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  • Loans, grants – what else?

    - OECD data shows that a mix of loan and grant financing with moderate tuition fees is most effective in widening HE access given tight budgets. Some countries come up with even more creative solutions linking tuition fees to skills short on the labor market.

    A report by the OECD highlights how much its member states vary in their policies towards higher education financing. Especially "in countries with more progressive tax structures, such as Denmark, Finland, Iceland, Norway and Sweden, students pay low or no tuition fees and have access to generous public subsidies for higher education, but face high income tax rates. By contrast, tuition fees can be much higher in Australia, Canada, New Zealand, the Netherlands and the United States, though students in these countries also have access to significant financial support."

    Average tuition fees in $ (y-axis)
    vs. % of students receiving subsidies (x-axis)

    Average tuition fees vs. public subsidies

    Taking into higher education participation in the respective countries, the OECD suggests that "student financial support systems that provide both loans with income-contingent repayments and means-tested grants  not only promote access and equity at the front end of higher education, but also lead to better outcomes for students at the back end."

    "Charging a moderate level of tuition fees - while simultaneously giving students opportunities to benefit from comprehensive financial aid systems - is an effective way for countries to increase access to higher education, make efficient use of limited public funds, and acknowledge the significant private returns that students receive from higher education."

    "While what constitutes 'moderate' is not easy to define, OECD countries that charge for higher education most commonly have average annual tuition fees ranging from $800 to $1,300 per year for full-time national students enrolled in university-level programmes."

    Tying tuition fees to skills shortage

    Next to student loans and grants, a number of different approaches have become increasingly popular. "Some countries with highly subsidised higher education systems, such as Denmark and Sweden, increased tuition fees for non-European Union students in recent years, joining a long list of countries that charge higher rates for international students."

    "At least 14 OECD member and partner countries differentiate tuition fees among fields of study to account for the higher cost of operating some academic programmes. Australia has even attempted to link the level of fees to labour-market opportunities by lowering tuition fees for fields with skills shortages, in order to attract more students."