overview of higher education trends: returns and financing highlights from eag 2014
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Overview of Higher Education Trends: Returns and Financing Highlights from EAG 2014. 2 9 September 2014 Patricia Mangeol OECD Higher Education Programme Directorate for Education and Skills. Key Questions on OECD Trends. Higher education attainment and returns - PowerPoint PPT PresentationTRANSCRIPT
Overview of Higher Education Trends: Returns and FinancingHighlights from EAG 2014
29 September 2014
Patricia MangeolOECD Higher Education ProgrammeDirectorate for Education and Skills
• Higher education attainment and returns – What is the relationship between HE and Skills?– Is higher education still a strong protection against
unemployment? – What are some of the non-financial returns?
• Financing higher education– How much do countries spend per student across the OECD
and who pays?– How have funding models and student aid systems evolved?
• Impact of the crisis and key challenges:– Impact of crisis on returns and financing– How to make HE high quality and relevant to the labour
market, while maintaining affordability and expanding access?
2
Key Questions on OECD Trends
3
The Rate of People with HE Still RisesIs
rael
Uni
ted
Sta
tes
Ger
man
yB
razi
lE
ston
iaA
ustr
iaR
ussi
an F
eder
atio
nF
inla
ndC
hile
Tur
key
Italy
Den
mar
kM
exic
oS
witz
erla
ndN
ew Z
eala
ndC
anad
aS
lova
k R
epub
licIc
elan
dA
ustr
alia
Gre
ece
Sw
eden
EU
21
Ave
rage
OE
CD
ave
rage
Nor
way
Hun
gary
Net
herla
nds
Cze
ch R
epub
licU
nite
d K
ingd
omLa
tvia
Por
tuga
lB
elgi
umS
love
nia
Spa
inF
ranc
eLu
xem
bour
gIr
elan
dJa
pan
Pol
and
Kor
ea
- 10
0
10
20
30
40
50
60
70
-10
0
10
20
30
40
50
60
70
Difference between the 25-34 and 55-64 year-old population with tertiary education (right axis)Proportion of the 25-34 year-old population with tertiary education (left axis)Proportion of the 55-64 year-old population with tertiary education (left axis)% Percent-
age points
Chart A1.3 – EAG2014
25-34 and 55-64 year-olds with tertiary education, and percentage-point difference between these groups
4
Educational Upward Mobility in Many Countries – With Large Variations
Czech RepublicGermany
AustriaUnited States
Slovak RepublicItaly
NorwayDenmark
England/N. Ireland (UK)Spain
AverageAustralia
JapanSwedenEstoniaCanada
NetherlandsPolandIrelandFrance
Flanders (Belgium)Finland
KoreaRussian Federation*
- 10 20 30 40 50 60 70
Upward mobility
Downward mobility
Chart A4.3 – EAG 2014
Percentage of 25-64 year-old non-students whose educational attainment is higher than (upward mobility) or lower than (downward mobility)
5
But Mobility Did Not Trickle Down to the Disadvantaged
Japa
n
Cana
da
Norw
ay
Swed
en
Esto
nia
Germ
any
Denm
ark
Neth
erla
nds
Aust
ralia
Flan
ders
(Bel
g...
Unite
d St
ates
Russ
ian
Fede
rat..
.
Finl
and
Aver
age
Engl
and/
N. Ir
ela.
..
Aust
ria
Irela
nd
Fran
ce
Kore
a
Pola
nd
Slov
ak R
epub
lic
Czec
h Re
publ
ic
Spai
n
Italy
-
10
20
30
40
50
60
70
80
90
100
Parents with tertiary educationParents with upper secondary or post-secondary non-tertiary education as highest level of attainmentParents with educational attainment below upper secondary education
%
Chart A4.1 – EAG 2014
Parents with tertiary education
Percentage of 20-34 year-olds in tertiary education, by parental attainment (2012)
HE AND SKILLS
6
7
HE and Skills: A Rocky RelationshipJa
pan
Net
herla
nds
Finl
and
Sw
eden
Aus
tralia
Cze
ch R
epub
lic
Flan
ders
(Bel
gium
)
Nor
way
Uni
ted
Sta
tes
Ave
rage
Pol
and
Aus
tria
Eng
land
/N. I
rela
nd (U
K)
Slo
vak
Rep
ublic
Fran
ce
Ger
man
y
Den
mar
k
Irela
nd
Kor
ea
Can
ada
Est
onia
Spa
in
Italy
Rus
sian
Fed
erat
ion
200
220
240
260
280
300
320
Below upper secondary education Upper secondary or post-secondary non-tertiary education Tertiary education
Chart A1.4 – EAG 2014
Mean literacy score, by educational attainment (2012)
8
Proportions of Highly Literate, Tertiary Educated Adults Vary Across Countries Ja
pan
Finl
and
Net
herla
nds
Sw
eden
Aus
tralia
Nor
way
Flan
ders
(Bel
gium
)
Eng
land
/N. I
rela
nd ..
