When talking about higher education funding, we must begin by asking: What value do we, as a society, place on higher education? Broadly speaking, two worldviews emerge.

One sees higher education as a personal benefit — a means through which individuals improve their material and intellectual well-being and therefore should pay their own way. The other regards higher education as a public investment that makes Estonia smarter, more efficient, healthier and more democratic. A clear ideological divide runs between these two mindsets: the cashier wants immediate returns, while the gardener planting an oak thinks in decades.

Estonia's Education Development Plan aims for 45 percent of 25-34-year-olds to have a higher education degree by 2035. Currently, that figure stands at 43.5 percent — well below the OECD average of 47.6 percent. In Denmark, the rate is 49 percent; in Norway, it's as high as 57 percent.

Labor market studies indicate that in the coming years, we will need so many more highly educated workers that universities should enroll 1,000-3,000 additional students annually. The good news is that, despite a general population decline, the number of 18-21-year-olds in Estonia is expected to increase by over 10,000 between 2025 and 2029. Therefore, we must find ways to expand access to higher education while ensuring equal opportunities.

The government's goal is to develop a higher value-added economy. To achieve this, we need more and more highly educated people, including specialists with doctoral degrees.

Currently, only about 1 percent of Estonia's working-age population holds a PhD. In countries with research- and innovation-intensive economies, the share is much higher — about 4.5 percent in Switzerland, over 3 percent in Denmark. The OECD average is just under 2 percent.

Germany awards nearly 28,000 doctoral degrees annually. Scaled to Estonia's population, that would mean 400-450 PhDs per year. Last year, Estonia produced 262 — clearly too few to drive meaningful change.

Public sector research funding in Estonia, as a share of GDP, is among the highest in Europe — surpassed only by Germany and Denmark. In 2023, Estonia's research and development spending hit a record €702 million.

It's encouraging to see that Estonian businesses are also increasingly investing in R&D, with private sector investments surpassing those of the government in recent years. In fact, the private sector's share amounted to 1.08 percent of GDP. This is a step in the right direction, as the development of a knowledge-based economy depends on having more highly qualified specialists.

In six years, the number of R&D employees in Estonian companies has doubled (to 4,524), but growth must continue. The state has decided to support employers by partially compensating wage costs, but even more important is ensuring a sufficient supply of doctoral-level talent from which to recruit specialists.

Prime Minister Kristen Michal told the Riigikogu that the effective application of artificial intelligence could boost Estonia's economic value by up to €3 billion at its peak. For comparison, the entire education sector's annual budget is around €2.5 billion. To realize this potential, however, we need the world's best AI specialists.

Jaak Vilo, a professor at the University of Tartu and vice president of the Estonian Academy of Sciences, has proposed creating a national doctoral program in artificial intelligence. This deserves serious consideration. If we want to move toward a knowledge-based economy, we must aim for at least 500 PhDs to be defended each year. Yes, in the short term, this would mean higher costs, but in the long term, it would bring significant benefits to both the economy and society as a whole.

In the Nordic countries, higher education is mostly free. These societies manage to create greater added value, maintain stronger social indicators and ensure deeper social cohesion. The more highly educated people a country has — especially those with doctorates — the smarter its economy and the wealthier the country. Wealthier not just in economic terms, but in its ability to preserve language and culture, support those in need and provide quality education and universal healthcare.

Beyond increasing tax revenues, higher education also shapes behavior and life outcomes: educated people earn more, are more eager to learn, contribute more actively to society with their knowledge and tend to be healthier. According to Statistics Estonia, in 2023, people with higher education lived 11 years longer than those with only a basic education. Most importantly, higher education offers the opportunity for intellectual growth and deeper self-actualization.

Should we charge students €500 a year, bringing universities an extra €20 million over four years? Or €2,700 annually, which would increase university budgets by €30 million in just one year? In both cases, the bulk of tuition would still be covered by taxpayers, yet the system would not result in more students. What it would do, however, is increase student accountability and expectations for educational quality.

For the past four years, the state has embraced the oak planter mentality. After a long period of austerity, nearly €140 million in additional funding has been invested in higher education since 2022. If another €30 million is added annually in the coming years, we can keep higher education funding sustainable and accessible.

Investing in higher education benefits both individuals and the state. A study commissioned by the Council of Rectors confirmed that every euro invested in higher education yields seven euros in return. This brings us back to the question at the heart of the issue: Do we charge students upfront for their personal benefit or do we embrace the wisdom of the old proverb — "He who plants an oak, lives long"? Do we patch the funding gap with a €2,700 tuition fee or do we invest in higher education collectively, in solidarity?

On the 100th anniversary of the Republic of Estonia, Estonians planted 6,000 oaks in parks, alleys and groves. Because oaks grow slowly and live for centuries, planting them is associated with long-term impact. "He who plants an oak, thinks in centuries." The oak planter doesn't think about today's gain, but about the strength of the future. This is the mindset we should adopt when investing in higher education.

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