It’s often claimed that bachelor’s degrees in England are the most expensive in the world.
Most recently this claim came from the Organisation for Economic Cooperation and Development (OECD)’s annual publication Education at a Glance and found coverage in the Times and other major news outlets. But is it true? This analytical summary considers the context in which the OECD data should be treated, and compares the cost of bachelor’s degrees between the two most expensive countries, the UK and the USA.
Setting the context
The OECD’s tuition fee comparisons show that public institutions’ annual tuition fees for home students in England (not the UK as a whole) are the highest across the OECD countries. In 2018, they equated to US$12,330 (at current prices). In comparison, the equivalent to a bachelor’s degree in the USA costs US$9,212, while other countries like Finland, Norway and Sweden charge no tuition fees.
The context behind the tuition fee comparisons should reflect the different levels of public expenditure on higher education in these countries. While the OECD provides no detail for the proportion of public investment in the provision of bachelor’s degrees, Table C3.1 tells us about the proportions of public, private, and international expenditure on tertiary education.
The data in this table does not single England out, but details the sources of funds for the UK. It shows that the UK has the lowest proportion of public expenditure on tertiary education, at 25 per cent, and the highest private expenditure on tertiary education, at 71 per cent (household expenditure accounting for 52 per cent of the total and expenditures by private entities for 19 per cent). The remaining 4 per cent comes from international sources. The average public expenditure across the OECD countries is 66 per cent – the highest being in Norway (92 per cent) and Finland (91 per cent), neither of which charges tuition fees.
The OECD describes the context of tuition fees as follows: ‘Tuition fees help bridge the gap between the costs incurred by tertiary educational institutions and the revenues they receive from sources other than students and their families.’ At the average of 66 per cent mentioned above, public expenditure across the OECD countries is the most significant funding source for tertiary education.
Public expenditure on tertiary education in the UK will increase in due course to account for the Resource Accounting and Budgeting charge, which is the estimated cost of borrowing to support the student finance system. The latest estimate for this charge, as quoted by the Universities Minister in May, was 53 per cent in 2019-20 for full-time students and 45 per cent for part-time students.
Previously, Andreas Schleicher, director of the OECD’s directorate for education and skills, praised the UK’s approach to universities’ funding as ‘the most scalable and sustainable approach to university finance’.
Are tuition fees in England higher than those in the USA?
The USA has the third largest tertiary education system in the world after China and India. The tertiary education system is diverse, and the average tuition fees vary from institution to institution and from state to state.
Research from the College Board in the USA shows fee increases compared with 2018/19. It estimates that the tuition for home students at public institutions offering four-year courses in 2020/21 was US$10,560, which reflects an annual increase of 1.1 per cent compared with the previous year before inflation adjustment.
In England, the Government raised the cap on tuition fees for new undergraduate students to £9,000 in 2012/13. A slight increase in the cap up to 9,250 was allowed for institutions with successful performance under the Teaching Excellence Framework in 2017/18. The cap has remained unchanged since then. If tuition fees in England remain unchanged in future, then the difference between the tuition fees charged in the two countries will continue to diminish.
In this context, there are two considerations: the duration of degrees in both countries and the definition of ‘home’ students.
Although the annual tuition fee in England is higher at present, degrees are shorter. A typical US bachelor’s degree tends to be four years, compared with three in England.
This being the case, using the tuition fee levels in 2018:
- A US bachelor’s degree for ‘home’ students costs: $9,212 x 4 years = US$36,848.
- A bachelor’s degree in England for ‘home’ students costs: $12,329 x 3 years = US$36,987.
Thus, a first-degree in England cost $139 more in 2018. If the average tuition fee levels for 2020 are used, then degrees from four-year public institutions in the USA cost more ($10,560 x 4 = $42,240).
A close look at the OECD methodology of the tuition fee estimates shows that for the USA, the estimates for public institutions are based on in-state tuition, which is explained on page 15 in Annex 3.
However, out-of-state students at public institutions are charged higher fees, similar to those charged to international students (although the latter group of students are likely to pay higher tuition across many institutions). The US National Center for Education Statistics shows that 22 per cent of the students studying towards undergraduate degrees and certificates travel out of their home state for their education. This proportion includes students at community colleges, where the proportion of resident students is likely to be very high. Altogether, over 4,000 institutions are included in these numbers. This means that, at the bachelor’s level, the proportion of out-of-state students is likely to be higher than 22 per cent.
In addition to tuition, one should also consider the generally higher cost of living and the opportunity cost associated with foregone income associated with an additional year.
In summary, the overall cost of undergraduate degrees in England appears to be lower than that in the USA. Tuition fees in England have remained unchanged since OECD reference year 2018, whereas tuition costs in the USA have increased in addition to inflation adjustments. On average, bachelor’s degrees in the USA are longer. Public institutions in the USA charge their out-of-state students much higher tuition fees. This shows international comparisons are complex, and the findings need to be caveated carefully.
The role of the private higher education sector
Another consideration is the size of the private tertiary sector in the USA. Over a quarter of the tertiary students in the US are enrolled in private institutions, most of which are non-profit.
An example that compares institutions from similar standing and reputation draws on the controversial league tables. The World University Rankings include four UK institutions in the top 20, all public universities. In contrast, the USA has 12 institutions in the top 20. With two exceptions (Berkeley and Los Angeles, each part of the University of California system), these are private and charge significantly higher tuition fees (e.g. Harvard, Stanford, Princeton, Yale, MIT).
The size of student debt is becoming a policy preoccupation in both countries. The student debt in the US totals $1.73 trillion and continues to rise. In the UK, the economic cost of higher education expansion resulted in abandoning the 50 per cent participation target. The UK dropped from 6th to 8th place in tertiary education participation between 2010 and 2020 among the OECD nations and is behind Canada, Ireland, the US, Japan, Korea, Israel and Luxembourg. Capping young people’s ambition to attend university is likely to come at a significantly higher cost in the long run than the savings it is aiming to achieve.