Before the country's higher education reform, the Estonian state invested 1.6 percent of GDP in higher education. Currently, however, state spending on higher education amounts to just 1.1 percent of GDP, ETV's "AK. Nädal" reported Sunday.

To compensate for the gap that had emerged in higher education funding, a deal was struck in 2022 between the Council of Rectors and the Ministry of Education and Research under which the government of the time committed to increasing funding for higher education by 15 percent annually through 2026.

Starting this year, however, the rate of increase has already been slashed.

"Unfortunately, we have to acknowledge this year that the budget increase for applied higher education institutions was significantly smaller than the funding increase for public universities," admitted Pallas University of Applied Sciences rector Piret Viirpalu.

"Although the state has expressed at meeting after meeting that the volume of applied higher education should grow, and that it's very important to the state, that unfortunately still isn't reflected in the funding," she pointed out. "This year, we only received a 7 percent increase in our budget, although we were really, really hoping for the 15 percent promised by the state."

This week, the new Reform-Eesti 200 coalition government decided that first-time Estonian-language higher education will remain tuition-free, but repeat students will have to start paying for their studies. Rectors, however, say the decision doesn't actually solve the funding issue facing the education sector.

"This is primarily about discipline — that when I make the decision about what kind of education to pursue, I think it through, because I might not have the opportunity later [to study] tuition-free," said Tartu Health Care College (TTHKK) rector Ulla Preeden, referring to incoming students.

According to rectors, the planned funding increases through 2026 have helped ease the issue, but there is still no long-term plan for sustainably financing higher education.

Applied higher education institutions believe that state funding should reach 1.3 percent of GDP, while universities find it should reach 1.5 percent. Rectors also say that bringing in more private funding than currently could help alleviate their funding problems.

According to Preeden, they've encountered situations where someone wants to pay their own way through university, but the law currently doesn't allow for the self-funding of full-time Estonian-language programs.

"We've had people calling in upset, asking if it's really true that people can't even attend on their own dime, and how is that possible," Preeden acknowledged.

More cooperation with businesses, employers?

"And no, at the moment we haven't had a very good solution to offer," she continued. "I understand that the fear is of reverting back to the old model — where perhaps that model was misused? I assume that could have been the case — that ultimately people started charging more money than they maybe should have. But I can say from the college's perspective that this is ultimately limiting access."

According to University of Tartu (TÜ) rector Toomas Asser, another option would be to bring in more money from businesses.

"What would especially help attract money from the private sector would be changes to the Income Tax Act, allowing universities to be included among organizations eligible for income tax incentives," Asser said.

"From the business side, it's definitely possible to support education — whether through scholarships, endowed professorships or partially also infrastructure or lab equipment from private companies," he explained. "But it's important to note that these measures are by no means the keys to solving higher education's longer-term funding problem. This is a relatively marginal activity, and mainly supports specific fields of possible interest."

Vocational education is likewise facing a funding shortage, and starting this upcoming academic year, tuition will be reinstated for repeat vocational students.

Minister of Education and Research Kristina Kallas (Eesti 200) has said that, despite tuition fees, vocational education will still need an additional €5 million in funding.

According to Tartu Vocational College (TRK) director Raini Jõks, charging tuition could help ease the funding shortfall. Greater cooperation with businesses, however, could bring more money into vocational education as well.

"Through cooperation with businesses, we can expand work-based learning, which means an employer hires someone and handles the practical training on site," he explained. "We might also help with supervision, but theory is covered at school."

Jõks noted that there's room for improvement for everyone.

"Both for the school itself, in terms of what [education] we offer and how, and for employers to adopt this [model]," he explained. "Right now, we have 15 groups — about 150 students out of 3,200 — in work-based learning, so there's definitely room to grow."

TTHKK rector Ulla Preeden says the funding issues facing both higher and vocational education are part of a broader problem. According to her, a critical review is needed to assess whether there is overproduction going on in some fields, and whether academic and applied higher education should have the same funding model.

"Maybe we're already operating on slightly different grounds today, and perhaps we should approach this differently," she noted. "Maybe the time is right to take a closer look at what applied higher education institutions need and what universities need today, and where we're headed."

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