Contents: Principles influencing higher ed funding; Basic scheme for funding higher ed; Funding model component: mechanisms; Funding model component: ratio grant:fees:3rd party; Funding model component: principle "public-first"; Funding model component: affordability; Funding model component: equity; Some questions for Irish higher ed

1. Dr. Dominic Orr
Affiliated researcher at DZHW Hannover (http://www.dzhw.eu/en)
Affiliated researcher at FiBS Research Berlin (http://fibs.eu/en/)
dominicjorr@gmail.com and @DominicOrr
Outline of the various
funding models in higher
education across the
world – with a focus on
the role of student
contributions
A Dialogue on the Future Funding of Higher
Education in Ireland 23 September 2015
The Meccano Bridge built by Queen's
University civil engineering students at
Clarendon Dock, Belfast. Pic: Stephen
Davison/Pacemaker.

2. 2Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
Contents
1. Principles influencing higher ed funding
2. Basic scheme for funding higher ed
3. Funding model component: mechanisms
4. Funding model component: ratio grant:fees:3rd party
5. Funding model component: principle "public-first"
6. Funding model component: affordability
7. Funding model component: equity
8. Some questions for Irish higher ed

3. 3Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
Principles and assumptions behind funding models
• Size of the higher ed system – current and planned (demand
from Economy, from potential students and their parents)
• Governance of HEIs – what role does the funding system play in
the governance constellation?
• Size and stability of the public budget for higher ed (e.g. austerity
vs. multi-year agreements)
• Tasks of “tertiary education” sector (research vs. teaching,
academic vs. vocational)
• Means of achieving tasks (short- vs. long-cycle courses, part- vs.
full-time provision, public HEI vs. private HEI)
• Social values on (re)allocation of educational costs (private vs.
tax-payers)

4. 4Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
Funding higher ed: between public and private costs
Scheme of Higher Education Funding
Research
Other study-related
costs
Tuition/
participation fees
Living costs
direct/indirect
(grants,loans,taxbenefits…
Teaching /
learning
Job
State
Business
Student
Parents / family
Private donations
Source: author
But is it sustainable?
• Is it sufficient to
assure quality of
services (teaching,
research, transfer…)?
• Is it sufficient to
attain the goal of
social mobility
(equitable access,
affordability)?

5. 5Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
State grant Third-party
funding
Tuition fees
Discretionary
funding
Controlled
competition
Market
competition
incremental &
strategic
performance-
based
research
grants
business
contracts
blanket fees
individual fees
Funding model component: mechanisms
Source: author

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Funding model component: ratio between state grant, fees and third-party funding
Source: own calculations, ETER data set
average

7. 7Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
Funding model component: ratio between state grant, fees and third-party funding
High contribution of tuition fees
to total income and low
contribution of third party
funding to total income
CY, MT
High contribution of tuition fees
to total income and high
contribution of third party
funding to total income
IE, LT
Low contribution of tuition fees
to total income and low
contribution of third party
funding to total income
FR, LU
Low contribution of tuition fees
to total income and high
contribution of third party
funding to total income
NO, CH, DK, NL, (DE, SE)

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Higher ed funding trend in Irish higher ed
Source: own calculations, Grant Thornton 2014

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Interlude: Funding model component: private higher education sector
Source: own calculations, OECD data set

10. 10Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
Funding model component: principle “public-first” in European higher ed
Question: can expanding systems keep up this principle?
• “Yes”: Germany & Austria (after short blips)
• “No”: Portugal (two departures)
• “Yes for some, but not for others”: former Communist higher ed
systems like Poland and Hungary give free places on merit (but
Poland using demographic decrease as chance)
• “No”: England (continuous increase based on politics – but
loans)
• Interesting: South Korea using demographic decrease to increase
study aid (loans)

11. 11Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
….exception England – swap between public and private funding (if you ignore publically funded loans)
England: Per-student income of HEIs, by source (1995-2011)
Note: Constant prices (2011).
Source: Case study research.

