The financial sustainability of higher education is a growing – albeit far from new – concern in OECD countries. Reports of universities and colleges that are unable to balance their books or to invest adequately in their staff and infrastructure to meet future requirements are common. Almost universally across OECD countries, constraints on public finances and demands from other policy areas, whether health, social care or defence, limit the headroom for governments to invest additional public money in post-secondary education and research. The shrinking youth cohort in many OECD countries is already reducing the flow of new undergraduates and the public subsidy and tuition fees they bring – a pattern that will only accelerate in the years to come. And in higher education systems where international students account for a substantial proportion of enrolment, changing patterns of international mobility, geopolitical tensions and shifts in domestic immigration policies are combining to reduce inbound mobility and the income generated from lucrative international fees.
Putting higher education on a more sustainable financial footing may mean revisiting institutional and system-wide strategies and making choices about which objectives and activities to prioritise, and the institutional landscape, human resources and funding needed to achieve these. Potentially unpalatable decisions about what to stop doing and what to re-organise will often be required. Institutional leaders and public funding bodies will likely need to take bold decisions consciously to preserve societally important but vulnerable activities and expenditure. As tertiary education attainment rates reach new records and artificial intelligence (AI) starts to reshape many graduate occupations, it is in any case time to embark on a serious collective reflection about the advanced knowledge and skills that should be valued in society and how higher education systems and qualifications can best be configured to deliver these.
Creating higher education systems that provide high-quality, relevant educational opportunities to learners at different stages of their lives, continue to advance human knowledge through research and provide service to society in a way that is financially sustainable is a challenging task. Alongside a renewed vision for higher education, it will require a nuanced understanding of the activities and outputs that higher education institutions deliver and what these realistically cost; concerted efforts to mobilise resources to pay for things that society needs and values; and innovative approaches to reshaping higher education to deliver on societal and institutional objectives as efficiently as possible.
Drawing on evidence from comparative and system-specific analyses undertaken as part of the OECD’s Resourcing Higher Education Project between 2021 and 2024, this report takes stock of recent policy efforts in OECD countries to understand the cost of higher education activities, mobilise resources for higher education and create the conditions for effective and efficient higher education systems through the design of public funding models. Developing a renewed vision for higher education in each national or regional context will require time and input from many sources. However, by sharing information on policy approaches and evidence on effectiveness and outstanding challenges, this report aims to support efforts by policy and lawmakers in OECD countries and beyond to lay the foundations for more financially sustainable higher education systems.