Student Support Programs Student Loans and Grants Findings from IIEP/UNESCO studies Les programmes d aide aux étudiants Prêts et Bourses Resultats

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1 Student Support Programs Student Loans and Grants Findings from IIEP/UNESCO studies Les programmes d aide aux étudiants Prêts et Bourses Resultats des Etudes par L IIPE/UNESCO

2 Case studies and comparative analyses In Asia: China (Mainland and Hong Kong), the Philippines, South Korea, Thailand In Europe: the UK, Finland, Spain, Sweden, Poland, Russia, Moldova Key observations: Contrasting experiences, country-specific policies, sensitive to change due to intertia

3 Sweden Denmark Netherlands Switzerland1 United Kingdom Austria Finland Germany Japan Spain Australia2 France Iceland Ireland Belgium Italy2 Israel2 New Zealand Czech Republic2 In equivalent USD converted using PPPs Korea Slovenia Hungary1 Mexico Poland1, 2 Chart B1.5. Cumulative expenditure by educational institutions per student over the average duration of tertiary studies (2007) OECD average Note: Each segment of the bar represents the annual expenditure by educational institutions per student. The number of segments represents the average number of years a student remains in tertiary education. 1. Public institutions only. 2. Tertiary-type A and advanced research programmes only. Countries are ranked in descending order of the total expenditure by educational institutions per student over the average duration of tertiary studies. Source: OECD. Table B1.3b. See Annex 3 for notes (

4 Need for Additional Resources Un besoin de revenus complémentaires Government budget-limited vs. massification Budget du gouvernement : limité Efficiency gains, savings, cost-cutting Gains de rapport, économies, reduction des couts Diversify resource base with private funds Diversification de la base de revenus grâce à des fonds privés Primary beneficiary: students Les premiers bénéficiaires en sont les étudiants

5 Extra individual income for university graduates in US$ (OECD, 2009)

6 Cost-sharing using Private Funding (fees) Partage avec les Fonds Privés (frais) Family resources Les ressources des familles Student earnings Les revenues des étudiants Students future earning/foreign students Les revenues futures des étudiants/les etrangers

7 The economic implications of fewer international higher education students in Australia 26 September 2010.This report argues that economic output associated with Australia's third largest export industry will shrink by as much as $600 million in 2011 and by $1.2 billion to 2012, unless urgent action is taken on pressing policy concerns. The report, commissioned by the John Curtin Institute of Public Policy (JCIPP) at Curtin University shows that: Higher education is the most significant part of the sector. With 32% of the international student market it generates 57% of the export revenue. International on-shore education is now a billion dollar industry in its own right in New South Wales and Victoria, generating value-added of around $3 billion in each state. It has an overall economic impact of $1.4 billion in Queensland. On average each International student in higher education generates $50,874 for Australia, 36% of this being spent on fees with the remainder mainly on accommodation, food, restaurants and retail. For every two International students enrolled in an Australian university one extra job is created. This value add from International university students in 2009 saw an additional 102,387 jobs created, of which 83,050 were created outside the education sector. Publication type Report Publisher Type Academic research centre Coverage Australia Permanent URL

8 Cost Recovery (student loans) Recouvrement des Couts (prets aux etudiants) Increases efficiency Accroît l efficacité Enhances equity Renforce l équité Expands source of revenue Développe la source des revenus

9 Equity Issue La question de l équité What if qualified students cannot pay? Et si des étudiants qualifiés ne peuvent pas payer? - Mix with grants - Possibilités des bourses

10 Student Loans Les Prets aux étudiants Mortgage-type: specified time period, fixed payments de type crédit immobilier : durée déterminée, paiements échelonnés Problems Problèmes Harms access Nuisible quant à l accès Costly Cher Defaults Des inconvénients No private funding Pas de financement privé

11 Alternative Alternative Income-contingent student loan Prets aux étudiants ordonné aux revenues Or/ou Graduate Tax Impot sur les revenues des diplomes

12 Income Contingent Student Loan Emprunt étudiant ordonné aux revenus Enables students to defer payments until they are working Permet à l étudiant de différer le remboursement juqu au premier salaire Allows needy access to higher education Facilite l accès des plus démunis à l enseignement supérieur

