The national funding model for universities is rapidly being reformed as part of the implementation of the Vision for Higher Education and Research in 2030. We see potential pitfalls in the model under preparation, particularly in relation to funding allocated based on education. Furthermore, the changes now planned for the funding model do not offer solutions to the fundamental problems of the universities’ steering and financing system.
What kind of changes are planned to the funding model in terms of education?
In the current funding model, universities have been rewarded for their performance in education based especially on how many degrees have been completed (19%) and how many students have completed 55 credits in a year (10%). The changes being planned now would remove the 55-credit indicator completely and allocate as much as 30% of all funding allocated through the entire funding model to universities based on completed degrees. The new indicator based on degree numbers has a specific problem, however: it is planned to include various factors. Through the normative duration factor, universities would receive the most funding for degrees completed within the normative duration of studies. The second degree factor, on the other hand, would decrease the amount of funding allocated for degrees completed by students who have previously completed a degree at the same level.
…and why do we not support these changes?
Used as an indicator in the universities’ funding model, the number of degrees completed within the normative duration of studies would cause significant risks for the quality of education, its societal impact and students’ opportunities to build personal degrees that best support their own vision for the future.
Particularly in generalist fields, it is important for students to acquire job experience from their own field, even before graduation, in order to get employed. If universities would have financial incentives to urge students to graduate as quickly as possible, students’ possibilities of accepting interesting job offers during studies will decrease. This would result in a situation where recent university graduates would no longer be as prepared for working life as they currently are.
The new funding model indicator would decrease the societal impact of education for another reason, as well: it practically prevents the creation of surprising study modules and competences. If students are forced to study as if through a production line, with no time for experimenting with interesting minor subjects, new ideas stemming from crossdisciplinarity would also be left unborn. As national innovations are needed, students should continue to have the opportunity to study as much as they consider necessary to achieve their desired competences.
The funding model’s indicator on degrees completed within the normative duration of studies would also decrease students’ internationalisation opportunities. It is often challenging to get studies completed during exchange accepted as part of the basic modules in degrees. If universities have a financial incentive to ensure that students graduate in time, they will also easily be tempted to prevent students from participating in study opportunities that delay studies. Unfortunately, the likelihood of exchange studies becoming a financial risk to universities is also boosted by the removal of a separate indicator that encourages studies abroad from the funding model.
The second degree factor is aimed at the same goal as the quota for first-time applicants and the student admissions reform – the goal of all of us only having one chance to choose the right field for ourselves. However, as many of us do not know what we want to do with our life yet at the secondary level, there should always be opportunities for changing one’s field and for lifelong learning. Current working life, too, requires individuals to be able to change.
How should we reward universities for education then?
Steering the universities’ profitability restricts their autonomy, which means that particular attention must be paid to the kind of incentives the chosen indicators create – what effects they have on the focus areas of universities’ operations, what kind of goals they help achieve and whether the incentives lead to the kind of universities we want there to be in Finland.
We want Finnish universities to be places where people accumulate as much and as diverse competences as possible. As universities will increasingly act as platforms for lifelong learning in the future, it is sensible to reward them based on the number of completed credits instead of completed degrees. Moving the focus of higher education funding models towards the production of credits has been suggested by the National Union of University Students in Finland, Finnish Business School Graduates and Social Science Professionals in their proposal for a platform model for higher education institutions.* The model aims at encouraging higher education institutions to open up their courses to other people than their own degree students, too. In this model, universities would be rewarded for all credits – for funding purposes, it would not matter whether credits were completed by the institution’s own degree students, degree students from another higher education institution or lifelong learners completing parts of degrees.
Overall, universities need as simple, predictable and transparent a funding model as possible. Research and education activities are a long-term operation where easy wins are not available. Let us give universities the opportunity to work in peace and grow into the best possible versions of themselves, on their own terms.
* The platform model for higher education institutions by the National Union of University Students in Finland, Finnish Business School Graduates and Social Science Professionals (in Finnish):