.
Uni
ted
Sta
tes
Cze
ch R
epub
lic
Ave
rage
Pol
and
Can
ada
Aus
tria
Ger
man
y
Irela
nd
Fran
ce
Den
mar
k
Est
onia
Slo
vak
Rep
ublic
Kor
ea
Rus
sian
Fed
erat
ion
Spa
in
Italy
0
5
10
15
20
25
30
35
40
Below upper secondary education Upper secondary or post-secondary non-tertiary education
Tertiary education%
Chart A1.5 – EAG 2014
Percentage of adults scoring at literacy proficiency Level 4/5 in the Survey of Adult Skills, by educational attainment (2012)
9
And Skill Levels Matter for Earnings, Even Within the Same Education Level
Below upper secondary ed-
ucation
Upper secondary or post-sec-
ondary non-ter-tiary education
Tertiary edu-cation
All levels of ed-ucation
0
1000
2000
3000
4000
5000
AverageEquivalent USD Level 4 or 5
Level 3
Level 2
Level 1 or below
Mean monthly earnings, by educational attainment and literacy proficiency level – Average
Chart A6.4 – EAG 2014
10
RETURNS TO HIGHER EDUCATION: RECENT
FINDINGS
11
Individuals with HE Have Higher Employment Rates …Ic
elan
d 18
Norw
ay 2
5Sw
itzer
land
21
Swed
en 2
5Ge
rman
y 30
Neth
erla
nds 2
5Au
stria
31
Denm
ark
25La
tvia
34
Braz
il 19
Slov
enia
38
Israe
l 38
Luxe
mbo
urg
22Po
land
45
Belg
ium
37
Aust
ralia
18
Fran
ce 2
9Fi
nlan
d 29
Chile
1 24
Unite
d Ki
ngdo
m 2
7Ne
w Z
eala
nd 1
6Cz
ech
Repu
blic
43
OEC
D av
erag
e 28
Russ
ian
Fede
ratio
...Es
toni
a 32
Port
ugal
19
Cana
da 2
5M
exic
o 16
Unite
d St
ates
27
Slov
ak R
epub
lic 4
9Ire
land
36
Japa
n
Hu
ngar
y 41
Italy
28
Spai
n 28
Kore
a 12
Turk
ey 2
5Gr
eece
2420
30
40
50
60
70
80
90
100
Below upper secondary education Upper secondary or post-secondary non-tertiary education Tertiary education%
Percentage point difference in em-ployment rates between people with below upper secondary and ter-tiary qualifications
Chart A5.1 – EAG 2014
12
... And Higher EarningsH
unga
ry
Gre
ece
Slo
veni
a
Turk
ey
Irela
nd
Cze
ch R
epub
lic
Aus
tria
Pol
and
Uni
ted
Sta
tes
Fran
ce
Slo
vak
Rep
ublic
Ger
man
y
EU
21
aver
age
Luxe
mbo
urg
OE
CD
ave
rage
Por
tuga
l
Isra
el
Finl
and
Can
ada
Italy
Sw
itzer
land
Net
herla
nds
Uni
ted
Kin
gdom
Spa
in
Kor
ea
Aus
tralia
Japa
n
Sw
eden
Den
mar
k
Bel
gium
Est
onia
Nor
way
New
Zea
land
100
120
140
160
180
200
220
240
Men Women
Tertiary-type A or advanced research pro-grammes
Index
Chart A6.1 – EAG 2014
Relative earnings, by educational attainment and gender (2012); upper secondary education = 100
13
Individuals with HE Have Better Social Outcomes/ Enjoy Better Quality of Life
Below upper secondary education
Upper sec-ondary or post-sec-
ondary non-tertiary educa-
tion
Tertiary ed-ucation
All 50
60
70
80
90
100Level 1 or below Level 2 Level 3 Level 4 or 5
Below upper secondary education
Upper sec-ondary or post-sec-
ondary non-tertiary educa-
tion
Tertiary ed-ucation
All 10
20
30
40
50
60Level 1 or below Level 2 Level 3 Level 4 or 5%
Below upper secondary education
Upper sec-ondary or post-
secondary non-tertiary education
Tertiary educa-tion
All 5
10
15
20
25
30Level 1 or below Level 2 Level 3 Level 4 or 5%
Below upper secondary education
Upper sec-ondary or post-
