Internationals face higher tuition fees

National policies regarding tuition fees and financial aid to students generally cover all students studying in a country’s educational institutions, say the compilers of the OECD publication Education at a Glance 2014.

But differences in the fees that local and international students are charged, and the financial help each group may receive, can impact on the flows of international students.

These differences can attract students to study in some countries or discourage them from studying in others (see indicator C4 in the report), especially when an increasing number of OECD member nations are charging higher tuition fees for international students.

In the majority of countries with available data, the tuition fees charged by public institutions differ for local and international students enrolled in the same programme. In Austria, the average tuition fees charged by public institutions for students who are not citizens of EU or European Economic Area countries are twice those charged for students from the EU and EEA.

Similar policies are found in Canada, Denmark, Ireland, the Netherlands, New Zealand (except for foreign doctoral students), Poland, the Slovak Republic, Slovenia, Sweden, Switzerland, Turkey, the UK and the US.

In these countries, fees vary according to citizenship or an individual’s residence (see indicator C4 and box C4.3 in the report). In Australia, international students are not eligible for the financial support available to national students.

Interconnection

As national economies become more interconnected and participation in education expands, governments are looking to tertiary education to broaden students’ horizons and help them to grasp a better understanding of the world’s cultures, languages and business methods.

One way for students to expand their knowledge of other societies and languages, and thus improve their prospects in globalised sectors of the labour market, is to study in tertiary institutions in countries other than their own.

The factors driving the general increase in student mobility range from the exploding demand for higher education worldwide, and the perceived value of studying at prestigious post-secondary institutions abroad, to specific policies that aim to foster student mobility within a geographic region (as is the case in Europe), to government efforts to support students in studying specific fields that are growing rapidly in the country of origin.

In addition, some countries and institutions undertake major marketing efforts to attract students from outside their boundaries.

The increase in student mobility in tertiary education can also provide an opportunity for smaller or less-developed host education systems to improve the cost-efficiency of their education systems: it can help countries focus limited resources on educational programmes with potential economies of scale, or expand participation in tertiary education without having to expand the tertiary system within the country itself.

For host countries, enrolling international students can not only help raise revenues from higher education, but also can be part of a broader strategy to recruit highly skilled immigrants.

Candidates for support

A significant proportion of foreign students from G20 countries that are not members of the OECD are among some of the better-performing students. They are natural candidates for public or private support, as are those from even relatively advantaged socio-economic backgrounds.

This implies that student mobility can have an impact not only on the stature of a nation’s tertiary institutions’ academic programmes, but can also economically benefit the host education systems. In the current global economic climate, shrinking support for scholarships and grants, as well as tighter budgets for individuals, may slow the pace of student mobility.

On the other hand, limited labour market opportunities in students’ countries of origin may increase the attractiveness of studying abroad as a way to gain a competitive edge, and thus boost student mobility.

International students tend to choose different courses of study compared to local students. This may point to either a degree of specialisation in the programmes offered or a lack of courses in the countries of origin and better employment opportunities associated with specific fields of education.

Among most EU countries, international students from other EU countries are treated as domestic students with respect to tuition fee charges. They include Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Italy, the Netherlands, Poland, the Slovak Republic, Spain, Sweden and the UK.

This is also true in Ireland, but only if the EU student has lived in the EU, the EEA or Switzerland for three out of the previous five years. If this condition is satisfied, the student is eligible for free tuition in a given academic year whereas in Finland, Germany and Italy, this applies to non-EU international students as well.

No fees

While there are no tuition fees charged in Finland, Iceland and Norway, in Germany tuition fees are collected in all government-dependent private institutions. In some federal states such as Lower Saxony, tuition fees were introduced in public universities as well but these will be completely eliminated by the end of 2014.

In Denmark, students from Norway, Iceland and EU countries are treated like domestic students and pay no tuition fees, with their education fully subsidised. Most international students from non-EU or non-EEA countries, however, must pay the full amount of tuition fees, although a limited number of talented students from non-EU/EEA countries can obtain scholarships covering all or part of their tuition fees (see box C4.3 in the report).

Among some non-EU countries, including Iceland, Japan, Korea, Norway and the US, the same treatment applies to all domestic and international students. In Norway, tuition is the same for domestic and international students: no fees in public universities but charges are imposed in some private institutions. In Iceland, all students have to pay registration fees and students in private institutions have to pay tuition fees as well.

In Japan, domestic and international students are generally charged the same tuition fees, although international students with Japanese government scholarships do not have to pay. Scholarships are available for privately financed international students.

In US public institutions, international students pay the same fees as domestic out-of-state students. But since most domestic students are enrolled in-state, in practice most international students pay higher fees than most domestic students. In private universities, fees are the same for domestic and international students.

International students pay

In Korea, tuition fees and subsidies for international students vary, depending on the contract between their college of origin and the college or university they attend in Korea. In general, most international students in Korea pay tuition fees that are lower than those paid by domestic students.

In New Zealand, international students, except those in advanced research programmes, generally pay higher tuition fees; but international students from Australia receive the same subsidies as domestic students.

Typically in Australia (with the exceptions noted in Box C4.3 of the report) and in Canada, international students pay higher tuition fees than domestic students. This is also true in the Russian Federation unless students are subsidised by the Russian government.

