Should university courses be free?

Free tuition is part of the landscape in a number of European countries.

There are many societal advantages to free tertiary education, but that doesn't address the crucial question - should you pay for it?

Quality tertiary education can boost a society’s human capital, generating wealth and generally making things better. But should the taxpayer or the user be footing the bill for it?

The death last year of free-education champion, former Australian prime minister Gough Whitlam, and moves by German universities to abolish tuition fees have put the spotlight on an age-old debate – should university students have to pay for their courses?

While it is largely taken for granted in countries such as the US, Australia, New Zealand and the United Kingdom that students should pay at least part of the cost of their degrees, free tuition is still part of the landscape in European countries such as Germany and Sweden. Governments face tough funding decisions in a debate that straddles politics and economics. 



University of Sydney,

In a perfect world, Michael Spence believes tertiary education should be free, along with a generous flow of government funding to underpin university research. After all, he is a beneficiary of the Whitlam era in Australia and its commitment to a free university system. However, the growing scale of universities imposes some different financial realities.

“There has been a massive expansion in the system and, for one reason or another, the taxpayer isn’t prepared to pick up the bill,” says the University of Sydney’s vice-chancellor.

“And that leaves us in the situation where not only research, but teaching, is underfunded.”

Although some critics argue that having tertiary fees discriminates against students from poorer backgrounds, Spence says a fair fee-paying system means universities could potentially support more students from disadvantaged backgrounds. Latest figures show that just 7 per cent of University of Sydney students come from low socio-economic status backgrounds.

In 2014, Australia’s Senate rejected the Abbott Government’s push to deregulate universities and let them set their own fees. That decision has cast an ever bigger cloud of uncertainty over funding for tertiary institutions.

Spence argues that deregulation would actually result in a better-resourced system that could invest more in quality education and create a more expansive scholarship program for students from disadvantaged backgrounds.

“What the deregulation of university fees involves is charging people who can afford to pay to support better teaching for everybody, and also to support a broader diversity of students in our universities,” he says.

While tuition fees have been under the microscope, Spence says that it’s not always course fees that make things so financially tough for students – the more crushing problem is the high cost of living.

“So particularly for students from rural and regional communities, who might want to come to the city to study, the cost of living in a city like Sydney is prohibitive,” he says.

Spence says if the status quo continues for funding tertiary institutions in Australia, the nation’s university system will face even more quality pressures and rely more heavily on international student fees. He describes that dependence on international students as “morally hazardous” and “unsustainable”.

Dr Michael Spence is the vice-chancellor of the University of Sydney and a leader in the field of intellectual property theory.


Australian National University,

 Bruce Chapman from the Australian National University wants to disabuse people of the notion of “free” university education. Even if students pay no tuition fees, the cost of institutions and their courses has to be borne by governments and, ultimately, taxpayers.

“In economics, there is no ‘free’,” he says.

“The correct economic question is ‘who should pay and how much should they pay?’ A system whereby the students pay nothing is a system in which the taxpayer pays close to 100 per cent.”

Chapman is known as the father of the Higher Education Contribution Scheme (HECS), the world’s first income-contingent loan scheme to pay off public-sector higher education tuition charges. Introduced in Australia in 1989, the loans legally require graduates to repay fees directly through the tax system.

Chapman believes it is “inequitable and unfair” for taxpayers, especially those from lower socio-economic groups, to meet the full cost of people’s university degrees. This is especially true, he says, given research that shows over a lifetime, the pre-tax incomes of graduates will exceed those of non-graduates by an average of A$1 million to A$1.5 million.

“If a system is financed entirely by government, it means that some part of the taxes of people who don’t go to university – and that will still be of the order of 70 per cent of the adult population in total – are actually being used for the private benefits of the graduates.”

Chapman says the Australian experience showed that people from lower socio-economic groups were less likely to attend university even when there were no student fees.

He sees it as an irony that the most vocal advocates of a free university education typically come from the left wing of society.

“And yet this is a policy which basically distributes, on average, resources to the most privileged.”

Chapman has studied the German free-tuition model and, while reluctant to criticise the country’s system, he believes that it has been adopted “because of the politics” rather than any logical economic argument.

“If I think generically about this, the case for introducing income-contingent loans is as strong anywhere in the world as it was in Australia,” he concludes.

Professor Bruce Chapman has been a higher education financing consultant to the World Bank and governments around the world.


Technische Universität Braunschweig,

While tuition fees had been seen by some as a way to address lingering underfunding in German universities, they have not done the job, says Professor Jürgen Hesselbach of Technische Universität Braunschweig in Lower Saxony.

Now courses at all German universities are nominally free, after tuition fees were recently abolished in Lower Saxony, the last of Germany’s seven states to charge for higher education. But that doesn’t solve the problem either, according to Hesselbach.

He notes that while not being a panacea, tuition fees at least made some contribution to improving course delivery and student outcomes in a sector that had been through the Bologna Process, creating a common European university education system.

“For the first time we had relevant funding for the improvement of study conditions and the students had for the first time influence on the university budget,” he says.

Hesselbach acknowledges that public-funded education is a popular concept, but given that a university degree offers students the prospect of better life opportunities, he believes it is fair to ask them for a financial contribution.

There is, however, a proviso: “The precondition is an advanced system of scholarships to guarantee no deterrence of lower socio-economic groups,” says Hesselbach.

Although the switch back to free tuition could, in theory, put more financial pressure on German universities and impact on the quality of courses, Hesselbach believes that won’t happen in Lower Saxony, as the state government pays a full compensation related to the number of students. Yet that may not always be the case.

“It’s impossible to say if the state government will maintain the compensation in a difficult budget situation,” he notes.

Hesselbach says the jury is out on whether abandoning tuition fees will allow greater access to higher education for all people in society.

“The effect of tuition fees on the willingness to study of lower socio-economic groups is controversial in science. The small amount of €500 [about A$750] per semester may play a role. But there are not only financial aspects influencing the access to higher education.”

Regardless of the arguments for and against, Hesselbach expects the fees debate to stay on the agenda in Germany.

“We respect the parliamentary decision, but our preference has always been to continue with tuition fees as a stable long-term source of funding [rather than] variable public und external funding.”

Professor Jürgen Hesselbach is president of Technische Universität Braunschweig and chairman of the State Higher Education Conference in Lower Saxony, Germany.

This article is from the February 2015 issue of INTHEBLACK.

February 2015
February 2015

Read the February issue

Each month we select the must-reads from the current issue of INTHEBLACK. Read more now.