3. What do tertiary students pay?

As students move from the compulsory years of schooling into tertiary education, differences emerge between in the ways in which education is funded.  Tuition fees are common, though by no means universal.  Different methods of student support apply - universal and targeted, grants and loans.  There is considerable interest in how different funding mechanisms are reflected in education participation and attainment.  The following indicators highlight how New Zealand compares in its funding, participation and attainment in the tertiary education.

3.1 Estimated annual average tuition fees charged by tertiary-type A² educational institutions for national students (academic year 2006/07)

The OECD compiles the average tuition fee charged to tertiary students across the OECD. The average domestic fee is calculated on an equivalent full-time basis and is adjusted using purchasing power parities (PPP) to enable a comparison to be made with the tuition fees charged in other countries.

Large differences were observed among OECD countries in the average tuition fees charged by institutions for tertiary type-A programmes in 2006, with New Zealand tuition fees being significantly lower than those charged in the United States, Australia and Japan. No tuition fees were charged for degree level qualifications by public institutions in seven OECD countries.

New Zealand tertiary education institutions charged an average annual fee of US$2,765 for tertiary type-A programmes. This was 31 percent lower than the Australian average fee (US`$4,035). However, if we account for the respective national income levels of the two countries, we find that the average New Zealand fee as a proportion of GDP per capita was only 9 percent lower than that of Australia.

At the tertiary-type B level, New Zealand average fees were more in line with those charged in the United States and Japan (see Figure 7), but 23 percent lower than those charged in Australia.  However, when related to GDP per capita, New Zealand average tertiary type-B were 2 percent above the fees charged for similar programmes in Australia. As with tertiary-type A study, there were several OECD countries that did not charge tuition fees at the tertiary-type B level (e.g. Ireland).

Figure 7: Annual average domestic tuition fees charged by tertiary institutions for selected OECD countries 2006

Notes:

1. This figure expresses annual average tuition fees per student in equivalent US dollars converted using purchasing power parities.
2. Amounts of tuition fees should be interpreted with caution as they result from the weighted average of the main tertiary-type A and tertiary-type B programmes and do not cover all institutions
   

Source: OECD (2009), Education at a Glance, Tables B5.1.a, B5.1b (web only)

3.2 Relative proportions of public and private expenditure on educational institutions, as a percentage, for tertiary education (2000, 2006)

Expenditure on tertiary education institutions³ comes from a variety of sources. The OECD measures how much of this expenditure is allocated from public sources, such as government grants, and how much is sourced privately, such as tuition fees from students and grants from private business.

Figure 8 illustrates the proportion of public and private expenditure on tertiary education institutions in 2006. In New Zealand, private expenditure accounted for 37 percent of total expenditure on tertiary education institutions in 2006. In Australia, the contribution from private sources is higher than New Zealand at 52 percent. Private expenditure in the OECD ranges from a low of three percent in Norway to a high of 66 percent in the United States, and averages 27 percent.

Figure 8: Proportions of public and private expenditure on tertiary education institutions in 2006

Source: OECD (2009), Education at a Glance, Table B3.2b

Expenditure from private sources also includes tuition fees paid by international students. If we look at the balance between the fees paid just by domestic students and subsidies paid by government, the student share of the full cost is around 30 percent. Of that 30 percent, much is paid by way of the compulsory fee entitlement in the Student Loan Scheme and hence, has a government subsidy. Allowing for that effect, and given that the cost to the government of lending under the Student Loan Scheme in 2006/07, the year analysed, was 41.15 cents in each dollar borrowed, the actual share of full cost borne by students reduces to around 21 percent.

Footnotes 

2. See Box 1 for definition of tertiary-type A and tertiary-type B education programmes.
3. Note that the OECD definition of tertiary education institutions includes tertiary providers and government agencies.