The Political Economy of Higher Education Finance

The Politics of Tuition Fees and Subsidies in OECD Countries,1945–2015

Julian L. Garritzmann

• Publisher: Palgrave Macmillan
• Year: 2016
• ISBN:
  9783319299136
• Topic: Education
• Subtopic: Higher Education

This book analyzes the political economy of higher education finance across a range of OECD countries, exploring why some students pay extortionate tuition fees whilst for others their education is free.What are the redistributional consequences of these different tuition-subsidy systems?Analysing the variety of existing systems, Garritzmann shows that across the advanced democracies "Four Worlds of Student Finance" exist. Historically, however, all countries' higher education systems looked very much alike in the 1940s. The book develops a theoretical model, the Time-Sensitive Partisan Theory, to explain why countries have evolved from a similar historical starting point to today's very distinct Four Worlds. The empirical analyses combine a wide variety of qualitative and quantitative evidence, studying higher education policies in all advanced democracies from 1945-2015.

© The Author(s) 2016

Julian L. GarritzmannThe Political Economy of Higher Education Finance10.1007/978-3-319-29913-6_1

Begin Abstract

1. The Politics of Higher Education Tuition Fees and Subsidies

Julian L. Garritzmann¹

(1)

University of Konstanz, Department of Politics & Public Administration, Konstanz, Germany

End Abstract

1.1 Introduction

When a student graduates from college in the USA, she probably shoulders a debt of US$40,000, due to loans she took out to cover tuition fees and living expenses. Even debts exceeding US$100,000 are not uncommon. Suppose this student (let’s call her Hannah) studied in Finland instead. There, Hannah would pay no tuition fees, and she would receive a substantial governmental grant to cover living costs during her studies. We can also imagine Hannah studied in Germany, where no tuition fees would be charged either; presumably, however, she also would not receive any financial student aid. Finally, consider that Hannah attended a typical Japanese university where the tuition amounts would resemble those of the USA; in contrast to the USA, however, public grants and subsidized loans would be hardly available.

Why do students in some countries pay tremendously high tuition fees while students in other countries study free of charge? Why do some countries offer grants, scholarships, and subsidized loans while such subsidies are non-existent elsewhere? What are the (re-)distributional consequences of these different tuition-subsidy systems? This book provides answers to these and related questions by analyzing the political economy of higher education tuition fees and subsidies. ¹

More specifically, this book poses and answers three research questions that build on one another. Firstly, how do the tuition-subsidy systems differ across the advanced democracies? As a systematic comparative descriptive overview on the variety of tuition-subsidy regimes across the advanced democracies is still absent in the literature, I compiled a huge comparative dataset on the tuition-subsidy systems in 33 advanced democracies (OECD countries, i.e. the Organisation for Economic Co-operation and Development) to provide such an overview. Chapter 2 summarizes these data, which comprise information on more than 70 characteristics of the respective tuition-subsidy systems. The main takeaway from the descriptive overview is that the advanced democracies fall into Four Worlds of Student Finance. In some countries (mainly continental Europe) tuition fees are low, but financial student aid is also largely non-existent: the low-tuition–low-subsidy regime. A second group (comprising Nordic Europe) is characterized by the absence of tuition fees but very generous public subsidies: the low-tuition–high-subsidy regime. The Anglo-Saxon countries form a third group, the high-tuition–high-subsidy regime, where most students are charged considerable tuition amounts but also often receive public grants or publicly subsidized student loans. Finally, we also find the—prima facie potentially most surprising—combination of high tuition fees accompanied by sparse public subsidies in Japan, Korea, and other Asian countries, as well as some Latin American countries: the high-tuition–low-subsidy regime. Figure 1.1 depicts the Four Worlds of Student Finance with two exemplary variables (cf. Chap. 2 for details).

Fig. 1.1

The Four Worlds of Student Finance (Source: Author’s compilation, cf. Fig. 2.​8 for details)

The second—and major—aim of this book is to explain the variety of the Four Worlds of Student Finance. Why do countries’ higher education finance systems differ so considerably? This question is particularly puzzling, because when one goes back to the immediate post-World War II (WWII) period, all of these countries’ tuition-subsidy systems looked very much alike ² : systematic public subsidies were non-existent in all countries and tuition was comparably low (Chap. 3; cf. also Eicher 1998; Nakata and Mosk 1987). Moreover, enrollment levels were also very low, as barely 5 % of each age cohort enrolled in higher education (Trow 1972; Windolf 1997). In other words, the higher education systems of countries such as Germany, Sweden, the UK, the USA, Japan, or France were all highly similar in the mid-twentieth century. The main question of this book, therefore, is how can we explain the origin of the Four Worlds of Student Finance? How and why have countries developed from a low-tuition–low-subsidy regime in the immediate post-WWII decade to today’s four highly distinct regimes?

The main argument of this book is—challenging a literature that so far has almost exclusively focused on structural socio-economic explanations (see Sect. 1.2)—that the main reason for countries’ diverse developments lies in politics. More specifically, I use partisan hypothesis (Hibbs 1977; Alt 1985; Tufte 1978) as the starting point, arguing that the partisan composition of government is crucial for the development of the advanced democracies’ tuition-subsidy regimes. Yet, as I will demonstrate, partisan theory alone cannot explain the full variety of the Four Worlds of Student Finance, rather only two of the four regimes: the constant predominance of conservative parties can explain the high-tuition–low-subsidy regime (e.g., Japan), while the stable predominance of left-wing parties explains the low-tuition–high-subsidy cluster (e.g., Sweden). Yet, in order to understand the origin of the other two regimes (low-tuition–low-subsidy as, for example, in Germany, and high-tuition–high-subsidy as, for example, in the USA), we need to go beyond partisan hypothesis in its “simple” form.

