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Proposal to change the system of education funding

High school students in choosing the university does not decide whether their field of study will be demanded in the labor market, but rather the intensity of study and admission procedure, in the opinion of family and friends, the distance from home. The colleges' priority is to have accredited degree programs and to cover the capacity of departments. The Ministry of Education funded universities without the control of output, e.g. excessive number of economists and inadequate number of medically or technically educated people. This acting creates an imbalance in the labor market and therefore it is necessary that government shall prepare its fiscal policy to create the conditions for re-balance.

Therefore, the Employment Institute proposes to provide favorable state loans for college students, whatever is their social status. This would be a long-term loans intended to cover costs of full-time students and part-time students. The adjusted student loan would be redeemed by setting off income tax, ie. after graduate, student employs and pays a reduced tax. In other words, the graduate is required to pay taxes in an amount of the loan repayment. Taxes can be reduced only to one who receives a salary and pays taxes in Slovakia. Graduates who go abroad to work are encouraged to seek employment in which they fully apply their education because they have an obligation to repay the loan in Slovakia. Graduates who complete their field of study with which they are not able to find a job they will be under pressure of loan and therefore motivated to retrain to get a job.

Variants

There are several options how to provide government loan. One variant is minimal when the Ministry of Education declaring priority study fields that are in the medium term the best possibility of applying in the labor market and therefore make these programs to benefit from state loans. This variant has a motivational aspect.

Minimum Variant

The minimum variant is not expected to introduce tuition fees, so the student loan would cover only cost of a student to study. The estimated cost is € 1 800 for full-time student and € 3,800 for part-time student for one year of study (the difference is due to the tuition fees for part-time students). Assuming a 5 year study is € 9 000 and € 19 000 according to the type of study. The estimated amount of student loans is therefore at € 10 000, giving an average of the € 2 000 for one year of study. The minimum variant allows to provide loans only for the priority fields of study. We assume that the number of students belonging to the priority fields is 5% of all students. We can therefore assume that in the priority programs are 10,000 students. Thus, in each year are 2,000 students. In calculating the total cost to the state budget for the provision of subsidized loans we assume that every first years would take the maximum subsidized loan. We can say that the total loan would be at amount of € 20 million. Graduate will pay the entire loan in 8 years. The entire loan would be interest-bearing equal to inflation.

Maximum Variant

Another variation is the maximum variant, which has a different principle than the minimum. In this case, the tuition fees are at all colleges and at the same time the Ministry of Education provides new loans in the amount of tuition, accommodation, meals, textbooks and so on.

Following the introduction of tuition fees for each school would government save on current and capital expenditures around € 450 million per year (in 2010). The expenditures on students studying at university are an average of € 2 414 per year per student. After adding the costs of the student's from first variant, the total expenditure are approximately € 4 000 per year for full-time student. In this case we propose loan of € 20 000 for five years of study. With number of students in a grade of 40 000 and a loan for a student € 20 000, would represent a total cost of € 800 million, having in mind that there are savings in spending on higher education in the amount of € 450 million. The graduate employed with an average salary of university graduates would repay a loan in 15 years.

In no variant is expected with working students to whom the repayment of the loan is shorter, and we also do not consider the loan is less than the maximum. There are national economic effects of access to higher education for all and improve the efficient allocation of human resources which are not taken in mind. On the other hand, we must take count with administrative costs, as it is likely to take maximum number of loans and a long period of its duration, and perhaps uncollectable loans (eg, people living abroad, future disabled people and people who die before the loan is paid ).

Conclusion

In times of globalization and increased migration is a system of higher education without the tuition very difficult to sustainable. On the other hand, the system of tuition fees can't discriminate vulnerable social groups from participation in education. Therefore, this proposal is submitted for establishing a system of loans, which allows to study the socially disadvantaged, while financially does not affect those who start school after working in Slovakia.


similar articles: Education of unemployed , Long term unemployed from young unemployed , ecosoc 2012 147 post secondary vociational education (pdf) , Unemployment and inactivity of young , Young unemployed not taking part in education


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