secondary non-tertiary education
Tertiary educa-tion
All 5
10
15
20
25
30 Level 1 or below Level 2 Level 3 Level 4 or 5%
Proportion of adults reporting that they are in good health Proportion of adults reporting that they believe they have a say in government
Proportion of adults reporting that they volunteer at least once a month Proportion of adults reporting that they can trust others
Chart A8.1 – EAG 2014
14
Returns to HE: Is the Investment Worth It?
Turk
eyD
enm
ark
Spa
inE
ston
iaS
wed
enN
ew Z
eala
ndG
reec
eK
orea
Japa
nC
anad
aS
lova
k R
epub
licP
olan
dN
orw
ayIs
rael
Cze
ch R
epub
licFr
ance
Aus
tralia
Finl
and
OE
CD
ave
rage
Por
tuga
lE
U21
ave
rage
Aus
tria
Uni
ted
Kin
gdom
Net
herla
nds
Italy
Bel
gium
Slo
veni
aG
erm
any
Uni
ted
Sta
tes
Hun
gary
Irela
nd
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
500 000
Equ
ival
ent U
SD
Man with HE, compared with returns from upp sec or post-sec. non-tertiary
Chart A7.1 – EAG 2014
• Net public and private returns increase with the level of education, both for individuals and the public
• “Net present value”: complex calculation and caution needed– Social outcomes are not included – hard to measure but important– No distinction along key aspects like field of study– Contextual factors have an impact (local employment regulations,
tax systems, etc)• But useful to have a broad picture and take into account
both the direct and indirect costs and benefits of HE E.g. foregone earnings, foregone tax revenues for government, but also lesser social transfers
• The question of a potential “oversupply” of HE educated people on returns – no clear answer 15
Returns to HE: What to Keep in Mind
HE FINANCING TRENDS
16
17
State of HE Funding: Per Student Expenditures
Uni
ted
Sta
tes
Sw
itzer
land
Den
mar
kS
wed
enN
orw
ayFi
nlan
dN
ethe
rland
sG
erm
any
Japa
nA
ustra
liaIre
land
Bel
gium
Fran
ceA
ustri
aU
nite
d K
in...
Spa
inIs
rael
Bra
zil
New
Zea
land
Slo
veni
aIta
lyK
orea
Pol
and
Por
tuga
lC
zech
Rep
u...
Hun
gary
EU
21 a
vera
geIc
elan
dC
hile
Turk
eyS
lova
k R
epu.
..M
exic
oE
ston
iaLa
tvia
Indo
nesi
a
02 0004 0006 0008 000
10 00012 00014 00016 00018 00020 00022 00024 00026 00028 000
OECD average
Expenditure per student (equivalent USD con-verted using PPPs)
Annual expenditure per student by educational institutions for all services, tertiary education (2011)
Chart B1.2a– EAG 2014
18
State of HE Funding: Cumulative Expenditures (Over Duration of Studies)
Den
mar
k
Sw
eden
Net
herla
nds
Finl
and
Sw
itzer
land
Uni
ted
Sta
tes
Aus
tria
Japa
n
Ger
man
y
EU
21 a
vera
ge
Fran
ce
Spa
in
Irela
nd
Bel
gium Ita
ly
Cze
ch R
epub
lic
Uni
ted
Kin
gdom
Icel
and
Isra
el
New
Zea
land
Pol
and
Est
onia
Kor
ea
Slo
veni
a
Slo
vak
Rep
ublic
Hun
gary
Mex
ico
Turk
ey
0
20 000
40 000
60 000
80 000
100 000
120 000
In equivalent USD conver-ted using PPPs
OECD average
Each segment of the bar represents the annual expenditure by educational insti-tutions per student. The number of seg-ments represents the average number of years a student remains in tertiary educa-tion.
