Does Finland repeat the mistakes of the USA?

Finland has traditionally offered tuition-free higher education for all students, independently of the students’ country of origin. This changed in 2017, when this privilege was restricted to domestic and EU/EEA students. While there are some arguments in favour of tuition fees (see the list below), the negative consequences outweigh by far these arguments. Despite most sensible people being strongly opposed to this idea (including the student organizations and the University Rectors’ Conference UNIFI), our government is preparing legislation that would allow universities to offer degree programs where students are accepted once they pay the tuition fee bypassing all entrance examinations. These students would be even more privileged compared to the our current fee-liable students, who need to pass the student selection and pay the fee.

Allowing the universities to offer paid degrees does not mean that universities have to offer such degrees if they do not deem this appropriate. However, this legislation is probably similar to the tuition fee for non-EU/EEA citizens, which also went from first “allowed” to “mandatory” to “has to cover all costs”. And given the desolate financial situation of our universities, it will be interesting to see which of our universities can resist the temptation to earn some additional bucks while trampling at the same time their vision of Bildung, Equality and whatnot. Given their track records, most will probably falter. There has been a promise by the Minister of Science and Culture Mari-Leena Talvitie that at least the first degree (i.e. the BSc) will remain free until 2040.

This experiment has been done at a much larger scale in Germany and it did not end well. Most universities went back to the free model after they saw that there was no improvement in graduation rates, but a clear drop of enrolment by students from lower socio-economic backgrounds. However, in Finland the universities are much less independent than in Germany and the government frequently does impose mandatory rules. which the university’s cannot avoid to obey. So much for not being a federal republic like Germany or the US where there is substantial freedom merely by the fact that many important things are not decided at the national level. If you don’t like the educational system, you can move to another state, which aligns better with your ideas; when it comes to the educational system, Germany appears as fragmented as it was politically some 500 years ago.

Here are some of the arguments in favour of a tuition fee and what I think about them:

1. Making university education financially self-sustaining, thus helping out the totally botched budget of our government who promised to put the finances onto solid ground, but actually achieved the opposite. First, the revenue impact is limited. From all what we know from similar transitions in other countries, it does not transform the university budget. And once you ask students to pay, you also better provide them with a good product! Because once the university asks for money, it competes with hundreds of other foreign universities that have a much better track record of supplying good tuition. Hence, Finnish universities would need to spend the lion share of the additional income on establishing a better personal tuition that goes beyond the once-per-semester (or once-per year) HOPS meeting which our students theses days “enjoy”. I personally do not believe that this would improve quality by a lot. First, the universities would use the additional money to patch their current deficits. Second, we have enough non-teaching and non-researching staff, but that has not helped with the administrative burden on researchers and teachers. Rather the opposite: more and more documentation, reporting, quality control, reorganization, optimization and evaluation has been the result. And finally, if this really would bring additional money into the university’s pocket: Knowing our politicians, they would immediately use this as a reason to cut government spending on universities (or freeze it in an inflationary environment).

2. The argument that many other countries require tuition fees (“international convergence”) is a bad one. I hopefully do not have to explain that the majority doing a thing is not a good argument why you should do the same. First, the majority might be wrong. But more importantly, you cannot compare different countries based on an isolated variable. What does work in the US or in China does not necessarily work in Finland, because Finland differs from the United States and China is so many other aspects that it is ridiculous to even make the point.

3. Some argue that university graduates benefit privately by higher lifetime earnings, so partial cost-sharing is justified. There is a point to this, but guess what: we have had progressive taxation to make up for this! Besides, the income difference between a highly educated person (take me as an example) and a tram or train driver is in Finland about 50% after taxes (not even counting that I rarely have an 8-hour working day). So the argument is much less powerful in Finland than it is in the US, where the income inequality between the poor and the rich is much larger than in Finland. Finland’s GINI index is somewhere around 27-28, while the USA crossed the 40 already more than 30 years ago, showing a massive difference in income inequality  .

4. Make students graduate faster. That actually works to a certain degree, but is offset by less students starting university education. Thus we replace a merit-based selection (“the smart ones should study”) by a affluence-based selection (“the rich should study”). Since a university education still provides somewhat better future income, this would further increase wealth inequality. Finland doesn’t need stupid but highly educated university graduates. Finland has progressed from a backwater, agriculture-dominated country largely because bright kids from modest backgrounds could always get an excellent education. In a country of only 5 1/2 millions you cannot afford to let human intellectual capital go to waste. A tuition fee would exactly do that: let talent go to waste. You might argue, that the US and the UK show that it is possible to have the smartest scientists despite a highly commercialized higher education! That is entirely correct, but you ignore two key differences between Finland and the Anglo-American countries:

• The UK and the US have always managed to attract the intellectual cutting edge from all around the world. They do not rely on domestic talent. However, Finland almost exclusively has to rely on domestic talent because nobody comes to Finland to have a scientific career here. Occasionally some smart foreigners end up here, but mostly it’s for private reasons, not for the career. And if it’s for the career, it’s mostly regarded as a stepping stone for higher ambitions.
• All Ivy league universities have a generous scholarship program for talented students. There is nothing comparable in Finland. And guess what: The student loan crisis in the US is a crisis! It seems that some Finnish politicians do not know about it. Please listen to this podcast, Mari-Leena: https://freakonomics.com/podcast/the-1-5-trillion-question-how-to-fix-student-loan-debt-ep-377/  . Study delays in Finland have systemic roots that are not easily fixed: Many need to work during studies because of the inadequate student aid (for which our government is responsible). And there is an epidemic of mental health issues, that results not from individual issues but from the overall situation the young people find themselves in these days (for which the boomer generation can be blamed collectively). It is noteworthy that our government has consistently targeted students and young people with austerity measures (e.g., student debt reliance, proposed tuition fees, raising the retirement age) while avoiding tax hikes or cuts to Finland’s €40 billion annual pension expenditures. Guess what the average age of a Kokoomus voter is…

Could a hybrid system work? Maybe. There is something to say in favor of asking fees from students that have been studying for 6 years without completing any degree. However, simple hybrid systems would create a two-class society at the universities. First class, paying students would receive private tuition and tutoring, because they are legally entitled to it because they have bought the service. No questions asked: we would like to give such services to every student, but the reality is that we first need to comply with the legal requirements. The rest is charity work. Already now, paying students get more attention than non-paying students, because if they do not graduate in time, they likely never will if they lack the money to pay for another year of tuition. 18000€ is a massive amount of money for many students coming from outside the EU/EEA. Hence, the faculty has a large incentive to keep an eye on their progress.