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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  1. JoelP says:

    I think you may be overstating the negatives and understating the positives.

    Negatives: Cost per student is higher than tuition per student.

    Most educational expenses are salary, which is taxed. Is cost per student higher than tuition per student plus marginal increase in tax revenues?
    Some students will stay; this helps provide a brain drain.
    Cultural influence on returning students.

    It is possible that subsidizing foreigners’ education may be a winning proposition.

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  2. NSK says:

    I suspect you are delivering your lectures in English. If the medium of instruction is set to the native tongue, 2 benefits would be achieved:

    1. the native tongue is preserved
    2. there is a “barrier to entry” for the freeloaders

    To retain the ability to assimilate with the world at large, guest lectures and papers to be presented/reviewed could be set to be in English.

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  3. John Roberts says:

    Why would taxpayers support excellence in their own state colleges when it would attract enrollment from out-of-state at their expense? The incentive would be to impoverish your own institutions and send your kids away. Maybe two incentives there.

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  4. Nosybear says:

    So, does that mean we can call the tuition process here in the US the Baloney Process? Your line of thinking perpetuates an us-vs-them mentality: In your calculations of the economies of greed, do you calculate the economy of benefit? That the Netherlands benefits, say, from the research these students do while in their country or that when the EU as a whole benefits, Dutch North Sea beach resorts have more tourists? In a certain evolutionary sense, nature has selected us for cooperation and competition and those communities that favored cooperation have generally won the race. Look at the quality of education in the EU – German schools have to compete with Dutch schools and British schools and so forth for students, who pay no penalty for the competition. The result, European schools as a whole are improved through the competition while the Students benefit from the cooperation. Best of both worlds, unlike ours where we actually are harming students through unregulated competition of States for tax revenue.

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  5. Eileen Wyatt says:

    The EU system should make specialization more affordable. Let’s say Ruritania has a terrific research institute in the sciences, while Montecapitano has the best school of economics in a 300-mile radius.

    Surely it’s more efficient for Ruritania to subsidize having some Montecapitano students at its science-focused university, rather than building, staffing, and maintaining a school of economics for the Ruritanian students who now seek that education in Montecapitano.

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  6. carlos says:

    Besides the arguments exposed above supporting the positive trades off of exchange of students I would add 1) The worse thing small countries like the Netherlands, Denmark, Portugal, etc, could do is to close their countries to European influx, as their key to economic growth is exporting to the EU. (That’s why they offer more education in English)In the case of the bigger countries it’s also good to have people learning their language 2) In Europe there is no brain drain per se, but more of a circulation brain. This is good for us. As well it has been for centuries in the U.S. 3) Universities have mechanisms to protect their locals, and for a small increased in variable costs their students and teachers benefit a lot from having “international” students. 4) It concerns me more other non-EU free loaders.

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  7. Conor says:

    Unfortunately, none of this is based on any kind of student policy, it’s just that EU law forbids treating fellow EU citizens differently to citizens of any other EU country.

    EU institutions do charge much higher tuition for students coming from outside the EU but the law forbids them from doing so to citizens of other EU countries, on the other hand, the same law allows free movement of goods, services, and labour… while a country may have to subsidise students from another EU country, the idea is that they gain in other areas.

    This is a perfect example of focusing on a single market and coming to ill-informed conclusions on the benefits and costs of the issue.

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  8. Kirilius says:

    You forgot to mention that net-sending countires get brain-drained when they send students to study abroad.

    You may say that net-receiving countries subsidize students who are not “theirs”, but how do you define “theirs”? What defines which country a student “belongs” to? Is it the country they were born in or the country they work in? Western society is highly mobile these days and thngs are not that clearcut as you seem to suggest.

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