Cumulative expenditure per student by educational institutions over the average duration of tertiary studies (2011)
Chart B1.4– EAG 2014
19
Annual Spending Per Student and Rate of Change Between 2005 and 2011
-30 -20 -10 0 10 20 30 40 50 60 705 0007 0009 000
11 00013 00015 00017 00019 00021 00023 00025 00027 000
United States
SwitzerlandDenmarkSweden
Norway FinlandNetherlands Germany JapanIrelandBelgium FranceAustria
SpainIsrael
United Kingdom
Brazil ItalyKoreaPolandPortugal Czech Republic
HungaryChileSlovak RepublicMexico EstoniaIceland
Russian Federation
New Zealand
SloveniaR² = 0.0789910852395619
Change in expenditure per student between 2005 and 2011 (%)
Annual expenditure per student (2011,
USD)
Tertiary education
OECD average
OECD av-erage
Tertiary Education
Chart B1.5– EAG 2014
20
State of Financing: Private Expenditures Represent a Larger Share…
Chi
le
Kor
ea
Uni
ted
Kin
gdom
Japa
n
Uni
ted
Sta
tes
Aus
tralia
Isra
el
Can
ada
Rus
sian
Fed
erat
ion
Italy
Mex
ico
Por
tuga
l
OE
CD
ave
rage
Net
herla
nds
Pol
and
Slo
vak
Rep
ublic
Spa
in
EU
21 a
vera
ge
Est
onia
Irela
nd
Fran
ce
Cze
ch R
epub
lic
Ger
man
y
Slo
veni
a
Aus
tria
Sw
eden
Bel
gium
Icel
and
Den
mar
k
Finl
and
Nor
way
0
10
20
30
40
50
60
70
80
90
2011 2008 2000%
Share of private expenditure on tertiary educational institutions (2000, 2008 and 2011)
Chart B3.3 – EAG 2014
21
… But With Large Differences in Recent Patterns Across Countries
Chi
le
Kor
ea
Uni
ted
Kin
gdom
Japa
n
Uni
ted
Sta
tes
Aus
tralia
Isra
el
Can
ada
Rus
sian
Fed
erat
ion
Italy
Mex
ico
Por
tuga
l
OE
CD
ave
rage
Net
herla
nds
Pol
and
Slo
vak
Rep
ublic
Spa
in
EU
21 a
vera
ge
Est
onia
Irela
nd
Fran
ce
Cze
ch R
epub
lic
Ger
man
y
Slo
veni
a
Aus
tria
Sw
eden
Bel
gium
Icel
and
Den
mar
k
Finl
and
Nor
way
- 10- 5 0 5
10 15 20 25 30 35 40 45 50
Difference 2000-2008 Difference 2008-2011 Difference 2000-2011
Percentage points
Change (in percentage points) in the proportion of private expenditure between 2000 and 2011
Chart B3.3 – EAG 2014
22
Fees and Student Aid – Select OECD Countries
0 25 50 75 100 0
1 500
3 000
4 500
6 000
7 500
Australia
AustriaBelgium (Fl.)
FinlandFrance2
Italy
Japan 3
Netherlands
New Zealand
NorwaySweden
United States1
Switzerland
Chile4
Denmark Turkey
United Kingdom
Mexico
Average tuition fees charged by public institutions, first degrees programmes, in USD
Belgium (Fr.) (Fr.)
% of students who benefit from public loans AND/OR scholarships/grants
Chart B5.1– EAG 2014
Relationship between:• average tuition fees charged by public institutions and • proportion of students who benefit from public institutions and proportion of students who
benefit from public loans and/or scholarships/grants in tertiary-type A education (2011)
For full-time national students, in USD converted using PPPs for GDP, academic year 2010/11
23
Financing Models and Access in Select OECD Countries: What Interactions?
