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a blog from young economists at Nova SBE

Free Access To Universities For Everybody?

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In Germany, there is an ongoing debate on whether there should be tuition fees for tertiary education or not. Several federal governments have been introducing and again dropping tuition fees for universities. Thus, the questions remains: is free access to tertiary education for everybody desirable?
On first sight, free access to education in general seems to be desirable. Since the concern is often raised that high tuition fees actually inhibit students with an unprivileged background from attending university. This is backed by empirical evidence that children with parents coming from an academic background are much more likely to also attend university as compared to other children whose parents do not. In order to establish equality in such preconditions, free access for tertiary education can be considered one possible solution. Though, there is evidence that the roots of this observed imbalance begin much earlier (see Cardak and Ryan, 2009). Evidence suggests that already at basic education participation rates for high income families are higher and we observe students fulfilling the prerequisites for being eligible for university entry to come mostly from academic backgrounds. Thus, the question of abolishing tuition fees or not, cannot be equivalently seen as a question of whether access to tertiary education for everybody is desirable since equity concerns raised in this context might not simply be solved by eliminating tuition fees. Expressing it in a different way we could even say that the already privileged children are being even more privileged because they are the core group benefitting from the abolition of university tuition fees. Directing taxpayers’ money to facilitating free access to tertiary education thus might even increase existing income differences.
Looking at the topic from a more economic perspective, Hanushek and Woessman (2011) argue in favour of free access to education. In their study, they find that a population with higher cognitive skills increases the rate of economic growth of a country. Thus, looking at education as a means to increase productivity and induce economic growth, the impact of tuitions on growth should be reconsidered. There, the impact of the abolition of tuition fees might give rise to a rather opposing policy implication. Time spent in education postpones productive activity but there is evidence that time spent in education leads to higher future wages. Thus, the foregone salary when studying instead of working can be compensated in future. This makes it worthwhile to attend tertiary education from a monetary point of view. Moreover, Human Capital Theory (Lucas, 1988) argues that the effectiveness of an educational system is a crucial determinant for economic growth, and that a higher effectiveness increases the optimal time that should be spent in education. An important implication derived from this result is that the better an educational institution is, the longer a student should spent time studying there. This will make the whole economy better off. From this point of view, tuition fees might provide wrong incentives giving rise to increasing opportunity costs of acquiring education. Thus, the common perception of obtaining a university degree as fast as possible in order to join the labour force is opposing theory and might need some rethinking.

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Author: studentnovasbe

Master student in Nova Sbe

One thought on “Free Access To Universities For Everybody?

  1. I think that discussing the issue of tuition fees only in terms of opportunity cost is likely to be reductive. In my opinion both inequality and income redistribution are significant themes in the discussion too. A progressive tax system would be preferable: students with low incomes would not pay university fees (or pay reduced ones), instead students with high incomes should pay for them. In this system the university would remain accessible to all, the opportunity cost would not increase excessively and the state would fulfill one of its primary tasks: the redistribution of income within society. #2033