A Tax/Benefit Problem

The most common nationality of the students in my undergraduate class in the Netherlands is German. They pay the same fees as Dutch students. The same would be true for Dutch students in Germany — or in most other EU countries — under the agreements referred to as the Bologna Process.

It’s totally different from in-state/out-of-state tuition charges in public universities in the U.S. It’s not a bad idea-it encourages university students to flock to schools that they believe (rightly or wrongly) offer a better education. It means European students in general obtain a better education. The problem is that fees never cover average costs. Taxpayers in the net-receiving countries subsidize the education of net-sending countries’ students. I don’t see how this can be a stable equilibrium politically: If I were a taxpayer in a net-receiving country, I would not like having my taxes support the education of foreigners, nor would I be pleased to give foreign taxpayers the incentive to be free-riders on the educational policy of the E.U. The only hope is that some foreign students remain in the receiving country after completing education, so that the receiving country reaps a return on its subsidies.

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COMMENTS: 18

  1. htb says:

    Once again, the cost of university education is far higher than the tuition. Tuition gets you into class; it does not give you food to eat or a place to sleep. Room and board are frequently the largest expenses — especially for people that are going “away” to college, instead of attending the local school and living with their parents.

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  2. Johnny E says:

    We got the same problem in Texas. We have some great state universities but the politicians don’t like to fund them. There’s no state income tax. Even though we have a high-tech computer corridor, have a high-tech oil industry, and the world’s largest hospital complex we end up having to import workers trained elsewhere. It used to be from states that have big state universities but now it’s lots of people on H-1B visas. Years ago some friends of mine hung out with some nursing students in Newfoundland. They all moved to Texas because Texas doesn’t train enough of their own. I knew a guy with political conections in Austin and he was lobbying to build more nursing schools but he wasn’t getting anywhere.

    So the taxpayers from other states and countries end up subsidizing cheapskate Texas. Meanwhile we have a lot of people who live here who would like the opportunity for those jobs. Instead they end up being on welfare or unemployment which is a real drain on the taxpayers.

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  3. Lord says:

    There is a question whether what is being subsidized is the education of foreigners or the educational establishment of the subsidizers. Sounds like more of the latter which may offer substantial spinoffs.

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  4. jimi says:

    Here in the US, I live in one state and own property in another.

    Because I am not a resident of the other state, I do not have a homestead exemption, and therefore pay higher property taxes. However, my child is not eligible for in-state tuition in that state, despite the fact that I have paid a greater share of the states property taxes.

    That really ticks me off…….

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  5. Martin Doonan says:

    You’d also have to check the grants and loans systems. If the receiving country gives the grants and loans (loans normally having to be paid back by working in that country) then migration will tend towards the most finacially generous, not the best education. (You don’t actually beleive all students are genuinely interested in the education?)

    If you only have to pay back gov’t loans when working in the loaning country, it becomes easy to get the education and skip home, defaulting on the debt.

    With the high costs of higher education, financial motivations are stronger than educational for students.

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  7. martien says:

    Also here incentives work all too well. I taught at Maastricht university, which attracts many international (German) students.

    The international students lowered the professors’ direct costs of teaching (and maybe they lowered the costs at departmental level) for these reasons:

    1) The foreign students are highly motivated students – and so they substantially lowered the direct costs of teaching. International students also found their way in TA and RA jobs, or they enrolled in PhD programs.

    2) Professors with good language skills had a higher likelihood of teaching the groups with more foreign students: good language skills tend to correlate with academic skills.

    3) Thus a positive feedback loop was established, foreign students lowered the costs and created value for the professors and themselves.

    4) Lastly, but this is speculative: teaching capacity is fixed and Dutch uni’s cannot refuse applicants. Student numbers are volatile. Maybe uni’s have more control over the amount of foreign students they can accept / refuse. This also lowers the costs of teaching.

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  8. Owen says:

    In the state of Ohio the supreme court ruled that using property taxes to fund public schools was illegal because it was not equitable. Essentially, wealthier neighborhoods had better schools. Lots of people think like you, that their taxes shouldn’t be funding other people’s education. That’s the logic behind property taxes funding education. The truth is, funding education is better for everyone and ‘other people’ is always relative. You could be disagreeing about your tax dollars going to people in another county, state, country or continent.

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