Model 1 Model 2 Model 3 Model 4Tuition fees No/low High
(> 1500 USD)High(>4500 USD)
Low(<1300 USD)
Student support systems
Well-developed(> 55% of students receive aid)
Well-developed (>75% of students receive aid)
Less developed Less developed(<40% students receive aid)
Countries Denmark, Finland, Iceland, Norway, Sweden
Australia, Canada, Netherlands, New Zealand, United Kingdom, United States
Chile, Japan, Korea Austria, Belgium, Czech Republic, France, Italy, Mexico, Poland, Portugal, Switzerland, Spain
Entry Rates in Tertiary Type A compared to OECD average (59%)
Above average: 74%
Above average: ranging from 64% in the UK to 96% in Australia (due in part to high number of internat. students)
Below average in Chile (45%) and Japan (52%), but significantly above average in Korea (69%)
Below average: 56% (In Belgium, relatively low rate counterbalanced by high entry rate in tertiary type 5B)
Recent changes
Introducing tuition fees for international students (Denmark and Sweden, 2011)
The Netherlands and the UK moved from model 4 to model 2 since approx. 1995 and with recent fee hikes in UK
Reforms to enhance student support systems in Japan and Korea, in addition to existing fee reductions/ exemptions for top students with financial barriers
Since 1995, reforms to increase tuition fees in public institutions (in particular in Austria and Italy)
24
• Ireland is not easy to fit into the four models: tuition fees were abolished but the “student charge” represents an increasing cost to the individual
• Any increase in student charge / tuition fees should be accompanied by the development of robust student aid systems
Issues for Ireland
25
RECENT TRENDS AND IMPACT OF THE CRISIS
26
People Without an Upper Secondary Education Face A Rising Unemployment Risk
Kore
aM
exic
oBr
azil
Nor
way
Chi
leAu
stra
liaLu
xem
bour
gN
ew Z
eala
ndN
ethe
rland
sIc
elan
dAu
stria
Switz
erla
ndTu
rkey
Den
mar
kIs
rael
Uni
ted
Kin
gdom
Can
ada
Finl
and
Belg
ium
Rus
sian
Fed
erat
ion
Italy
Swed
enG
erm
any
OE
CD
ave
rage
Fran
ceSl
oven
iaU
nite
d S
tate
sPo
rtug
alEU
21 a
vera
gePo
land
Esto
nia
Hun
gary
Latv
iaIre
land
Gre
ece
Cze
ch R
epub
licSp
ain
Slov
ak R
epub
lic
0
10
20
30
40
50
2012 2005 2010
Below upper secondary educationUnemployment rates 25-64 year-olds, by educational attainment – below upper secondary education
%
27
Those with an Upper Secondary Education Are Not Immune to Unemployment
Norway
Switzerl
and
Austra
lia
Icelan
d
Netherl
ands
Japa
n
German
y
Czech
Rep
ublic
Russia
n Fed
eratio
nChil
e
Belgium Isr
ael
OECD avera
ge
France
United
Stat
es
EU21 av
erage
Estonia
Portug
al
Latvi
a
Greece
0
10
20
30
40
50
2012 2005 2010%
Unemployment rates 25-64 year-olds, by educational attainment – upper secondary education or post-secondary non-tertiary education
28
While People with Tertiary Education Still Have a Low Risk of Being Unemployed
Norway
German
y
Switzerl
and
Austra
liaBraz
il
Netherl
ands
Luxe
mbourg
United
King
dom
Hunga
ry
New Zea
land
Chile
United
Stat
es
Poland
OECD avera
ge
EU21 av
erage
Slovak
Rep
ublic
Latvi
a
Irelan
d
Portug
al
Greece
0
10
20
30
40
50
2012 2005 2010%
Unemployment rates 25-64 year-olds, by educational attainment – tertiary education
29
• HE-educated individuals have lower unemployment rates throughout the period
• In some countries, including Ireland and Southern and Eastern Europe, tertiary-educated people have been hit hard – but UR have increased across all education levels
• Factors leading to unemployment of HE-educated people are complex– Supply side: potential oversupply in some fields, relevance
of degrees to labour market, variations in skill level – But also demand side: economic restructuring and
