Tuition Economics

Campus Report ^ | September 15, 2008 | Bethany Stotts

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Tuition Economics

Bethany Stotts, September 15, 2008

A recent speech by the Secretary-General of the Organization for Economic Co-Operation and Development (OECD), which studies trends within its thirty member-countries, brought home the fact that while tuition costs are rising in America, other developed countries face a similar higher-education financial crunch. Angel Gurría said that “the demand for education in OECD countries has been growing at an accelerating pace, and this rising tide is creating budgetary pressures to increase the offer of education without compromising quality, but tertiary education is not managing to meet this growing demand in many countries and this is quite a risk in a highly competitive globalised economy.”

According to OECD statistics, which can be found in its 2008 Education at a Glance publication, higher education in these countries has seen a 20% rise in participation since 1995. “While in 1995, 37% of an age cohort went into university-level programmes; that number is now 57%,” said Gurría.

The Secretary-General recommended that instead of simply searching for new revenue sources, countries should focus on streamlining their programs and using their resources more efficiently. “While designing policies to bridge this gap, policymakers should not only focus on finding more resources, but on improving the overall management of tertiary education, in helping universities to improve their governance and adopt the latest financial management techniques to deploy their resources more efficiently,” he said.

“Again, it is not only a matter of money; it is a question of policy choices.”

One successful method might be increasing private funding for higher education, he argued. (Many European countries nearly completely fund their universities through progressive taxes without charging tuition).

But Education International, a global union federation spanning 171 countries, vociferously attacked the OECD’s suggestion that private funds might ease government’s strained education budgets....

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“Many European countries nearly completely fund their universities through progressive taxes without charging tuition.”

Proving a simple economic principle. When the person using the service doesn’t have to pay for it, demand for the service increases, the cost of the service goes up, the service rendered has less value, the person using the service loses the ability to demand better quality service, and the quality of the service diminishes.