Drawing on key contributions in the recent historical institutionalist literature (see Pierson 1993, 2004), I extend simple partisan hypothesis by arguing that we need to take time and timing seriously, particularly the sequencing and duration of parties in office. I develop a Time-Sensitive Partisan Theory and claim that only a “time-sensitive” analysis of the partisan composition of government can explain why countries’ tuition-subsidy systems have developed from a highly similar starting point in the mid-twentieth century to today’s Four Worlds of Student Finance. Section 1.3 develops the argument more fully and derives several empirically testable implications that the empirical chapters of this book (Chaps. 3, 4, 5, and 6) then engage in testing, combining a broad variety of quantitative and qualitative analyses in a multi-method approach (Lieberman 2005; Rohlfing 2008). The main theoretical contribution of the book is thus the refinement of a major theory of comparative politics that can also be applied to other policy areas (as outlined in Chap. 7).

The third and final question this book seeks to answer arises from the fact that during roughly the last 20 years, hardly any country has witnessed radical policy change. That is, no country changed from one tuition-subsidy regime to another. ³ In fact, it seems to be the case that the advanced democracies’ tuition-subsidy systems were largely formed during the first four post-war decades, while any subsequent developments have mainly continued along countries’ respective regime paths: tuition kept increasing in high-tuition countries, while low-tuition countries have remained tuition-free; likewise, high-subsidy countries have kept subsidies at a high level or extended these even further, while low-subsidy countries have hardly made attempts to install any serious public financial support (cf. Chap. 2 for empirical data). Thus, the question arises, why is it the case that countries do not change their tuition-subsidy systems anymore? Why are the Four Worlds of Student Finance so immune to radical policy change?

The argument I bring forward to explain this empirical puzzle is grounded in recent work on “positive feedback-effects” and “path dependencies” (see Pierson 1993, 2000a, 2004; Campbell 2012; Kumlin and Stadelmann-Steffen 2014). In Sect. 1.3, I claim theoretically—and demonstrate empirically in Chap. 6—that radical policy change has become increasingly difficult for parties, because the existing tuition-subsidy systems generate their own support by shaping people’s attitudes, bringing them in line with the status quo via positive feedback-effects: people support those characteristics of the higher education systems that they themselves have experienced. Consequently, radical change from the respective regime paths becomes increasingly electorally costly for political parties, thereby limiting governments’ leeway in departing from the respective regime paths.

In less abstract terms, I argue that individuals who have (not) paid tuition fees for their own education will also expect others (not) to pay for their own education, thereby reinforcing the high-tuition (low-tuition) path. Similarly, individuals who have (not) received generous subsidies will support that other students also (do not) receive these benefits, thereby strengthening the high-subsidy (low-subsidy) path. I show in Sect. 1.3 that this follows from both a rational choice perspective and from sociological approaches. Taken together, I argue that positive feedback-effects become stronger over time as the group affected by higher education increases and as the topic increasingly gains political salience. This sets high incentives for governments to follow further along the embarked upon paths because departure from the respective tuition-subsidy paths becomes electorally more costly. Consequently, the Four Worlds of Student Finance are solidified over time. ⁴

Empirically, the book tests this Time-Sensitive Partisan Theory in a multi-method design. Chapter 3 begins by analyzing the developments in four qualitative country case studies over the seven post-war decades, applying systematic process analysis (Hall 2003, 2008). Finland, Japan, Germany, and the USA were selected for in-depth study as “diverse cases” (Seawright and Gerring 2008), i.e., they represent the full variation of the Four Worlds of Student Finance. Analyses of the origins of the tuition-subsidy systems in these four countries demonstrate that not only the partisan composition of government but particularly the sequence and duration of parties in office play a crucial role in the development of countries’ tuition-subsidy systems, revealing strong support for the Time-Sensitive Partisan Theory.

Chapters 4, 5, and 6 continue the analyses in a quantitative large-n setting. Chapter 4 provides the empirical groundwork by studying parties’ positions on higher education finance in order to test whether parties hold distinct positions on higher education finance in the first place, whether these vary along ideological lines, and whether parties alter their positions over time due to positive feedback-effects. The analyses utilize data from a recent expert survey on party positions (Rohrschneider and Whitefield 2012) and my own codings of all manifestos of the British parties over four decades. The findings offer strong support for the Time-Sensitive Partisan Theory and provide the starting point for Chap. 5, which applies cross-sectional and time-series–cross-sectional (TSCS) regressions to all publicly available data on tuition-subsidy systems, testing whether the Time-Sensitive Partisan...

Table of contents

• Cover
• Frontmatter
• 1. The Politics of Higher Education Tuition Fees and Subsidies
• 2. The Four Worlds of Student Finance: A Comparative Descriptive Overview of Tuition Fees and Subsidies in 33 OECD Countries
• 3. Adding “Some Flesh to the Bones”: Illustrative Case Studies of Four Diverse Cases Over Seven Decades
• 4. What Do Parties Want? Parties’ Positions and Issue Emphasis on Tuition Fees and Subsidies
• 5. Testing the Time-Sensitive Partisan Theory in Large-n Analyses: Parties’ Impact on the Tuition-Subsidy Regimes of 21 Democracies Over Time
• 6. Individual-Level Attitudes Towards Subsidies: How Positive Feedback-Effects Prevent (Radical) Change in the Four Worlds of Student Finance
• 7. Conclusion and Outlook
• Backmatter