Hungarian Conservative

To Finance or Not to Finance? The State’s Role in Higher Education  

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Whether state-financed or partially state-financed, the ultimate question regarding higher education is whether it produces highly qualified individuals with a set of skills and knowledge that are useful and profitable for them and for their communities, or not.

There is a heated debate in the United States about President Biden’s decision to introduce a student loan relief plan that will cancel up to 20,000 dollars of student debt to ‘those most in need.’ 

While the American left has applauded the decision, most Republicans are outraged, arguing that what the President is doing is un-American, is not fair to those who have already paid back their debts, not to mention the unfairness of the scheme towards all those who never went to college, and who are now expected to retroactively finance the education of those who did. But it is not only Republicans, but some liberals as well who regard the Biden plan as unacceptable. As Florida governor Ron DeSantis and liberal comedian Bill Maher alike have pointed out, why should a working-class person finance the debt of those who chose to go to college but their college education is obviously not of great value? Maher has even insisted that the whole idea of presenting college degrees as a ‘golden ticket’ to reaching middle- or upper-middle class status is a ‘scam.’

In addition, many have suggested that the expensive plan’s real objective is to secure as many Millennial votes as possible before the upcoming mid-term elections. 

The announcement of the plan is a campaign promise that the President is delivering on

The way I see it, the issue is not black and white, and should be looked at with less animus. First of all, the announcement of the plan is a campaign promise that the President is delivering on. Those who voted for him in 2020 rightfully expect Joe Biden to keep his word. Also, what blanket denouncements of the debt ‘forgiveness’ rarely mention is that it is targeted at low- and middle- income borrowers, so those who have become wealthy as a result of the investment they made in their education will not be helped by the state. The justification of the plan also makes at least some sense. As the White House fact sheet on the student loan relief plan highlights, middle-class borrowers who struggle with high monthly debt payments are unable to build wealth, which is bad for the economy as a whole.

On the other hand, there are important aspects that should be considered from a conservative point of view when weighing the pros and cons of such a major measure. For one, not all who start undergraduate education actually obtain a degree. As the White House statement itself acknowledges it, ‘nearly one-third of borrowers have debt but no degree.’ Now, the Biden administration’s take on this is that these people are even more ‘in need’ of assistance, as they presumably do not hold financially rewarding jobs, while struggling to pay back the loan they had taken out to pursue higher education. However, another legitimate approach to the same issue is that these people were irresponsible. They had taken on a huge financial burden in order to obtain a degree, and then simply failed to accomplish that objective, for whatever reason. So indeed, why should a hard-working truck driver finance the debt of such an irresponsible individual?  

Also, the US controversy has to do with the broader question of whether education as such, and higher education in particular, should be free of charge, meaning subsidized by the state with tax payer money. The standard European, welfare state answer to that question has been, until recently, yes, it should. And that is, at least to some extent, a defendable position. Since every child is equally valuable and important, each child should be given the same opportunities, one may argue. Also, it is in the interest of the entire society to have educated people, so that they may become the future professional class, or, more generically speaking, the intelligentsia, that will work for the benefit of all. In many, wealthier Western European countries, admission to state-run higher education only depends on the applicants’ academic performance in high school. 

However, economic and social realities have forced many countries to reconsider this practice. In Hungary, for example, which inherited an entirely free but restricted-to-the-privileged-few higher education system from Socialist times, the government has embarked on the road of creating a hybrid system. Some types of studies, of those who excel academically, are still financed directly by the state, but more and more formerly state-owned and managed institutions are transformed into endowment-run, private universities that offer their own scholarships to the best students. Corvinus University is a par excellence example of the latter format. MOME, the Moholy-Nagy University of Art and Design, is also managed by a foundation, but there are still fully state-sponsored scholarships available for most of its courses. Then there are prestigious state universities like ELTE, and of course entirely private colleges as well, like International Business School or Budapest Metropolitan University. This is a mix in which anyone with higher education ambitions is likely to find an institution that suits their interests and ambitions and that they can afford to attend. Those whose families or themselves are unable to finance their studies, can take out a student loan. The Hungarian system is unique in Europe in that loans are guaranteed by the state, so the private financial institutions that provide the loans can work with lower interest rates. Students take out the loans via the state-owned, non-profit Diákhitel Központ Zrt. (Student Loan Centre) and there are several options from which students can choose, depending on whether they wish to finance their everyday livelihood or they need the financing specifically for the tuition fee. By the way, tuition fees in Hungary are rather high, compared to the average wages, but not exorbitant, and are still rather low in European comparison. Semmelweis University’s doctor of medicine programme is the most expensive, costing 1.3 million forints per semester, followed by doctor of dental medicine and doctor of pharmacy programmes, but it is not cheap to study art at MOME either, at 700,000 forints per semester. By comparison, those who wish to get a degree in law must pay less than 300,000 for one term.

It is not difficult to comprehend that the state has the obligation to look at the big picture, and consider the long-term needs of the Hungarian economy and society

Apart from reducing the state’s role in higher education, the Hungarian government has also gradually cut back on the number of state-financed places available, prompting universities to raise the admission threshold scores, in particular in those programmes that are either very popular, like law school, or where training is long and expensive, such as medical school. It is not difficult to comprehend that the state has the obligation to look at the big picture, and consider the long-term needs of the Hungarian economy and society, and therefore, with the limited means it has, attempt to influence the higher education choices of young people. On the one hand, it would be desirable if more chose careers in engineering, maths and IT, and fewer opted for social studies and communication programmes, for obvious reasons. On the other hand, attrition rates need to be kept in mind as well when allocating precious taxpayer funds. Take, for instance, the statistics that show that of ten freshmen who start law school in Hungary, only four obtain a doctor of law degree. That is an astounding attrition rate of 60 per cent. Now, providing state financing to all who are admitted to law school would mean that more than half of those hundreds of millions of forints would be practically money down the drain. Finally, although one can argue against them, high admission thresholds are essential, as quality is hard to maintain if higher education becomes an industry that just churns out degrees en masse. 

So, in my view, whether state-financed or partially state-financed, the ultimate question regarding higher education is whether it produces highly qualified individuals with a set of skills and knowledge that are useful and profitable for them and for their communities, or not. If the answer is the latter, we have a problem.

Whether state-financed or partially state-financed, the ultimate question regarding higher education is whether it produces highly qualified individuals with a set of skills and knowledge that are useful and profitable for them and for their communities, or not.

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