opportunity should be open to all citizens “irrespective of their personal, social or economic circumstances” (EU 2009). In 2011, a strategy document, specifically focussed on higher education within the framework of the overall EU strategy for supporting growth and jobs, laid out an agenda for the modernisation of Europe's higher education system (EU 2011). It too called for improvements in the quantity and quality of higher education graduates. Some of this growth should come from attracting “a broader cross-section of society into higher education” (EU 2011). The document stated that the total investment in higher education in Europe was too low, at 1.3 % of GDP on average, behind both US and Japan, and that additional funding sources —“be they public or private”—were necessary (EU 2011). Internationally comparative data sets show that over the last two decades, there has been a shift towards larger shares of private funding of higher education. This tendency can be related to similar trends of privatisation in various areas of public services and administration (Megginson and Netter 2001). Even though higher education is not easily comparable to other types of public institutions, motives to aim for increased shares of private financial contributions in higher education are not unlike what drives privatisation of other social subsystems. They include: restricting public spending in times of severe fiscal constraints; reducing organisational inertia; and increasing efficiency by replacing monopolies through competitive environments, among other things.

The three main issues highlighted in the study as relevant to policy development in cost-sharing are impacts on sustainability, effectiveness and equity.

Sustainability: In the context of very large and in many cases still growing higher education sectors, there is a need to find a funding model that can cope with this challenge. Whilst higher education is seen as a major driver of a nations' economic and social well-being, growth in higher education participation puts enormous strains on the public purse. This has led to higher education institutions (HEIs) diversifying their income sources, often by charging (higher) tuition fees.[1] The advantage of tuition fees over other sources of supplementary income is that they do not tend to add additional costs to the institution or divert academic staff away from their core teaching responsibilities, as might be the case with entrepreneurial activities or research grants. Tuition fees can also represent a significant and reliable share of HEIs' income, unlike other possible sources of private funding (i.e. businesses and private donations).

Effectiveness: This is about high-quality provision of higher education, which

ensures that HEIs can provide students with the best possible training. There is an argument that the introduction of market mechanisms into the higher education system will increase HEIs' responsiveness to the needs of students and the labour market into which they should transition following graduation.

Equity: There are in fact two perspectives to the equity issue. On the one hand,

the equity notion argues that those who benefit directly from higher education should also contribute to its costs. If they do not, students' training is funded by all tax-payers, whether they themselves had a fair chance to study or not. On the other hand, the equity notion focuses on current barriers to higher education participation and places attention on the question of whether additional costs at entry to higher education will increase these barriers, making higher education participation even more unfair than before fees. These two perspectives do not have to be contradictions, since the additional money raised through private revenues can be used to particularly support under-represented groups.

As can be seen from these three issues, changes to cost-sharing are expected to affect the behaviour of institutions of higher education and of students. For this reason, the study adopts a twofold perspective on cost-sharing: firstly, cost-sharing is investigated in terms of the changing balance of public and private revenues for institutions. From the perspective of HEIs, cost-sharing involves changes to the share of public and private funding as income sources (and the respective role of tuition fees, contract income, philanthropic donations, etc. as opposed to state funding). Secondly, the study also adopts the student perspective by investigating the costs students (and/or their families) cover in order to pursue higher education, but also to support themselves while completing their studies. Thus, even in countries without tuition fees, there is still a substantial amount of cost-sharing, because no higher education system covers students' educational and living costs completely.

  • [1] This paper uses the term 'tuition fee' to refer to “any sum of money paid by students with which they formally and compulsorily contribute to the costs of their higher education” (Eurydice 2012)
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