13 Reforming the Funding System La réforme du système de financement Share costs Coûts répartis Minimize deterrent effect on poor Effet dissuasif pour les pauvres diminué Benefit adults and young Adultes et jeunes sont concernés Income contingent repayments Paiements en fonction du revenu Payments equal cost of loan Paiements équivalents au coût de l emprunt Payments over lifetime Paiements échelonnés sur la vie Minimize default Défauts de paiements réduits Loan not public expenditure Un pret, pas une dépense publique

14 Improving the Performance of Deferred Payment Programs Amélioration de la performance des programmes de paiement différé Student loan programs should be targeted Les programmes de prêts aux étudiants doivent être ciblés Hidden subsidies limited Subventions cachées limitées Likely pattern of graduate earnings taken into account Prise en compte de schémas semblables pour les revenus des diplômés Program management by banks Gestion des programmes par les banques

15 Successful loan programmes require specific conditions: Les programmes de prêts réussis requièrent en particulier : Adequate initial capital Realistic interest rate to cover inflation and administrative costs Effective targeting to identify needy students Efficient loan recovery mechanisms, using banks, tax or social security system de Effective publicity to change attitudes of students/employers un capital initial suffisant un taux d intérêt réaliste qui couvre les coûts d inflation et la gestion un ciblage précis pour identifier les étudiants nécessiteux des mécanismes efficaces de recouvrement, via les banques, les impôts ou le système sécurité sociale une communication efficace pour changer le comportement étudiants/employeurs

16 Student Loans may be feasible but have to be well designed Effective loan programmes require: Sound institutional structure Sound financial management Sound legal framework Effective machinery to support target groups Effective machinery for loan recovery to minimize default Les prêts étudiants pour être réalisables doivent être bien conçus Les programmes de prêt efficaces exigent des conditions générales comme : une structure institutionnelle solide une gestion financière saine un cadre juridique sain un mécanisme pour cibler les groupes prioritaires un mécanisme efficace pour optimiser le recouvrement des prêts Public campaigns to ensure understanding & acceptance une campagne d information pour expliquer et faire accepter

17 Tuition fees in the UK Full-time courses If you re a new student (or a continuing student who started your course in or after September 2006) the maximum tuition fees you ll be charged are 3,290 for the 2010/11 academic year. For 2009/10, the maximum is 3,225. Exactly what you re charged depends on the university or college you attend, your course, and where in the UK you study. You can get a Tuition Fee Loan to cover the full cost of your tuition fees. This is paid directly to your university or college. The amount you get does not depend on household income. If you're a new student starting a full-time course in 2010/11, you can use the Student Finance Calculator to work out a budget. Remember that if you take out the student loans available to full-time students, you don t have to start paying them back until you ve left your course and are earning over 15,000. Student loans accrue interest from the date they are paid out, up until they are repaid in full.

18 Tuition fees in France The fees are determined by the government, and not by the institution itself. A basic fee for an undergraduate course in 2010/2010 is Euro174 per year; for a Master s course it is Euro237 per year; for a Ph.D it is Euro359 per year. In addition, students pay social security charges of Euro200 per year. Fees at the Grandes Ecoles vary but are generally high. Fees for a classic business school costs between Euro5,000 and Euro10,000 per year, whilst an engineering school can cost up to Euro15,000. Universities are trying to overcome the government restrictions by charging higher fees for new courses and extra-curriculum activities.

19 Examples of fees USA: at private universities US$30,260 - In public universities US$7,170 - In Japan: US$4,500 - In China: US$3,000 - In India: US$600

20 Chart B5.3. Relationships between average tuition fees charged by public institutions and proportion of students who benefit from public loans Average tuition fees charged by public institutions in USD United States Japan Australia New Zealand Netherlands2 Italy2 Austria Spain Belgium (Fl.) 2 France1,2 Finland Iceland Norway2 Sweden % of students who benefit from public loans AND/OR scholarships/grants 1. Average tuition fees from USD 179 to USD for university programmes dependent from the Ministry of Education. 2. Year of reference Source: OECD. Tables B5.1 and B5.2. See Annex 3 for notes (

21 Panel Discussion: -An overview of ASEM countries with student loan and grant system in place; -Similarities & differences of various approaches; -Need for studies on future demand for higher education and related trends in higher education finance; -Possible other forms of cost-recovery (graduate tax?), to what extent it is possible to resolve problems associated with student loans? -Suggestions, criteria and issues for possible improvements

22 Thank you! Igor Kitaev IIEP/UNESCO, Paris