By Jason Delisle & Preston Cooper
Thursday, August 15, 2019
The higher-education system in Finland is supposedly
every American progressive’s dream. The Finnish government pays 96 percent of
the total cost of providing young Finns with a college education; almost all
domestic students at Finnish universities pay nothing in tuition. Indeed,
Finland subsidizes its universities more than any other country in the
developed world. American advocates of free college say that if Finland can do it,
so can we. But there’s a catch to the Finnish model, and it’s not just higher
taxes.
Finland offers a nice deal for students only if they are
lucky and talented enough to get in. In 2016, Finnish institutions of higher
education accepted just 33 percent of applicants. That’s the degree of
selectivity we’d expect from an elite college in America, yet that is the
admissions rate for Finland’s entire university system. There is a price
to pay for that kind of selectivity: Finland ranks in the bottom third of
developed countries for college-degree attainment. Meanwhile, the
tuition-charging United States ranks in the top third, thanks to
open-enrollment policies at many of our colleges and universities, along with
private financing and plenty of spots offered through a diverse range of
institutions.
The Finnish example reveals a reality often glossed over
by politicians and activists who advocate mimicking European-style free-college
regimes in the United States: government budgets are finite, even when taxes
are high. If a government elects to pay for a greater share of each student’s
college education, something else has to give. Perhaps the university system
will accept fewer applicants and produce fewer graduates, as is the case in
Finland. Or maybe it will spend fewer resources per student, potentially
lowering the quality of education. Finland is evidence that such tradeoffs are
not mere theory or a false choice manufactured by miserly conservatives. Nor is
Finland the only country where such stark tradeoffs are on display.
In a new report for the American Enterprise Institute, we
compare the performance of 35 developed countries on three aspects of their
higher-education systems: how many college graduates the system produces, how
much funding is available per student overall, and what share of that funding
comes from government sources. In a world of finite resources, these three
qualities are inherently in tension with one another, and a government that
tries to prioritize one quality usually has to sacrifice one of the others.
We find that the nations of the developed world approach
this trade-off in different ways. South Korea, for instance, has the highest
college attainment rate in the developed world: 70 percent of young Koreans
have earned a college degree. But all those sheepskins have a steep opportunity
cost. South Korea ranks near the bottom on our measures of funding and
subsidies, leaving Korean students to pay most of the cost of their education
and Korean universities to operate on tight budgets. This is the natural result
of a system that seeks stratospheric college attainment rates with finite
public funding: to keep total spending under control, policymakers must make
sacrifices.
While some countries prioritize a heavily subsidized
higher-education system and others pursue a high college attainment rate, the
evidence suggests that it’s almost impossible for a nation to do everything at
once. No large country ranks in the top third of developed nations on all three
measures. A nation inevitably has to pick and choose what its higher-education
system should emphasize. Does it want free college at all costs? Or does it
want higher degree attainment or better-resourced universities, even if that
means that students have to pay some tuition?
The United States has chosen the latter path. America
ranks eleventh out of 35 countries on degree attainment, and a striking third
on our measure of the total resources available to colleges. (Some might argue
that administrative bloat and unnecessary amenities on American campuses makes
the U.S. ranking on this last measure not entirely desirable.) The United
States achieves this high ranking precisely because its government does not
insist on picking up every penny of the costs of higher education; we do not
prohibit colleges from charging tuition. Students and their families share the
burden, and so the higher-education system can do more than it could if it
relied on public funding alone.
America is not the only nation to follow this route. An
analysis of the English higher-education system found that the end of free
tuition at English universities preceded remarkable increases in both student
enrollment and funding per head. Universities in the United Kingdom are now the
best-funded in the developed world (by our measure), and also post impressive
numbers on degree attainment.
Whether the American higher-education system is “better”
or “worse” than its peers overseas is the wrong question to ask. Rather, it’s
more instructive to compare the world’s higher-education systems on multiple
dimensions, because different countries prioritize different outcomes. America
is behind Finland on government subsidies, but ahead of it on degree attainment
and total funding. Whether that makes America better or worse than Finland
depends on your own subjective preferences.
Trade-offs are a fact of life, and higher education is no
exception. As Americans debate how to best reform our higher-education system,
considering the trade-offs involved will enable clearer thinking about policy
proposals such as free tuition. Copying what we like about Finland might mean
sacrificing what we like about America.
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