How the crisis might transform higher education: some scenarios

Stéphan Vincent-Lancrin

OECD Centre for Educational Research and Innovation

Outline

• Enrolments• Expenditure

– Levels– Possible impact on stakeholder

• Scenarios

Tertiary education enrolments

Evolution of the 18-24 population by 2025 (2005=100)

Source: United Nations, Population division (revision 2006)

Scenario 1: Projected tertiary enrolments in 2025 under current conditions (2005=100)

Source: OECD, Higher Education 2030, Vol. 1 Demography

Scenario 2: Projected tertiary enrolments in 2025 under recent trends (2005=100)

Source: OECD, Higher Education 2030, Vol. 1 Demography

Why the trend scenario is more likely…

• Supply will not be too limited– Knowledge economy– Crisis-related political reasons (better to

have students than unemployed people)

• Demand will increase– Individual returns remain high (compared

to high school returns)– Decrease of opportunity cost (crisis)– Demand of retraining from unemployed

workers– Less apprenticeship available (crisis)

…with limiting factors

• Rising cost to public authorities

• Rising cost to students and families in a context of unemployement and saving/capital losses

• Less ability to contribute of the business sector

Some qualitative changes in the student population

• More demand from mature students– More demand for short term programmes– More demand for vocational programmes

• More difficulties for students from lower working and lower middle classes– Where caps on student numbers– Where high tuition fees– Where insufficient student aid

Tertiary educational attainment (%) of 25-64 population

Impact on tertiary education expenditure

Projections of total expenditures for tertiary education institutions in 2025 (% of GDP):

pre-crisis scenario

Source: OECD, Higher Education 2030, Vol. 1 Demography

GDP set at 2% growth and educational costs per head projected linearly according to 1995-2005 growth rate (constant prices)

Change in student/staff ratio to stay at 2005 expenditure level

Possible Impact on stakeholders

Public funding for HE

Budget pressure• Unemployment and

social benefits• Consolidation of public

budgets• Ageing-related

expenditure• Continued expansion of

HE• Rise of eligible students

for student aid

Response (?)• Cuts on expenditures to

HEIs after relative protection under stimulus packages

• Slower growth of public expenditures in the longer run

• Rise in tuition fees• Inadequate student aid (?)• More competitive

allocation of funding and further segmentation of systems

Private funding for HEIs

Pressure• Less business:

– Cuts on R&D expenditures

– Cuts on corporate training

– Less endowments of foundations

– Less willingness to have interns and apprentices? (unless they can contribute to production)

Response (?)• Less ability to fund

university research, to fund their employees for training and and to participate in university programmes

• But this source of funding is marginal in most countries (except Canada and US)

Household funding for HEIs

Pressure• Decline in revenues of

parents• Less ability of

intergenerational transfer as older people are hit by budget consolidation

• Unemployment for parents and difficulty to work while studying

• Inadequate student aid for lower SES

Response (?)• Willingness to invest

more in HE where household cost has been low so far

• Difficulty to do so in countries where tuition have already rised significantly recently

Institutional response

Revenue• Raise tuition fee levels (if

they can)• Look for new revenues

(international students where differential fee, part-time students, further education, non-degree education, etc.)

• Compete more for research funding

• Efforts to raise more corporate funding where it is small (but slow process)

Cost• Postpone maintenance and

infrastructural costs, including library costs

• Look for further administrative efficiency

• Freeze hiring of new faculty • More differentiated status

of new faculty (teaching/research)

• Increase student/staff ratio or decrease face-to-face instructional time

Impact of the economic crisis

• Short term impact on access issues:– Increase in participation in tertiary education– Increase of the share of higher education expenditures in

public expenditures and GDP– Costs will be a limiting factor in countries where there is a

significant share of household funding– Possible rise in inequity

• Longer term impact:– Risk aversion of students and family: less confidence in

loans and financial products and less investment in higher education?

– Slowdown or acceleration of internationalisation?– Restructuring of higher education systems?

Intermediate conclusion

Before the crisis

• In most countries, the budgetary impact of the crisis was not significant

• Ageing could have affected priorities, but no strong evidence

After the crisis

• Budgetary impact could become more significant (under very conservative assumptions)

• Public consolidation after stimulus packages and crisis-related social benefits will make difficult for HE budget to grow

Scenarios in the light of the crisis

International

National

MarketDemand-driven

AdministrationSupply-driven

Scenarios for higher education systems

4 scenarios

• Open networking

• Serving local communities

• New public responsibility

• Higher education, Inc.

Scenario 1: Open Networking

Drivers

• International cooperation & harmonisation of systems

• Technology• Ideal of open knowledge

Related developments

• Bologna process, international academic partnerships and consortia,

• Increasing computing power and culture of openness challenging traditional intellectual property rights

Features

• Intensive networking among institutions, scholars, students (& industry)

• Modularisation of studies under academics’ control

• International collaborative research

• Strong hierarchy between networks but quick spillovers

• Lifelong learning outside the HE sector

Scenario 2: Serving local communities

Drivers

• Backlash against globalisation

• More geo-strategic sensitivity in research

• Cost efficiency

Related developments

• Anti-globalisation movements

• Crisis?

Features

• (Re)focus on national and local missions

• Public funding and control of the academic profession

• Convergence between universities and polytechnics

• Elite universities struggle to stay more internationalised

• Less research, mainly on humanities

• Big science relocated to government sector (more secretive and less internationalised)

Scenario 3: New public responsibility

Drivers

• Pressure on public budget (ageing, public debt, etc.)

• Diffusion of governance structures based on new public management

Related developments

• Autonomy given to HEIs (sometimes legally privatised)

• Debates on cost sharing• Encouragement of

competition between HEIs

Features

• Mainly public funding but autonomous institutions controlled at arm’s length (incentives + accountability)

• Mixed funding: new markets + more tuition fees (income contingent loans)

• Demand-driven system with more marked division of labour (specialisation but most HEIs continue to do some research)

• Research funds allocated through domestic competitive process (except for Europe)

Scenario 4: Higher education, Inc.

Drivers

• Trade liberalisation in education (GATS, bilateral)

Related developments

• Rise of trade in HE & inclusion of education in trade negotiations

• International competition for students

• Increase of cross-border funding of research

Features

• Global competition for education and research services

• Public funding for non-commercially viable disciplines exclusively

• Segmentation of the education and research market

• Vocational higher education: important share of the market

• Strong (international) division of labour according to competitive advantage

• Concentration of research and worldwide competition for funding

• English as main language of study

Serving Local Communities

International

National

MarketAdministration

Open Networking Higher Education Inc.

New Public Responsibility

Scenarios for higher education systems

New publication:Higher education to 2030

Forthcoming:

• Volume 2: technology• Volume 3:

Globalisation• Volume 4: Scenarios

THANK YOU

Stephan.Vincent-Lancrin@oecd.org

www.oecd.org/edu/universityfutureswww.oecd.org/edu/innovation