Thursday, June 11, 2015

Where Smart University Policies Rule

With average per student college costs in the United States hovering at about $31,000 a year and student debt with an economy-crushing aggregate of approximately $1.3 trillion, even if a young person is able to achieve a college education, the massive debt that follows has truly harmed the overall U.S. economy by stripping out a very large spending segment from our recovery. These students are struggling with an economy that seems to be favoring lower level, lower pay work, and are postponing major purchases, lifestyle upgrades, marriage and reducing discretionary spends… and these contractions are playing havoc with our sputtering recovery.
We’ve increased college applications from 20% of high school grads to 50% over the last two decades but seem to be hell-bent on killing those who depend on financial aid to receive a higher education. Since we need college grads to battle a very competitive world, but since we do not seem to have constructed a format to pay for that need without unnecessary pain, ever wonder how more rational countries cover the cost of college?
Germany, for one, has determined that as a matter of national policy, higher education is among their highest priorities. Except for very minor administrative payments (generally under $300, which often includes a pass to use public transportation), higher education, even at the very best universities in the country, is tuition free. Not just for citizens but for anyone able to gain admission into the relevant university. Last year, Saxony was the last German state to phase out tuition fees.
“Student numbers at German universities have been growing rapidly in recent years, leading to the establishment of the Higher Education Pact, an initiative which aims to help institutions meet growing demand.  According to University World News, overall student numbers at German universities have increased from approximately 2.2 million to 2.6 million in nine years, with an additional 760,000 expected by 2020 – significantly more than the Pact initially planned for.
“In response to this surge in demand, the federal and state governments are pledging to provide €26,000 [U.S.$29,000] per additional study place, to help German universities meet the rising costs of employing more faculty members, and expanding other resource provision [over and above the levels of funding already approved covering current demand]… One student in Berlin costs the country, on average, €13,300 ($14,600) a year. That number varies according to the field of study. With no tuition fees that expense is shouldered by the individual states, and ultimately the German taxpayer.” Add health insurance ($87/month) plus the cost of living (generally well-under $10,000/year), and getting an education in Germany is an incredible deal.
For Americans who are less than German fluent or who simply don’t want to have to learn a new language to that level of understanding, there are well over a thousand academic programs that are taught entirely in English. Huh? How’d that happen? “In 1999, European Union members signed the Bologna Accords, which called for uniform university degrees, and established a Bachelor/Master system across Europe. With hundreds of thousands of students from Portugal to Sweden freely travelling abroad, studying and getting degrees in other countries, English became the common language.”, June 3rd. Most such students learn German for practical reasons anyway:  “Still, to thrive in daily German life, students and experts alike told the BBC that German language skills are crucial.
“‘If you go to a pub or supermarket and you don't understand what everyone is saying in the long run you don't feel comfortable,’ says Sebastian Fohrbeck, Director of Scholarships at DAAD [initials stand for the English words, ‘German Academic Exchange Council’]… Most universities offer subsidised language programmes, and in some cases a certificate proving the applicant's German skills is required to apply to certain courses or scholarships.”
So why in the world does Germany subsidize college so heavily just as the United States has elected to make college vastly less affordable? “‘It's not unattractive for [Germany] when knowledge and know-how come to us from other countries and result in jobs when these students have a business idea and stay in Berlin to create their start-up,’ says Steffen Krach, Berlin's Secretary of Science… German students do not need to worry either, he says, because the city has increased capacities massively in recent years at its universities and there is enough space for everyone on campus.
“Research shows that the system is working, says Sebastian Fohrbeck of DAAD, and that 50% of foreign students stay in Germany… ‘Even if people don't pay tuition fees, if only 40% stay for five years and pay taxes we recover the cost for the tuition and for the study places so that works out well.’
“For a society with a demographic problem - a growing retired population and fewer young people entering college and the workforce - qualified immigration is seen as a resolution to the problem… ‘Keeping international students who have studied in the country is the ideal way of immigration. They have the needed certificates, they don't have a language problem at the end of their stay and they know the culture,’ says Fohrbeck.” Is this system sustainable? Time will tell, but even if tuition charges need to be re-introduced, they will undoubtedly be phased in slowly and have a much lower negative impact on the lives of the students involved.
Even with all these incentives to attend some pretty incredible universities, the number of U.S. students studying in Germany is about a paltry 4,600. But while United States suffers from some of the same demographic ailments that apply to Germany, our movement into a grayer America and fewer children per couple (below replacement rates, noting that U.S. population growth is more about immigration) is not as drastic as the numbers in Germany. But net, net, net, Germany will be producing more college grads without post-graduation earnings impairments than the United States. And remember, Germany is just one country with spectacular universities so significantly subsidizing their youth; there are dozens more with substantial programs as well. I guess they actually feel that they have a responsibility to education their children.
I’m Peter Dekom, and I should remind you that Germany is the champion of austerity all over Europe… they just understand priorities and the differences between spending and investing.

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