13 Jan 2011   |   News

Economic crisis hits at Europe’s higher education

Austerity measures are leading to changes in tuition fees, collaboration with industry, philanthropic funding and funding from donations, says European University Association.

The economic crisis has left few of Europe’s higher education systems unaffected, with institutions in most countries being faced with uncertainty and the expectation of further - and possibly deeper - cuts to come in the forthcoming months and years.

The cuts are likely to lead to significant restructuring, but as governments continue with austerity measures and balancing their deficits, the full extent of effects on higher education systems around Europe remains to be seen, according to the European University Association’s (EUA) latest report on the impact of the economic crisis on European universities.

EUA has been tracking the evolution of the economic crisis and its effects on higher education systems in Europe since its onset in 2008. The impact of the crisis on universities’ private sources of funding is also monitored, although a lack of data makes it difficult to identify clear trends. On average, Europe’s universities get 75 per cent of their funding from public sources.

Overall, the evidence points to changes taking place especially in relation to tuition fees, collaboration with industry, philanthropic funding and funding from donations.

Some countries, such as Norway and France for instance, have benefitted from stimulus packages provided at the beginning of the crisis, although these have not always been used to relieve the effects on teaching and research as core university activities.

Different European countries have been affected at different stages of the crisis. In some countries universities saw the impact of the crisis as early as the beginning of 2009, while others were affected only later or, in a few isolated cases, have experienced little direct impact so far.

Cuts in public spending tend to hit higher education budgets with somewhat of a delay, and this makes further monitoring and in-depth analysis essential, says EUA.

Latvia first to see cuts

Major cuts to public funding of higher education were first observed in Latvia, where an initial cut of 48 per cent at the beginning of 2009 was followed by a further cut of 18 per cent in 2010. The cuts have put serious pressure on the Latvian higher education system.

In Italy, universities’ public funding will be cut by close to 20 per cent by 2013. The cut will also have the effect of reducing income from tuition fees, which are limited and cannot exceed 20 per cent of their total public funding. The situation appears critical as some 25 universities already face a default in the near future. At the same time, a wide-ranging reform of the higher education system is being passed, which will affect the way funding is delivered to universities.

The situation is also critical in Greece, where the government wants to cut academic and maintenance budgets by 30 per cent, however leaving universities the choice of how to implement these savings themselves.

The last to join the category of major cuts is the UK, where higher education will have to take up to a 40 per cent cut of its current budget until 2014 – 2015. Most of this cut will affect teaching budgets, which will be reduced by up to 79 per cent. Tuition fees will be increased to compensate for this.

Cuts between 5 and 10 per cent have been introduced in Ireland. In addition, the capital grant has been halved for 2011.

Cuts of similar magnitude have also been introduced in Iceland where a 6-7 per cent cut is expected in 2011, to follow a 5 per cent cut in 2010. In Estonia there was a 10 per cent cut in 2010, in addition to a 7 per cent cut in 2009.

Cuts up to 5 per cent have been observed in many countries of Eastern and South Eastern Europe, including the Czech Republic, Croatia, Serbia and the Former Yugoslav Republic of Macedonia.

So far, no direct cuts or minor cuts only have been reported by the Nordic countries, including Norway, Sweden, Finland and Denmark, or by the Netherlands, Poland and Switzerland. Nonetheless, many universities across these countries give accounts of facing indirect impacts on their funding structure. In some cases, such as in Norway and the Netherlands, financial pressures stem especially from increased student numbers.

Funding commitments abandoned

In many countries, governments have discarded previous commitments to increase funding. In Hungary the government has cancelled plans announced in 2007 to increase overall university funding, which will leave universities with 15% less financial support than previously expected. Both communities in Belgium have also reported that their regional governments have abandoned previous plans to increase funding.

In the Flemish community of Belgium, universities are coping with a three-year funding freeze which has replaced a previously promised increase of approximately 10 per cent, while the French speaking community has seen the investment of Euro 30 million planned to be invested over eight years, now extended over 15 years.

Similarly, in Austria, plans by the government to increase higher education expenditure by 2 per cent between 2013 and 2015 have now been scrapped. In Spain, modified investment plans have mostly affected universities’ research capacities.

Some countries see increased investment

In contrast, some European governments have upheld their commitments, or indeed provided new investments to fund higher education. France’s announcement of the “Grand Emprunt” (national loan) has seen a significant increase in overall higher education funding, which comes as part of a large investment in key priority areas, especially teaching and research.

In 2010, spending of Euro 11 billion is proposed to improve the overall quality of higher education and Euro 8 billion for investment in research. A further Euro 8 billion will go to creating new university campuses towards restructuring existing ones.

However, since a major part of the investments made under the “Grand Emprunt” consists of capital contributions, this means that the actual amount received by universities depends on the financial markets, and EUA says is likely to be significantly smaller than proposed.

Another case where funds for higher education have been raised over recent years is Germany. Though higher education funding in Germany is largely provided by Länder authorities, the federal government has been increasing investments, providing an additional Euro 800 million under the renewed Higher Education Pact, which will support growing student numbers until 2015.

The federal government will also invest a further Euro 2.7 billion from 2012 – 2015 through the German Excellence Initiative, as well as provide additional funding through a 5 per cent per year increase for the Innovation and Research Pact until 2015. Federal authorities, with state support, will also guarantee further financial resources over the next ten years as part of a Pact to Increase the Quality of Teaching; which comes in parallel to a 2 per cent increase in current levels of student support.

On the other hand, it seems that these developments may also have an impact on the structure of the German higher education funding model in the future. As it becomes apparent that some Länder plan to cut or have already cut their higher education funding for 2011, the increases in federal funding will, to some extent, alleviate this loss, the EUA says.

In the case of Portugal the situation is mixed, as a recent agreement between the government and rectors will provide a greatly needed investment of Euro100 million which will alleviate the burden of cuts from previous years. This positive development may undermined by expected salary cuts in public administration that will affect university staff.

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