Executive summary

Higher education provides graduates with favourable economic and social outcomes, but the low basic skills of some graduates is a cause for concern

The share of young people achieving a higher education qualification has increased steadily in recent years. Across the OECD, the proportion of 25-34 year-olds with a higher education qualification is now larger than the proportion with upper secondary education only. Moreover, despite the growth in higher education attainment across the OECD in recent decades, the employment premium enjoyed by higher education graduates has remained steady. Young higher education graduates also attract a strong premium on earnings; on average bachelor’s graduates in the OECD earn one-third more, and master’s graduates close to two-thirds more, than those with upper secondary or post-secondary non-tertiary education.

Apart from positive economic outcomes, higher education graduates also tend to report more favourable social and health outcomes than those without a higher education qualification. They are less likely to report suffering from depression and more likely to report to be in good or excellent health, to volunteer, to indicate trust in others and to feel a sense of political efficacy than those with upper secondary or post-secondary non-tertiary education only.

However, nearly one-third of higher education graduates have poorer information processing skills than might be expected of graduates at this level. According to the OECD Survey of Adult Skills, a worrying proportion (around 30%) of graduates from OECD higher education systems do not reach the literacy and numeracy proficiency skill level required to carry out moderately complex information processing tasks.

Higher education spending per student is increasing rapidly, with households paying about one-fifth of the costs

Higher education costs more than education at other levels, and spending has increased rapidly in recent years. Between 2005 and 2015, while the number of students in higher education increased by around 10%, total expenditure grew by more than 30%.

Governments continue to be the main source of higher education funding, accounting for two-thirds of expenditure on higher education institutions on average across OECD countries. The widespread provision of grants and scholarships to students, as well as public loans, has helped to make higher education more accessible and affordable. In many OECD countries, the average government expenditure per student on grants, scholarships and loans exceeds the average annual household expenditure on education institutions per student.

Households contribute about one-fifth of the cost of higher education, although funding by other private sources and international sources remains marginal in most OECD countries.

Inequity of access by socio-economic and migration background is a persistent challenge

Many governments maintain horizontal differentiation in the system with the goal of enabling the higher education system to serve a wide variety of students and purposes. In many countries, a binary divide between academically oriented (universities) and professionally oriented (professional HEIs) institutions exists. Available data indicate that professional HEIs in binary systems tend to enrol more part-time students, older students and more students from disadvantaged groups than universities.

However, overall, equal access to higher education is far from a reality. Across the OECD, an average of 60% of today’s young people will enter higher education over their lifetimes. Nevertheless, the most recent evidence available indicates that 18-24 year-olds whose parents do not have a higher education qualification are still between 40% and 60% less likely than other individuals to enter a bachelor’s level programme. Similarly, across OECD countries with available data, the children of foreign-born parents are between 10% and 60% less likely to enter a bachelor’s level programme.

Only 4 in 10 bachelor’s students are able to complete on time, and 2 in 10 do not complete at all

Delayed completion and non-completion of studies is common in OECD education systems. On average, just 40% of new entrants to a bachelor’s level programme graduate within the expected duration of the programme and over one-fifth of students leave without completing a qualification. The high level of non-completion can reflect failures in the guidance process from upper secondary to higher education, low admission standards, inadequate academic support, poor programme quality and the financial cost of education.

Recent policy responses to low completion rates include better matching of applicants with higher education programmes, for example through in-depth information sessions and compulsory, non-binding self-assessment tests. In addition, financial incentives to increase timely completion have been introduced in some jurisdictions through formula funding or performance agreements between the government and higher education institutions.

Young doctorate holders in higher education employment find less job security than their predecessors and their peers in other sectors

According to data from the OECD Careers of Doctorate Holders survey, around one-third of doctorate holders are employed in the education sector on average across OECD countries with available data. This may indicate a limited absorptive capacity in the academic labour market for doctorate holders. However, in general, only a small percentage of doctoral graduates are not employed, signalling a demand for the skills and knowledge provided by doctoral education in the wider labour market, and suggesting that doctorate holders are employable in a variety of economic sectors.

