Financing of Higher Education

1. Introduction

As most higher education systems in Europe are publically funded, the rampant budget cuts in recent difficult economic times have impacted the higher education sector in many different ways, often having a much bigger impact than the cuts have had on other publicly funded sectors.

Trends such as the massification and internationalisation of HE have increased the student population across the EHEA with around 37.8 million tertiary student enrolled in 2011/2012 (EUROSTAT). In nearly one quarter of EHEA countries public funding for all aspects of HE fell even prior to the financial crisis, between 2005 and 2011 (EHEA 2015). The situation has seemingly deteriorated even more since then.

Though we see increasing student numbers in many countries, there are many barriers preventing students from completing or even beginning their programme. The financial burden on students and their families is a significant factor, compounded by the reduced funding to student financial support and the growing move from grants to loans.

If we are to enhance higher education quality and promote access and progression, sustainable and adequate funding for HEIs and support systems must be secured. ESU strongly believes that such sustainable funding must be allocated according to the notion of education as a public good and public responsibility, as outlined in the Unions’ policy:

''Education is a public good, a public responsibility, and should be publicly steered and supported. Higher education is all too often presented as an expense. Higher education is a general interest of all people, as it contributes to the common good by increasing the general level of education in society. Higher education is a value that should not become subject to economic speculation and prey to the ideologies of privatisation and the shrinking of the state (ESU 2013).

In this chapter we will examine the changing trends in the funding of HE and student finance systems, explore the impact of recent cuts and changes and draw conclusions and recommendations for the future.

2. Main findings

Student Finance
The financial situation for many students has been turbulent in recent years as support systems have been negatively affected by budget cuts, families’ income has decreased and with inflation, the cost of living has grown.

When asked how the financial situation for students in their country has changed since 2012, 31 of the 38 responding NUSes said the situation has deteriorated. Many respondents stated the economic crisis and austerity cuts have been the basis for the deteriorating state of students’ financial situations. NSUM (Macedonia) and DSF (Denmark) explained that the barriers preventing students from working alongside their study is a significant factor making their financial situation worse.

Financial situation of students

Trends of rising fees and shrinking grants were evident across Europe. A growing reliance on loans and less employment prospects following graduation leaves students and graduates with more debt and less working opportunities, a specific concern for ANSA (Armenia) and SFS Sweden.

Cuts to support schemes, including accommodation support and aid for living costs, are affecting students greatly in Austria, the UK, Ireland and Iceland. USI (Ireland) has run a campaign to engage with government to tackle an accommodation crisis in its larger cities with housing shortages and soaring rents marginalising students. In countries where the student support schemes have not been reduced, the situation for students is still deteriorating as support in not increased in line with inflation and increased living costs.

Of the six countries which said the situation has improved for students, Estonia, Norway and Malta reported an increase in student grants as having a positive effect. The economic prosperity in Slovakia has led to a better situation for students, and Hungary has also seen slight improvements in the past three years. In Lithuania, LSS says the decrease in student numbers has not been matched by any decrease in funding, so the overall expenditure per student has increased.

When analysing the answers of ESU’s member unions, the clear connection between cuts in students’ financing and students’ overall financial well‐being has become obvious. On the other hand, where grants have been increased, the situation has been less tense. Additional pressure has been put on students through less possibilities to work beside their studies. These two factors in combination are especially aggravating the situation for students whose socio‐economic background does not allow the compensation of those shortcomings. The representation of students with lower socio‐economic background in higher education is increasingly endangered, as they are furthermore the students to be most affected by the increasing debts resulting of the ongoing shift from grants to loans.

