Category Archives: Policy

Talents’ Migration and the Financing of Higher Education, Paradigms and Paradoxes

By Marcel Gerard, Catholic University of Louvain and CESifo

Until recently, talented people born in one country were educated, worked, retired and died in that same country. For that country, financing higher education, through tuition fees paid by families, foundations or financial institutions providing loans, or through taxes, was an investment generating extra welfare for the local population: larger graduate income meant extra tax revenues, better wealth, improved productivity of both high and low skilled people. These positive externalities justified and even guided an efficient and fair sharing of the cost of studies between tuition fees and tax financed subsidies. That was the old paradigm.

Nowadays the story is different. Talented students are international. Cross border spillovers are at work: the country which hosts them for higher education is neither their place of birth and first education, nor of work after graduation. And the jurisdiction which finances the studies is no longer that which benefits from the enrichment of that human capital. Even more, studying abroad is a driver for subsequently working abroad.[1]

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Why the Australian system is not the holy grail of HE

A recent report by the much respected Higher Education Policy Institute (HEPI)  recommends that UK policymakers pay much closer attention to Australia’s ‘advanced’ university funding system, which shares many of the features of the UK system, but at considerably lower taxpayer expense.

It is easy to see why HE finance policymakers should be tempted to look at Australia for inspiration. The recent finding that the RAB charge – or the proportion of unpaid student loan debt, that is covered by the taxpayer – may reach 45% shocked many. An IFS report out on Thursday put the figure at 43.3%. This means for every £1 lent to students 45p is not recovered. By contrast, the Australian equivalent – at 25% for standard tuition fee loans – is a much healthier figure.

On the surface, this would seem reason enough to adopt the features of the Australian tuition fee system. But this could result in unintended consequences if not thought through thoroughly. Continue reading →

Who pays for free higher education? The case of Scotland

By Lucy Hunter Blackburn

Student debt is not really an issue in Scotland.  This common belief is based on the country’s well-known policy of free tuition. It is pretty much true, for Scots whose families can cover their living costs in cash or kind.  The picture is different, however, for those whose starting point is less privileged. Indeed, Scotland is an instructive case for what happens when fees become the whole focus of political debate about student debt and “ability to pay”.

Lucy Hunter Fig 1

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