Thursday, September 11, 2008

The OECD says that higher education is at risk

Bern Bernanke took time off from Wall Street to address issues in higher education at the 2008 National Historically Black Colleges and Universities Week Conference.

“This morning I am especially pleased to highlight the past and continuing importance of the nation's historically black colleges and universities.”...“In general, higher education is one of the strong points of the U.S. educational system….”In particular, we must find ways to move more of our students, especially minorities and those from disadvantaged backgrounds, into education after high school.”

“The historically black colleges and universities have long played a vital role in this regard. They have proud record of accomplishment, dating back to 1837 with the founding of what is now Cheyney University of Pennsylvania. Slavery and segregation cast long dark shadows on our nation's history and our society, and the historically black colleges and universities served as beacons of knowledge in the darkness.” End quote.

As Bernanke indicated, education provides a strong social economic benefit. Education produces new technologies, stimulates growth, and improves the standard of living for all who live in the economy. Thus, the U.S. subsidizes education at all levels, including at the University level.

According to the Organisation for Economic Co-Operation and Development (OECD), roughly 80% of the U.S. population has at least an upper secondary degree (high school graduate).

Chart Source: OECD

Several developed economies, Germany, Norway, Switzerland, and Canada have similarly high rates of high school graduates as the U.S. Interestingly, education in the Czech Republic is strong, producing an excess of 90% of its population aged 25-34 of high school gradu. Each country has a slightly different education system, so making a direct inference on the percentages across the countries is difficult. Nevertheless, OECD countries have enacted strong public policy to address the social need for secondary education.

However, the OECD countries are strained to satisfy growing demand for tertiary education (University level). In 1997, 37% of students went to University but in 2006, that number jumped to 57%. Further, increased expenditures on education across the OECD countries has resulted in 30% more resources for each primary and secondary student, but resources for higher education (tertiary) have fallen.

In general, countries have raised the necessary monies in three ways: (1) taxes, like in the Nordic states, (2) shift some of the burden to the students, like in the U.S., or (3) like in some countries of continental Europe, shifted public resources into tertiary education, but not enough, and have not allowed private resources to pick up the slack.

The OECD is admittedly worried that tertiary education across the member countries is at risk. Public policy is not addressing the shortage in tertiary education properly, putting the future of the system, and thus economic growth, in jeopardy.

Certainly, education is yet another institution that is being squeezed by strong emerging market growth and migration. New policy need be put in place to assure that the quality of education keep up with demand.

Please leave comments. Rebecca Wilder


  1. This is not an original thought - simplifying the federal application for student aid alone would increase its usage dramatically and, thus, the number of students attending university. The form has over 100 questions that are difficult to figure out and they ask for all sorts of supporting documentation that some families may or may not have. Advisors, parents and students are all frustrated. People want to attend college; why put up such barriers?

  2. I agree - why make the application process a barrier to entry, rather than the University's application itself? You know, in Germany, one must assess very early in his/her education whether or not they are fit to attend University (like kindergarten). It's just another way the government tries to weed out those not willing to put in the effort. Sad, really.