On average across OECD countries, half of academic staff in the higher education sector are under 45 years of age. Evidence from the participating jurisdictions shows that younger academic staff with teaching duties are less likely to have a permanent contract compared to older teaching staff in some jurisdictions. Insecurity about career prospects often associated with early-stage careers in research (and in some countries, the accumulation of debt over this period) can make academic jobs less attractive than jobs in other sectors offering greater job security and benefits for similar levels of skills and experience.

Higher education research and development relies heavily upon public funding, and establishes limited collaboration with businesses on innovation, especially for small and medium enterprises

R&D undertaken by higher education is heavily financed by government funds, which make up two-thirds of the funding for the sector, on average. The links between business, higher education research sectors, and the wider economy and society appear to be less developed than in other sectors of research across the OECD. Together, business enterprises and the private non-profit sector still contribute less than 10% of higher education R&D funding. Surveys of business enterprises indicate that 15% of businesses report co-operation with the higher education sector on developing innovative products or processes. In addition, other evidence suggests that the collaboration with the higher education sector is more active amongst large businesses than amongst SMEs.

However, some OECD jurisdictions are working to increase collaboration between higher education institutions and businesses. In some cases, targeted industrial research funds are awarded by governments to institutions to engage in technology transfer activities, such as licensing, patenting and spin-offs. In other cases, consortia have been established between higher education institutions and private or public organisations to conduct applied research, based on a mixture of public targeted funding and private resources.

There is an increasing focus on engagement activities, but frameworks for measuring activities do not yet exist

Governments and stakeholders are increasingly asking higher education institutions to engage more effectively with the wider world through developing human capital (e.g. through developing entrepreneurial skills and providing continuing education), supporting innovation, promoting regional development and civic engagement, creating a culturally rich environment, increasing environmental awareness and contributing to achieve broader social goals on sustainability. At the same time, funding for engagement activities in higher education appears to be mainly project-based, and mechanisms for institutions to report on engagement outcomes in a systematic and comparable way have not yet been widely developed.

Open access to scientific documents remains limited

Higher education systems can contribute to the wider community through ensuring that the knowledge generated by their research is available for the benefit of all of society. Open access to publications has become a policy target in many OECD countries, and is relevant to the promotion of open science, i.e. the efforts to make the outputs of research more widely accessible in digital format to the scientific community and to society more broadly. Nevertheless, the main model of disseminating scientific research in OECD countries remains one of closed access. Recent analysis of a random sample of 100 000 publications found that only around 10% were published in gold open access journals (i.e. readers are able to access the publication at no charge), on average across OECD countries.

Although quality is difficult to measure, governments are increasingly trying to link funding and other policies to the quality of teaching and research

Although quality in higher education is especially difficult to measure, governments are using a variety of approaches to ensure quality in research and teaching. Research funding systems rely increasingly on bibliometric indicators that yield information about the number of publications and their impact. Policies in several OECD jurisdictions also aim at ensuring the relevance of research for society and economic activities, for example by rewarding applied research with a demonstrable economic impact. Competitive funding is widely used to award financial resources only to the most promising research projects and, more recently, to projects related to teaching. In addition, some OECD jurisdictions have introduced higher education teaching certifications based on peer review and training, with the aim of creating a community of teachers who share best practices for teaching and learning.

Data limitations prevent comprehensive performance assessment of higher education systems, but improvements in measurements are possible

The benchmarking exercise provided an opportunity to review the current state of higher education in OECD countries and identify some pressing performance issues facing higher education systems. Reviewing a set of 45 indicators at the country level demonstrates the complexity of making summary judgments about the performance of higher education systems. At the same time, considering a large volume of information together helps to identify areas of strengths and challenges relative to other OECD countries.

While some experimental measures of efficiency and cost-effectiveness are described in this report, the development of actionable measures of efficiency in the higher education sector is complicated by the multiplicity of inputs, outputs and outcomes that cannot be directly mapped to each other. There are also difficulties in measuring inputs themselves, ascertaining the level of control over the inputs, and attaching an importance weighting to the outputs and outcomes.

Many national governments are working on initiatives to improve the data available to assess the performance of higher education. These initiatives cover areas as diverse as the standardised assessment of student outcomes, implementing large-scale surveys of student satisfaction and collecting more granular labour market outcome information on graduates. International efforts to develop new methodologies and standards for the collection of data on higher education outcomes and policies also represent important steps forward in the development of the evidence base to measure higher education performance.

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