Analysis: Higher education funding could follow Finnish or Dutch examples

University of Tartu.
University of Tartu. Source: Ken Mürk/ERR

A University of Tartu analysis finds that Estonia could take after Finland or the Netherlands in higher education funding. Bigger study loans should be offered to ensure availability of higher education.

An analysis by the University of Tartu has found that a higher education system aiming for three goals – lots of students, no tuition and low cost – can only achieve two. Going after all three will inevitably impact the quality of education on offer. This is precisely what is happening in Estonia today.

"The number of elective subjects has fallen over the years. There simply aren't enough teaching resources available to offer all of these courses," said Hanna Britt Soots, deputy head of the University of Tarty student body.

Universities being unable to offer lecturers competitive salary can also impact quality of education. For example, this could lead to problems training future IT specialists.

Experience of other countries suggests there are two options – to hike state funding for free higher education, which is what Finland has done, or introduce a sensible tuition fee, like in the Netherlands.

"Considering tuition, we must also consider benefits to ensure access to higher education. These two things must go together, the analysis clearly showed. Support schemes are key when it comes to access to higher education. Not whether higher education is paid or free or even what the tuition is," said pedagogue Gerli Silm, one of the authors of the study.

In the two countries mentioned, higher education is accessible for those whose parents cannot afford to support them financially. While students in Estonia either have to work during studies or rely on their parents.

"Study loans are very small. We are talking about €2,500 a year or roughly €200 a month which is not enough for a student to cover their living expenses. They need additional support," Silm said.

While the university prefers the Finnish path, Nicholas Barr, professor of public economics at the London School or Economics and Political Science, recommended Estonia learn from the Netherlands. Barr emphasized that this means offering state support for study loans.

"The answer is study loans plus income-dependent payments. In other words, a student uses a loan to pay for studies which they will repay upon graduation as part of income, just as a person pays income tax. Low income would bring low or nonexistent loan payments. This would ensure very low risk for students. With the government in charge of collecting payments, creditors would have confidence to offer low interest rates," Barr suggested.

The professor added that the administrative costs of such a system are low as it relies on an existing tax system.


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Editor: Marcus Turovski

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