Hans Vossensteyn

eua.be

Hans Vossensteyn

Impact of tuition fees

Ways to accommodate the impact of

tuition fees on access to higher education

Hans Vossensteyn

Center enter for Higher igher Education ducation Policy olicy Studies tudies

EUA Conference

Hamburg 31 M · a · r · c · h - 1 A · p · r · i · l 2 · 0 · 0 · 6


subsidies,

grants

HE

institutions

Tuition fees,

grants, scholarships,

tuition waivers, loans

Flows in student financing

budget,

guarantees

GOVERNMENT

budget,

guarantees

intermediaries

/ banks

loans, grants, scholarships,

tuition waivers

STUDENTS

loans

free earning

amount

tax benefits,

family allowances

parents

parental

contributions

jobs


Financial

benefits

Non-

financial

benefits

Benefits and costs of HE

Private Social

• Higher wages (productivity)

• Higher chance of work

• Higher savings

• Higher mobility

• Consumption

• Better working conditions

• Higher personal status

• Higher work satisfaction

• Better health

• Better financial managem.

• More leisure

• Personal development

Costs • Tuition fees & other costs

• Foregone earnings

• Higher national production

• Higher tax income

• More flexible labour force

• Higher consumption

• Less financial dependency on

government

• Social cohesion

• Social mobility

• Cultural development

• Lower crime

• More charity

• Greater technology adaptation

• Democratic participation

• Operational costs

• Student support

• Foregone national production

BUT… BUT differences between countries, countries,

disciplines,

institutions,

institutions,

individuals,

individuals,


no or token fees

substantial fees

Tuition policies

tuition set by:

government institutions

most of Europe,

Africa, Asia,

Latin-America

Australia, NL,

US (public),

Canada

n.a.

New Zealand,

US (private),

UK, Canada


Students

How to accommodate &

who to subsidize ?

GOVERNMENT

Grants? Work-study? Loans? Debt remission?

Parents

Graduates


Subsidizing students:

equity at time of enrolment

budget,

guarantees

no/low tuition,

basic grants,

means-tested grants,

interest free loans

Scandinavian countries

But also: Canada, U.S.

GOVERNMENT

intermediaries

STUDENTS

parents

voluntary

parental

contributions


France

Germany

Belgium

Canada

budget,

guarantees

no/low tuition,

means-tested

grants/scholarships

loans

Subsidizing families:

equity of origin

GOVERNMENT

intermediaries

STUDENTS

tax benefits,

family allowances,

learning accounts

PARENTS

Legal/moral

parental

contributions


Australia

Subsidizing graduates:

lifetime equity

budget,

guarantees

deferred tuition, loans,

interest subsidies,

debt remission,

income contingent repayment

United Kingdom

GOVERNMENT

intermediaries

Students /

graduates

parents

voluntary

parental

contributions


A superior approach ?

Is subsidizing students less expensive than subsidizing

parents or graduates ?

… it depends on generosity

Which approach promotes access best ?

… it depends on information / perception

Can or should we choose one apporach over the other ?

… it depends on goals, tradition, politics & information


Impact of tuition fees &

student support

Interesting

international examples


HEI’s

subsidies,

grants

access policies

UK:

shift to tuition & loans

GOVERNMENT

budget,

guarantees

intermediaries

loans, tuition waivers,

access & hardship funds

STUDENTS

parents

parental

contributions


Amount (£)

5,000

4,000

3,000

2,000

1,000

0

Source: DfEE

UK: replacing grants by loans

1988/89

Student Maintenance - Grant and Loan Rates

Grant

Loan

1990/91

1991/92

1992/93

1993/94

1994/95

Year

1995/96

1996/97

1997/98

1998/99

1999/00


UK: increased borrowing


UK: current loans

As from 1999: income contingent loans

Used to be only for living expenses !

- tuition remained an up front payment (not anymore)

Repayment conditions

- income contingent, repay 9% of all income over £10.000 / year

(£15.000 / year as from April 2005)

- through tax authorities

- zero real rate of interest

Experiences

- loans too small, students remain poor credit card debt; work

- debt aversion, particularly low-income students (tuition + full loans ?)

- average debt: £9.000

- recent decrease in applications, but how will this develop in few years?


Australia (HECS):

emphasis on graduates

budget,

guarantees

deferred tuition,

grants, loans

GOVERNMENT

intermediaries

STUDENTS

parents

parental

contributions


Australia: HECS

As from 1989: tuition fees

Up-front or deferred through taxes

- income contingent repayment (low earnings: no or low repayment)

Several tuition increases and differentiation

- differences by discipline

- some institutional freedom

- lower repayment thresholds

Experiences

- substantial increase in HE participation

- NO changes in students’ socio-economic composition

- even not by discipline

- debt is rapidly repaid


HEI’s

subsidies,

grants

tuition, social

services,

scholarships, loans

US / Canada:

complex shared responsibility

GOVERNMENT

budget,

guarantees

intermediaries

tuition waivers,

grants, loans

STUDENTS

tax benefits,

family allowances

parents

parental

contributions


US / Canada: complexity

Low & high tuition alternatives

Grants, scholarships, subsidised / unsubsidised loans,

debt forgiveness, parental savings plans, tax deductions, …

General increase in private contributions

Impact

- support too little, students remain poor …

- students do not know what they get: avoid risk

- lower-SES pushed away from expensive institutions

- good information can make a difference (early intervention programs)


Scandinavia: NO tuition

students financially independent:

budget,

guarantees

no tuition,

basic grants,

loans

GOVERNMENT

intermediaries

STUDENTS

parents

voluntary

parental

contributions


Sweden: equitable but

strong emphasis on loans

No tuition fees. Periodical debate, but not yet strong enough?

Relatively low graduate earnings (flat wage structure)

Grants and loans are given in a package to all students

- grants (€67 per week); loans (€128 per week)

Experiences: many students take up loans

Limited number of student places


Other examples

Netherlands: gradual tuition increase / grant decrease

- differences in students’ perceptions, but …

- no changes in student composition

Austria: sudden introduction of tuition fees / loans

- initial decrease in enrolment (mainly no-show students)

- after 2 years re-established enrolment pattern

Ireland: abolished tuition fees (mid 1990s)

- no change in enrolment patterns

Central & Eastern Europe: dual tuition fees

- tuition fees for part-time students, extra students, private higher education

- no impact data, but increased opportunities for lower-SES students

In countries with loans: average debt very limited

Nevertheless everywhere strong equity debates


Wrap up: recommendations

Large variation in tuition & support practices

Most systems are complex: keep it simple !

Often substantial hidden subsidies: make visisble

Tuition & support limited impact: focus on low-SES students

Students, parents & media: poor information & biased perceptions:

COMMUNICATE !

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