Overview of Higher Education Trends: Returns and Financing Highlights from EAG 2014

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

%


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


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%


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


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


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


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


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%


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%


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


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


• 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


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


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


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


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)


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

34

• 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

35

Thank you www.oecd.org/edu/imhe

[email protected]

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Overview of Higher Education Trends: Returns and Financing Highlights from EAG 2014