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European higher education display a preference for study aid and a link between
tuition fees and study aid
Source: own calculations, based on data in EACEA 2015

13. 13Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
European higher education display a preference for study aid and a link between
tuition fees and study aid
Source: own calculations, based on data in EACEA 2015
Trend in student aid budget –
increase and
Trend in household expenditure
on HE - decline
PL, RO, EE, HR, LV, PT
Trend in student aid budget –
increase and
Trend in household expenditure
on HE - increase
UK, BG, IT, SK (FR, ES, IS,
NL)
Trend in student aid budget –
decline and
Trend in household expenditure
on HE - decline
AT, LT, CZ, SI (BE, CY)
Trend in student aid budget –
decline and
Trend in household expenditure
on HE - increase
IE, DK

14. 14Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
South Korea: Tuition fees, net fees & ‘out-of-pocket’ fees in public HEIS (1991-2011)
Note: Net student fees is student fees minus grants. Constant prices (2011).
Source: Country Index; Ministry of Education.
Out-of-pocket fees
….Korea is using demographic decline to support more studentswon
Out-of-pocket fees

15. 15Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
Is Germany the archetypal non-fee European model? Perhaps!
Source: Wößmann, L., Lergetporer, P., Kugler, F., Oestreich, L., & Werner, K. (2015)
 Germany had fees from 2007
on a low level (average €500
per semester)
 Income was ring-fenced for
improving teaching
 Over time the exceptions to
fee paying were increased
 In academic year 2014/2015
no students in public higher
ed pay tuition fees
 Is this because fees are not
acceptable in Germany? No.
61% would
support fees, if
there was post-
graduation
payment

16. 16Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
Funding model component: affordability (UN Sustainable
Development Goal 4.3) / sticker and net price in the USA
Source: http://trends.collegeboard.org/college-pricing/figures-tables/net-price-public-four-
year-institutions-residency-dependency-income-2011-12
 Problem of
“overheating”
 Loss of value of study aid
 Austerity following 2008
led to large public
budget cuts
 Many students pay lower
fees than advertised
 Fees monitored, as the
state can’t control them
 Case: Washington DC fee
cuts announced
September 2015
 Case: online learning

17. 17Royal Irish Academy Dublin, 23/09/2015@DominicOrr#highered funding
Funding model component: equity (UN Sustainable Development
Goal 4.3) / fees just one element
Fees in NL and IE

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-
10
20
30
40
50
60
70
80
NL EE SE DK AT DE ME IE FI CZ HR BA PL HU SI SK RS LV RO
SHARE OF (ALL) STUDENTS WITH FINANCIAL WORRIES
(NOT LIVING WITH PARENTS)
Not at all / slightly worried Seriously / very seriously worried
Source: own calculations, EUROSTUDENT V data set, subtopic F7
Important to watch: students’ own assessment of having financial difficulties

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• Can Ireland hold on to the 3 imperatives for higher education?
Equity, affordability and quality
• Does Ireland need to re-think the meaning of providing HE?
(short- vs. long-cycle, part- vs. full-time, distance vs. presence…,
vocational vs. academic focus)
Questions for Ireland regarding funding higher ed

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Size & shape of HE
Source: excerpt from Trow 2007

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Appendices: Further reading
Hauschildt, K., Gwosć, C., Netz, N., & Mishra, S. (2015). Social and economic conditions of student life
in Europe (EUROSTUDENT V 2012-2015). W. Bertelsmann. http://doi.org/10.3278/6001920bw
Grant Thornton. (2014). A changing landscape. Review of the financial health of the Irish higher
education sector. Retrieved from http://www.grantthornton.ie/db/Attachments/Higher-
education-Financial-Analysis-Report-080414-F.pdf
Johnstone, D. B. (2014). Financing Higher Education: Worldwide Perspectives and Lessons. The
International Comparative Higher Education Finance and Accessibility Project. Retrieved from
http://gse.buffalo.edu/org/inthigheredfinance/files/Recent_Publications/Financing H Ed WW
Perspectives and policy options revised.pdf
Orr, D., Wespel, J., & Usher, A. (2014). Do changes in cost-sharing have an impact on the behaviour
of students and higher education institutions ? Evidence from nine case studies VOLUME I:
Comparative Report. Publications Office of the European Union. http://doi.org/10.2766/73985
Trow, M. (2007). Reflections on the Transition from Elite to Mass to Universal Access: Forms and
Phases of Higher Education in Modern Societies since WWII. In J. F. Forest & P. Altbach (Eds.),
International Handbook of Higher Education SE - 13 (Vol. 18, pp. 243–280). Springer Netherlands.
http://doi.org/10.1007/978-1-4020-4012-2_13
Wößmann, L., Lergetporer, P., Kugler, F., Oestreich, L., & Werner, K. (2015). Deutsche sind zu
grundlegenden Bildungsreformen bereit – Ergebnisse des ifo Bildungsbarometers 2015. Ifo
Schnelldienst, 68(17). Retrieved from http://www.cesifo-group.de/DocDL/sd-2015-17-
woessmann-etal-bildungsbarometer.pdf