Strenghten Higher Education through Innovative Financial Tools Project Report: Higher education costs in Poland are borne by the state and households – is there a role for business?
The report provides a detailed analysis of financial aspects of higher education across the EU and selected Member States (Italy, Poland and the UK). The overall context is the pressure to improve efficiency of higher education spending across the EU. The report focuses on the student perspective: the challenges students face in funding education at the higher level under different models of costs of higher education and different schemes of financial support available in various EU Member States. In particular, SHIFT evinces the dynamics of higher education students’ access to finance and financial literacy across the EU, emphasizing the rigidities in availability of the direct (loans and grants) and indirect (tax allowances, family benefits) schemes for students and discerning the government initiatives in EU countries to increase the level of financial literacy. Furthermore, this report thoroughly examines the private and public expenditure by EU countries to finance higher education and highlights the shortcomings of the current funding policies. The analysis aims to provide a background for further reflection on the design of the innovative student support models.
Since 1991 Poland has undergone a dramatic change in higher education system, with a massive increase in the percentage of young people choosing tertiary education path. This share increased four-fold from 10% in 1990 to 40% in 2007. Since then the tertiary education participation rates stablised at below 40%. This education boom of 1990s and early 2000s has led to the growth of non-public higher education institutions (400 in the mid-2000s), forcing the majority of students to pay tuition fees. In 2005, the number of students in fee-based tertiary education programmes outpaced the number of students in public institutions.
For the last decade the situation has changed again. The size of cohorts in the age at which most people choose to participate in tertiary education has shrunk substantially. As a result, the number of students, after increasing more than fivefold between 1991 and 2008, started to decline so that between 2010 and 2016 the number of students fell by close to 30%. Given the demographic outlook for the next decade this downward trend is expected to continue.
Figure 1: Demography and tertiary education in Poland: boom and bust cycle, 1991-2025
Note: The data on the number of students for 1991 and 2013 onwards are not fully comparable with 1998-2012 data. Population projections (2018 onwards) according to central Eurostat scenario
Source: PL Central Statistical Office and Eurostat
It has now become easier for young people to obtain a place at public higher education institutions full-time programmes that do not charge fees. As illustrated in the Figure below over the last 10 years (until 2016/2017 academic year) the number of students at courses charging no fees has remained broadly stable. At the same time the number of students in fee-based tertiary education programmes has shrank by around half since 2005. This has had an impact on the higher education institutions offering fee-based courses leading to closing of some of private institutions. This could offer an opportunity for more quality-based competition between higher education institutions, but the resulting picture is probably more nuanced. The changes in the HEI funding formula introduced in 2017 and forthcoming substantial changes in the functioning of tertiary education resulting from a new framework law that entered into force in October 2018 are likely to have substantial impact. The overarching objective is to improve the quality of tertiary education.
Figure 2: Students studying without fees and those paying tuition fees, 1990-2016
Source: PL Central Statistical Office, Higher Education Institutions and their Finances, various editions
Poland has a dual system of financing higher education. Full-time undergraduate and postgraduate courses offered by public higher education institutions are free of charge, whereas part-time programmes, courses taught in foreign languages, and studies at private institutions are subject to a tuition fee. The financial support system mainly consists of various scholarships schemes with much less developed student loans. Thus,
- Around 20% of students receive scholarships, which take the form of both need-based and merit-based grants.
- About 16% of students receive financial support from the government (by law) due to their difficult financial situation or disabilities, whereas close to 8% of students are awarded with grants for outstanding academic performance.
- Only 0.3% of the student population obtain loans and the number of student loans has been declining for the last years, despite the favourable conditions (late repayment date, low interest rates, etc.) offered thanks to public subsidies to student loan schemes.
Poland clearly stands out from other EU countries in one important aspect. Almost all private spending on higher education comes from households (predominantly in the form of tuition fees and other similar payments), whereas the business sector involvement is minimal (see Figure below). This low private sector financial involvement is a result of a broader phenomenon – generally very weak co-operation between higher education institutions and the business sector. This is widely seen as a challenge for promoting innovation and increasing the labour market relevance of tertiary education.
Figure 3: Percentage shares of total expenditure on tertiary educational institutions (2014)
Source: OECD, Education at a Glance 2017: OECD Indicators
SHIFT is implemented by a Consortium of 8 partners from 4 countries (the United Kingdom, Belgium, Italy and Poland) and will develop and validate an innovative model to provide financial support to students. SHIFT is developing a model of a fund that pools money from both public and private sectors to generate revenues to be redistributed to HE students in the form of grants and/or soft loans.
CASE’s experts work in this project on an innovative financial model to guarantee sustainability and effectiveness in the use and management of public resources devoted to financial inclusion of Polish students to eliminate financial barriers for their participation. The SHIFT impact will materialise also way beyond the lifetime of the project. The potential benefits of SHIFT are manifold: improved efficiency and sustainability of public resources devoted to HE, a system to mobilise private funding for HE students, a public private partnership model conducive to improved HE quality, relevance and access.