An ever more global market for education and research means universities must take action to remain competitive. The costs of higher education and research have been growing rapidly. This is due to various factors such as advances in the field of technology, particularly ICT and its wider use in higher education and research, a growing participation rate, new societal demands on institutions, rising pension costs and tougher quality requirements. These costs need to be met by additional financing.
Despite the fact that universities are at the centre of knowledge creation and development, which itself is seen as one of the main motors of economic growth, public investment in higher education in most countries remains too low. Massification has often resulted in depressed higher education budgets per student, a handicap in an increasingly global competition. Despite political declarations of intent to increase spending in the field, public expenditure is unlikely to grow significantly and keep up with rapidly inflating costs in the years to come. One of the reasons for this is that higher education and research have to compete with other priorities in public budgets (health, security, etc.).
The recent economic downturn has moreover contributed to further decreases in the levels of investment into higher education and research of many European countries. This is particularly worrisome for universities, which continuing dependence on public funding puts their future sustainability under pressure.
All the above reasons are forcing universities to respond by taking action. The first step is for universities to master their cost structures and identify the real costs of their activities for both internal and external purposes. While calling for vital additional financial support from public authorities, which have a responsibility in the universities’ long-term financial sustainability, universities also need to increase and diversify additional sources of funding.
The design and implementation of higher education funding policy should be carefully calibrated to the needs of the sector in order to improve overall funding efficiency with full consideration for the possible impacts at institutional level.