Higher Education Funding

Students are also experiencing difficulties due to their Universities facing cuts and budget decreases. The following is taken from the focus groups held in January 2015 in Jerusalem. Participants were invited to explain the main issues effecting the funding of Higher Education Institutions in their country. The effects from many years of austerity measures and budget cuts were particularly worrying for some countries. In Ireland nearly 80% of the higher education budget is ring fenced for staff pay, leaving front line services and important supports to take the most serious cuts and though the fees have risen to €3000 a year for domestic students the HEIs are still starved of funding. HEIs in Portugal, Latvia and Spain are also struggling with decreased funding due to austerity. In Romania the 6% target for GDP investment in HE is not being met with current levels less than 4%. Though the funding has not been cut as severely in Austria issues are arising as funding is not aligned to demand which is increasing. The sources of funding is an issue in Switzerland with private funding linked to commercial bodies contributing to negative commodification practices. Another problem is seen in Poland where funding is being targeted to certain disciplines, leaving subjects within the humanities grossly underfunded.

Impact of changes to criteria for grants and loans

When completing the BWSE survey NUSes were asked if the commitment of "securing the highest possible level of public funding for higher education and drawing on other appropriate sources, as an investment in our future" in Bucharest Communiqué 2012 had an impact on their higher education system. Of the 36 responding NUSes 31 said no, 3 did not know and 2 said yes, EUL (Estonia) and ANSA (Armenia). EUL linked this commitment to the recent abolishment of tuition fees and ANSA noted a new loan scheme is being proposed. Some of the other respondents, who indicated no impact, explained that public funding has been cut and discussions of Bologna in relation to funding do not happen.

3. Conclusions and considerations for the future

In 2012, the Bucharest Ministerial Conference committed to the idea of higher education as a public good and public responsibility (EHEA 2012). They have also committed to improving the social dimension and creating inclusive learning environments. These commitments demand a higher education system that provides students with a sufficient framework that enables them to thrive throughout their entire learning process. Unfortunately these commitments have not been followed up. We’ve witnessed a higher education system in Europe unfairly affected by austerity measures, grants have been cut or not adjusted to inflation and loans have been introduced in their place. The financial burden is often increasingly shifted to students’ families, which especially affects those from lower socio‐economic backgrounds and other underrepresented groups, contrary to commitments made in the social dimension on improving access specifically for these groups (EHEA 2009, 2010, 2012)

The system is grossly underfunded in many countries leading HEIs to seek private or commercial funding including tuition fees and other practises which are commodifying higher education.

4. Recommendations

In order to ensure accessibility and quality of education for all students’ regardless of their background, higher education must be regarded as a public responsibility and public good. The financing of higher education and students must be prioritised as an area of investment with great impact to the progress in society.

● Students must be provided adequate support through publicly funded grants. These must be seen as an investment in the future by supporting students in their efforts to become active members not only of the labour market, but of society as a whole.

● Student support through grants must be preferred over loans. The consequences of the rising debt of graduates cannot yet be fully predicted but are highly likely to be exceptionally pressing for those from a lower socio‐economic background.

Adequate and comprehensive funding of HE systems as committed to by the Ministers in “securing the highest possible level of public funding for higher education and drawing on other appropriate sources, as an investment in our future" in Bucharest Communiqué 2012 without the burden falling on families.

5. References

European Higher Education Area, Bologna Follow-Up Group (2015). “ECTS Users’ Guide 2015. Draft Version Endorsed by the Bologna Follow-Up Group in November 2014. Subject to Approval by the Ministerial Conference in May 2015”. Brussels.

Conference of Ministers Responsible for Higher Education (2009). The Bologna Process 2020—The European Higher Education Area in the New Decade. Communiqué of the Conference of European Ministers Responsible for Higher Education,Leuven and Louvain-la-Neuve, 28–29 April 2009.

Conference of Ministers Responsible for Higher Education (2010). Budapest-Vienna Declaration on the European Higher Education Area.

Conference of Ministers Responsible for Higher Education (2012). Making the Most of Our Potential:
Consolidating the European Higher Education Area. Bucharest Communiqué.

European Students’ Union (2013). “Policy Paper on Public Responsibility, Governance and Financing of Higher Education”.