Private Funding for Higher Education: The Turkish Experience Erhan Erkut, PhD President, Özyeğin University 5th World Bank ECA Education Conference 29 October 2009 Budva, Montenegro
Financing of Higher Education Higher Education is expensive Typical major university budgets: $1B Typical per student cost: $10,000/year Who should pay? Social good state Personal benefit student Both state and student
Expenditure per Student in Selected Countries, $ (ppp), 2002 OECD (2005) Education at a Glance 2005 http://www.oecd. org/edu/eag2005 1,296 1,346 1,721 1,730 1,851 2,486 2,791 3,235 3,400 3,674 4,731 4,756 4,834 6,047 6,074 6,960 7,023 8,020 8,028 8,205 8,251 8,636 9,276 9,809 10,655 10,999 11,295 11,716 11,768 11,822 12,019 12,416 12,448 13,101 13,739 14,405 15,183 15,715 20,545 23,714 Indonesia Peru Uruguay Philippines Thailand India Paraguay Argentina Turkey Tunisia Greece Slovakia Poland Korea Mexico Portugal Chile Spain Jamaica Hungary Iceland Italy France Ireland OECD AVG. Germany Israel Japan Finland UK Belgium Australia Austria Netherlands Norway Malaysia Denmark Sweden USA Switzerland
A richer financing model 4 major sources State Student University Selling of services Contract Research Continuing Education Hospitals Spin-offs and start-ups Donations Alumni Major donors, naming
Turkish university history Religious institutions 1331: Iznik Madrasa Military/Imperial institutions 1773: Imperial Naval College Public University 1863: Dar-ül-fünun (the House of Sciences) 1863: Robert College (today s Bogazici Uni)
Republic of Turkey (1923 - ) 1923 1950: Istanbul, Istanbul Tech, Ankara 1950 1980 Spread across the country Central European system From elitist to massified (28 universities) Penetration 6.1% 1957: Middle Eastern Tech Univ (American)
Contemporary Turkish University 1980 1995 Number of universities doubled Distance education introduced Student enrolment x 6 21% penetration 1984: First Foundation University (Bilkent) Currently 94 State, 45 Foundation (5% of students) 37% penetration #16 in the world in the number of students
Number of Students in Turkish universities 2,914 10,213 25,091 54,069 147,175 262,302 321,568 344,305 346,476 333,312 270,278 237,369 240,403 281,539 335,715 417,341 469,922 505,091 534,459 594,662 685,500 749,921 810,781 915,765 1,143,083 1,174,299 1,326,986 1,303,188 1,409,627 1,464,740 1,503,981 1,594,642 1,664,364 1,894,109 1,946,442 2,106,351 2,342,898 1923-1924 1938-1939 1949-1950 1959-1960 1969-1970 1974-1975 1975-1976 1976-1977 1977-1978 1978-1979 1979-1980 1980-1981 1981-1982 1982-1983 1983-1984 1984-1985 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006
State Univ. Financing State: 55% ($3000/student) Services: 40% (hospitals) Tuition: 5% 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 Income from State per Full-Time Student ($) 1,453 1,190 1,509 1,538 2,153 2,059 1,934 1,924 2,002 2,195 2,025 2,288 2,055 2,114 1,433 1,369 1,263 1,270 1,270 1,701 2,287 1,885 2,014 2,658 3,072
Number of Students in Turkish Foundation Univ. (about 5% of the total) 2005-2006 2004-2005 2003-2004 2002-2003 2001-2002 2000-2001 55,549 50,545 63,979 76,979 90,898 111,735 1999-2000 1998-1999 1997-1998 1996-1997 1995-1996 1994-1995 1993-1994 1992-1993 1991-1992 1990-1991 1989-1990 1988-1989 1987-1988 1986-1987 39,243 29,360 21,267 13,598 9,852 9,714 9,005 7,954 7,136 6,208 4,633 3,289 1,492 426
Private Higher Ed -- most popular in developing countries Number of Students Enrolled in Private Higher Education (Ratio to Total -- Percentage) 2002-2004 Argentina, 20 Mexico; 32 USA, 32 Peru, 34 Portugal, 38 Paraguay, 47 Chile, 58 Indonesia, 60 Belgium, 63 Colombia, 64 Philippines, 67 El Salvador, 69 Brazil, 71 India, 75 Japan, 76 South Korea, 80 0 20 40 60 80 100 Perkinson, R. 2005. The Changing Landscape in Global Higher Education. Paper presented at VTA State Conference, Melbourne. Australia, 22 April.
Shares of Private Institutions in National Systems, % of Total Enrollment, 2004 Gürüz, K. (2008) Higher Education and International Student Mobility in the Global Knowledge Economy. Albany, New York, SUNY Press Israel Netherlands Japan Korea Taiwan Chile Brazil Philippines Indonesia India Paraguay Belgium Colombia Iran Lebanon Peru Russia Jordan Portugal Mexico Mozambique Mongolia Malaysia Estonia Poland Venezuela Latvia USA Romania Argentina Switzerland Georgia Uruguay Egypt Thailand France Norway Hungary Bulgaria Spain Ukraine Finland Vietnam Uganda China Sweden New Zealand Ireland Italy Morocco Turkey Hong Kong 41 37 35 33 32 32 32 31 29 27 23 23 22 21 21 19 19 18 18 16 15 14 14 14 12 11 11 10 9 7 7 6 6 5 4 3 49 47 61 60 58 55 55 54 68 66 76 74 84 82 82 81
Turkish Foundation University Based on an Ottoman concept of vakf Philanthropic activity Financed partly by a rich person/group Illegal to make a profit Considerable financial autonomy Small, agile, market-oriented Can set and charge tuition ($6,000 - $18,000)
Özyeğin University Founder: Hüsnü Özyeğin Business and Engineering Currently 400 students 40 PhDs 10,000 sqm building Tuition: $16,000 Tuition discounts: 75%
Financial accessibility Rich scholarship system 100% tuition scholarship Partial scholarships (75%, 50%, 25%) Credit system First in Turkey Partial tuition Interest subsidized Two years of no payments Seven years to pay back The country needs a tuition-credit system
Financing Currently Steady State Budget $20M $100 Founder 90% 10% Tuition 5% 35% Non-tuition 5% 50% State 0% 5% Wild estimates, merely to indicate direction
Major challenges Increase tuition revenue Banking on Continuing growth of Turkish economy Large appetite for higher education Increasing penetration rates (to 70%) Attracting international students Generate non-tuition revenue Services (Research, Exec Ed, Certificates) Companies (Start-ups, Spin-offs)
University budget calculator Major cost drivers University A University B Cost of faculty $40,000/year $100,000/year Course load 8 courses/year 4 courses/year Class size 100 students 25 students Per studentclass cost Why? $50 $1,000 Teaching College Research University