Sunday, June 2, 2013

Education Costs Through a Wider Lens

With controversy churning once again around a rise in the interest on student loans, Brigitte wondered how the U.S. situation compares to that in other countries. We have memories, of course. Two of our daughters went to college, Michelle in France, Monique in Spain; Michelle also graduated there. We made some minor financial contributions to those efforts (it seems)—but not painful enough even to be remembered. My own reflex reaction was cautious. I sort of doubted that good data would be available. It turned out that I was wrong. A Canadian group, called Higher Education Strategy Associates (HESA, link), part of the Canadian Education Project (link), has been collecting data on fifteen countries. The most recent report, titled Global Higher Education Rankings 2010, is available online (link).

HESA’s objective is to measure the affordability of education. Their approach is to compare the actual total cost of education to median income in every country. The cost of education is measured as tuition and costs (fees, books) added to necessary living expenses; that is total cost. Total cost is then reduced by measuring grants and additional tax expenditures made by the country to subsidize educational attainment; such tax expenditures do not include loan programs in HESA’s scheme. The result is net cost. Net cost expressed as a percentage of median income then produces a ranking. HESA reports on those few countries for which it was able to collect all of the data required. I am reproducing one of the summary tables here based on 2008 data:

The table here includes actual net costs for the individual. Loan programs, which do not reduce costs but improve accessibility to education, would be applied to these net costs. In this tabulation, Germany ranks lowest in cost or highest in affordability. The net cost is 15.2 percent of median income in that country. Japan is worst, with education costing 107 percent of median income.

Worth noting here is that in Denmark, France, Germany, Norway, and Sweden, virtually no tuition is charged at all. Finland, Latvia, Netherlands, and New Zealand fall into the low tuition category, Canada, England and Wales, and Mexico are placed into the medium tuition bracket, whereas Australia, Japan, and the United States are in the high tuition category.

The report contains many tables showing details, including data on loan programs. The text brings explanations. The focus in this country, right now, is on loans—which HESA treats as a somewhat marginal issue. The real one is what education costs. The high costs in the United States and in Mexico are in part due to the big cost difference between private and public education in those countries. If only public education were charted, the U.S. would be closer to Canada in rankings and Mexico closer to Australia.

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