destruction of jobs, features of national labour market (e.g. minimum wage, hiring/firing rules, etc)
Impact of Crisis on Unemployment Rates – Cont’d
30
Below Upper Secondary
Tertiary
2005 2012 2005 2012Australia 81 83 134 134Austria 74 70 158 171Denmark 82 81 125 128Germany 89 84 159 174Hungary 78 78 229 208Israel 79 71 151 152Korea 68 71 149 147New Zealand 81 82 125 123Sweden 88 82 130 128Switzerland 76 77 157 158Turkey 69 63 149 191United Kingdom 71 70 158 156United States 71 63 186 174
Evolution of Earnings – Widening GapTrends in relative earnings of workers, by educational attainment, in 2005 and 2012
25-64 year-olds with income from employment; upper secondary education = 100
Table A6.2aEAG 2014
31
Moderate Cuts in Educational Funding So Far Despite GDP Declining
Uni
ted
Kin
gdom
Cze
ch R
epub
licN
ew Z
eala
ndD
enm
ark
Slo
vak
Rep
ublic
Bra
zil
Finl
and
Aus
tralia
Irela
ndN
ethe
rland
sJa
pan
Sw
itzer
land
Ger
man
yS
love
nia
Chi
leC
anad
aP
ortu
gal
Mex
ico
Kor
eaO
EC
D a
vera
geA
ustri
aS
pain
EU
21 a
vera
geN
orw
ayB
elgi
umFr
ance
Sw
eden
Isra
elIc
elan
dU
nite
d S
tate
sR
ussi
an F
eder
atio
nP
olan
dE
ston
iaIta
lyH
unga
ry
80 85 90 95
100 105 110 115 120 125 130
Change in public expenditure on educational institutions Change in Gross Domestic Product
Change in expenditure on education institutions as a percentage of GDPIndex of change
(2008=100)
Impact of the economic crisis on public expenditure on education 2008-2011
Chart B2.3 – EAG 2014
32
But in Some Countries Funding Per Student in HE Has Not Kept Pace with Enrolments
Estonia
Slovak Republic
Chile
Hungary
Korea
Czech Republic
Finland
SloveniaDenmark
Russian Federation
Israel
Japan
United Kingdom
Italy
Poland
OECD averageEU21 average
NetherlandsSwitzerland
France
Sweden
GermanyAustralia
Brazil
Spain
Norway
Mexico
BelgiumPortugal
Austria
United States
IrelandIceland
80
90
10 0
11 0
12 0
13 0
14 0
15 0
Cha nge in e xpenditu re Cha nge in the numbe r of studen ts (in ful l -time equ iv ale nts) Cha nge in e xpend itu re pe r stude nt
In de x of ch an ge (200 8= 10 0)
Chart B1.6 . Cha nge s in the number of students and cha nge s in e xpe nditure pe r student by educa tiona l institutions , by le ve l of e duc a tion (2 0 05 , 2 01 0)In d ex of c h an ge b etwe en 20 05 an d 2 01 0 (2 00 5 = 1 0 0, 20 10 c o nsta nt pri ce s )
Change in expenditure per student by educational institutions, tertiary education (2008, 2011)
Chart B1.6 – EAG 2014
33
• High employment rates and earnings signal a strong need for highly-qualified people – and a highly qualified population is important for long-term growth
• But in some countries the unemployment rate for tertiary-educated people has increased substantially
• HE needs to meet the needs of the labour market and be responsive to structural economic shifts e.g., need for HE to prepare for 21st century skills, new forms of work like entrepreneurship, etc.
The Crisis Has Revealed Some Weaknesses of HE
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• Traditional funding schemes are under pressure – need for more effective business models. – Clarify and enhance value proposition of HEIs in a globally
competitive environment – Identify cost-reducing/ cost-stabilising strategies where
possible– Seek alternative revenues – while recognising limitations of
those relying mostly on cost-sharing • Promote quality in a constrained environment
– Range of methods to promote quality teaching and learning – outcomes of IMHE teaching quality reviews 2012
– Funding research excellence: combining funding approaches to promote competitiveness while maintaining diversity
Implications for HEIs