The fact that Finland, Iceland and Norway do not have tuition fees for international students, combined with the availability of programmes taught in English, probably explains part of the growth in the number of foreign students enrolling in some of these countries between 2005 and 2012 (Table C4.1).

In the absence of fees, the high unit costs of tertiary education mean that international students place a heavy financial burden on the countries where they study (see Table B1.1a). For this reason, Denmark, which previously had no tuition fees, adopted them for non-EU and non-EEA international students as of 2006-07.

Similar options are being tested in Finland, and were adopted in Sweden which introduced tuition fees compensated by scholarships for students from outside the EU-EEA, starting from the academic year 2011-12.

Public returns from higher education

Whatever costs are incurred by students undertaking higher education, the report says that in most countries, the public returns are substantially higher than those from students enrolled in upper secondary or post-secondary non-tertiary education. This is because of the higher taxes and social contributions that flow from the higher incomes of those with tertiary qualifications.

On average across OECD countries, the public net return from an investment in tertiary education is more than US$105,000 for a man and more than US$60,000 for a woman, the report says. Taking into account direct costs, foregone earnings, and public grants, the public benefits from a man in tertiary education are four times higher than the public costs, and from a tertiary-educated woman, 2.5 times higher.

“Direct costs for education are in large part borne by the public sector. For instance, on average across OECD countries, the direct costs for a man attaining tertiary education are around 30% of the total private and public direct investment costs,” say the OECD analysts.

“Only in a few countries, notably Australia, Japan, Korea, the UK and the US, do private direct costs such as tuition fees constitute more than 55% of the overall public and private direct investment costs.”

Rather than loans, countries that offer particularly large grants are the Nordic countries of Denmark (US$29,000), Finland (US$9,000) and Sweden (US$8,000), as well as Austria (US$11,000), the Netherlands (US$14,000) and the US (US$27,000).

The analysts note that the available data show no relationship between direct costs to the students and the grants made available to them. Countries where grants are higher do not always have the highest private direct costs while, conversely, among the five countries where direct costs are the highest – US$20,000 or more – only the UK and the US provide substantial grants to students.

Full-time national students in first-degree programmes in Australia, Canada, the Netherlands, New Zealand, the UK and the US face comparatively high levels of tuition fees and well-developed student loan systems. On the other hand, Denmark, Finland, Norway and Sweden have comparatively low levels of tuition fees as well as well-developed student support systems.

In the Netherlands, grants or scholarships have a larger impact than loans because grants are more widely accessible than loans and are greater on average. As a result, more than two in three students receive a grant compared with one in three who take out loans.

In Canada, students benefit from relatively high remission rates where a large proportion of the average loan is expected to be written off if studies are completed. The overall benefit from loans is nonetheless counterbalanced by the relatively high average cost of loans, with high interest rates charged after studies are completed.

Not surprisingly, the impact of loans is negligible in Belgium, France and Spain, as these countries have comparatively low tuition fees and less-developed student support systems.

Other findings

Other findings are:

• • Australia, Canada, France, Germany, the UK and the US together receive more than 50% of all foreign students worldwide.
  
  
• • International students from OECD countries mainly come from Canada, France, Germany, Italy, Korea and the US.
  
  
• • International students represent 10% or more of the enrolments in tertiary education in Australia, Austria, Luxembourg, New Zealand, Switzerland and the United Kingdom. They also account for more than 30% of enrolments in advanced research programmes in Australia, Belgium, Luxembourg, the Netherlands, New Zealand, Switzerland and the UK.

Trends

During 2000-12, the number of foreign tertiary students enrolled worldwide more than doubled, with an average annual growth rate of almost 7%. In OECD countries, the number of foreign students enrolled at the tertiary level mirrored the global trend.

• • Europe is the top destination for students at the tertiary level of education enrolled outside their country of origin, hosting 48% of international students, followed by North America, which hosts 21% of all international students, and Asia with 18%. The number of international students in Oceania has almost tripled since 2000, though the region hosts less than 10% of all foreign students.
  
  
• • Other regions, such as Africa and Latin America and the Caribbean, are also seeing growing numbers of international students, reflecting the internationalisation of universities in an increasing number of countries (Table C4.6 and Chart C4.1).
  
  
• • In 2012, more than 4.5 million students were enrolled in tertiary education outside their country of citizenship. Australia, Austria, Luxembourg, New Zealand, Switzerland and the UK have the highest proportion of international students as a percentage of their total tertiary enrolments.
  
  
• • Students from Asia represent 53% of foreign students enrolled worldwide. The largest numbers of foreign students from this continent are from China, India and Korea.
  
  
• • The number of foreign students enrolled in tertiary education in OECD countries in 2012 was, on average, three times the number of students from OECD countries studying abroad.
  
  
• • Some 82% of all foreign students are enrolled in G20 countries while 75% are in OECD countries. These proportions have remained stable during the past decade.
  
  
• • Several countries are developing doctoral programmes or changing their funding policies to attract international students. By attracting the best students from around the world, a country believes it will eventually be seen as playing a leading role in research and innovation.
  
  
• • International students account for more than one in two new entrants into doctoral programmes in Switzerland (see chart C3.4). In 2012, significant proportions of international students were also enrolled in doctoral programmes in New Zealand and the UK (41% each).