Statistic of the Month: How Students in Top Performing Countries Pay for College

by Jackie Kraemer

Many applauded when President Obama proposed free community college tuition for all students in the United States. The community college sector is where most students go for technical training or for a lower-cost entry into a four-year college. While it seems unlikely that this proposal will be implemented, skyrocketing tuition rates in the United States are one factor in the plateauing rates of entry into and completion of post-secondary education nationally, particularly among disadvantaged populations. As post secondary education becomes more and more critical in maintaining a competitive workforce, it is instructive to look around the world at the top performing systems in education to see how their systems of post-secondary are funded and how they are grappling with the need to increase access to students from low-income families.

As the chart below shows, among the ten countries that performed best on the 2012 PISA examinations, there are many different approaches to how post-secondary education is funded. Among the group of European countries (Finland, Estonia and Poland), public higher education is free both for university level study and for technical programs. In Estonia and Poland, a parallel private system operates alongside the public system and charges tuition. In Poland, as in many non-U.S. countries with both public and private higher education institutions, public institutions are much more competitive resulting in stronger students having more access to free or lower-cost education and less strong, often disadvantaged students facing higher costs for postsecondary education. Poland, in particular, has a large private higher education market that is struggling for both legitimacy and public support for students. Finland operates only public institutions and, along with Estonia, offers living stipends for low-income students in addition to free tuition.

HigherEd VennThe Asian countries who perform at the highest levels on PISA do not offer free higher education. Although higher education in China was free historically, it transitioned to a tuition-based system, first for students who scored below a certain level on university entrance exams in the 1980s and, in the 1990s, for everyone. The other Asian countries have no recent history of free higher education. Among the five jurisdictions in this group, tuition is highest in Singapore and South Korea. Singapore’s tuition is over US$20,000 per year for many degree programs although closer to US$2,000 for two-year diploma programs. In South Korea, many private universities charge over US$10,000 per year for tuition. All five jurisdictions in this group offer different amounts of student aid. Singapore’s aid is the most generous, with substantial tuition grants covering over 75 percent of tuition to all undergraduate and diploma students in exchange for the students agreeing to work for a Singapore-based company for a minimum of three years. Japan’s aid is the least generous, primarily limited to loans, with the lowest interest loans predicated on merit as well as need. All of these jurisdictions have expanded aid in recent years as tuition has risen. This is a topic of major public concern.

Interestingly for American audiences, the Asian countries set their tuition rates for different programs based on the expectation of future income of the students in the program. For example in Singapore, tuition for an Arts and Sciences bachelor degree is US$21,069 (reduced to US$5,783 after a tuition grant from the Ministry of Education for all students) while a medical degree is US$95,000 (reduced to US$17,865 after the tuition grant.) As mentioned above, these tuition grants do not need to be repaid as long as students agree to work in Singapore for a set number of years. In Shanghai, engineering programs charge higher tuition than other degrees.

In Canada, the provinces control higher education, similar to the way that states do in the United States. Ontario has a system of two-year colleges offering technical and vocational programs and four-year universities and colleges offering academic and technical bachelor and advanced degrees. The province provides a 30 percent discount on all colleges and university programs for all middle- and low-income families, with annual family income limits set at a surprisingly high US$127,270. In addition, the Canadian national government contributes US$7,200 per child to an education savings plan, with more funds added for children in low-income families. The U.S. also has college savings plans that are tax-free, but with no direct government contribution. Individual colleges and universities in Ontario offer additional scholarships and all students have access to low-interest loan programs.

Even among countries that charge tuition to all higher education students, the level of tuition in the United States is significantly higher than in any of the top performing countries. The OECD’s Education at a Glance analyzes higher education spending, categorizing countries as high and low tuition and high and low student support countries. (See chart below) The United States, categorized as “high tuition, high aid”, charges the highest tuition of any country analyzed, except for Chile.

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Note: Singapore, Shanghai, Hong Kong, Taiwan and Estonia were not included in OECD’s analysis.
The arrows show how the average tuition fees and proportion of students who benefit from public support have changed since 1995, following reforms.

Indeed, NCES’s most recent data (for 2012) reported that average tuition in the United States was US$33,716 for private and US$16,789 for public four-year institutions and US$23,447 for private and US$8,571 for public two-year institutions. But perhaps more noteworthy than the steep tuition in the United States is the lack of preparation among students who do enroll in higher education. Over half of students entering community college are referred to at least one remedial course before they can begin taking credit-bearing courses and the rate is even higher at many institutions. This suggests that access to and the high dropout rate from higher education is far more than a financial issue. For more on this issue, see NCEE’s 2013 report What Does It Mean to be College and Work Ready?