Thematic week: Tuition fees and equity issues in Finland

Jussi Kivistö

This article is written by Jussi Kivistö. He holds a doctoral degree in higher education administration from University of Tampere, and is working at the university as Research Director of HEG (Higher Education Group). His articles have been published in a number of peer reviewed international publications in the field of higher education research. His current research is primarily focused on finance of higher education, development of doctoral programmes, and implementation of the higher education policies.

In general, the issue of implementing tuition fees for foreign or domestic students can be analysed from the perspectives of efficiency or equity. As a requested reply to Leasa Weimer’s blog entry yesterday, I will limit the discussion here to only some of the equity concerns involved.

According to the latest OECD statistics (Education at a Glance 2010), Finland has the privilege of having the one of the most publicly funded higher education system in the world. In 2007, the public expenditure on higher education, both on institutions and subsidies to households, comprised 1.6% of Finland’s GDP, being the highest (together with Denmark) among the OECD countries (EU19 average 1.1%). Finland is also among the top 3 together with Denmark and Norway in financing HEIs from public sources. In 2007, 95,7% of the expenditures on Finnish HEIs were funded from public sources (EU19 average 79,4%, Norway 97,0%, Denmark 96,5%).

This extremely high rate of public funding reflects directly the central and long-standing goal of the national higher education policy to provide equal opportunities for students from all socio-economic backgrounds. However, the results of this policy are somewhat surprising. Although Finland was ranked #1 in the latest ”Global Higher Education Rankings 2010: Affordability and Accessibility in Comparative Perspective” (Usher & Medow 2010), recent studies on the socio-economic background of domestic students (e.g. National Student Survey 2010; Nori 2011) reveal that students from a  middle and upper class background are still strongly overrepresented in the cohorts obtaining higher education. There are also perceptible trends of socio-economic background influencing the choice of the field of education. So-called status fields with high private rate of return, such as Law, Business and Medicine, attract almost half of the students from higher socio-economic background, whereas less than one third of education students come from the highest income groups.

It is also somewhat surprising that Educational Equity Index (EEI) measuring accessibility as a ratio of socio-demographic characteristics (specifically, parental education) shows that countries collecting tuition fees (Netherlands, Australia, Canada), have higher EEI scores than countries of fee-free higher education (Finland, Sweden, Norway). Lower EEI score indicates that the student body is more “elite” than the overall population. Actually the score of the U.S. (.64), a country well known for high tuition fees, is only slightly lower than Finland (.70) but clearly higher than Norway (.58) and Sweden (.59) (Usher & Medow 2010, pp. 46-47).

During the past years, the number of non-EU/EEC students in Finnish universities has been increasing. In 2010, there were roughly 3,600 Master’s students in Finnish universities compared to 1,500 students in 1999. Although there is no reliable information on the socio-economic background of foreign students available, it is presumable that the majority of these students are not from the lowest socio-economic groups.

Providing fee-free higher education on the grounds of equity has been a failure from the perspective of distributional equity. Since the majority of Finnish (and presumably foreign) students are members of  the richest half of the population,  high public funding (i.e. tax revenues, of which only 1/3 are collected with the progression related to income or wealth) for higher education is creating regressive income distribution, i.e. redistributing resources away from the poorer individuals to the richer individuals. Implementing tuition fees for foreign students is a step towards the right direction making the Finnish higher education system more equitable, especially, if it eventually leads to the implementation of tuition fees for domestic students.