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.


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.


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.

John Roberts

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.


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.


Eileen Wyatt

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.


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.


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.


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.


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.

Johnny E

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.



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.


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.......

Martin Doonan

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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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.



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.


You are aware of the fact that there are more Dutch students in Germany than vice versa?

Dai Hao

Considering the issues with Greece right now, I think that if I were Germany, I would jump at the chance to instill a German/Dutch/French/whatever ideology on my EU counterparts via their college students.