US losing its competitive edge due to high costs of higher education: OECD

The lack of financial assistance to offset rising costs of US universities is a major reason, according to the Organization for Economic Cooperation and Development (OECD).

By , Staff writer

The US is losing its competitive edge over other countries when it comes to the percentage of the population with higher education degrees, and much of that has to do with the rising cost of a university education, according to the Organization for Economic Cooperation and Development (OECD).

The rate of enrollment of US students in higher education is now lower than most other OECD countries, said Andreas Schleicher, the head of indicators and analysis at the OECD, in a briefing with reporters Monday. The rising costs of the American education system and the lack of financial assistance to offset the increase are major factors.

"Many industrialized countries have moved beyond the US. A decade before, we were the benchmark of success," Mr. Schleicher said.

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While the US still boasts the largest percentage of people with college degrees (26 percent), the rate at which other countries are catching up is evident once the population is broken down into age cohorts, as shown in the OECD's 2011 "Education at a Glance" report, released Monday.

The most stark indicator comes from an examination of two age brackets: 25-34 and 55-64. Among industrialized countries, one-third of people with higher education between the ages of 55 and 64 hail from the United States. In the 25-34 age cohort, that percentage drops to one out of every five people.

The number of countries from which the growing pool of highly educated people draws from is also expanding, Schleicher said. Twelve percent of college graduates come from China, but that jumps to 18 percent when looking at the 25-34 bracket.

"If you look across age groups, the US is quite alone in that young people are not better educated than people in the labor market," he said.

Low public spending on education

The US has the highest tuition costs among the OECD members, but its public spending on higher education is on par with that of many countries with lower tuition.

The US is one of four countries highlighted that did not increase its spending per student at all from 2000 to 2008. Meanwhile, eight countries – including emerging economic powers South Korea and Mexico – expanded their spending by 50 percent or more, according to the report.

US still No. 1 on quality

However, the US was out so far ahead that it still remains a very attractive country for foreign students, Schleicher said. The high rate of employment for US college graduates – right now low for the US, but still higher than many other industrialized countries – shows that educational quality is still strong.

Whether a quality education is affordable varies based on countries' loan and grant programs.

"When you have high levels of tuition, you need to ensure that students have really good access to public loans," Schleicher said, describing access in the US as only "reasonable."

In the US, loans are expected to be paid back in full, regardless of a graduate's employment status, but in some countries, college graduates only pay their loans back when they begin earning taxable income of a certain amount.

In those countries, students are more likely to pursue higher education, because they will not be burdened with debt unless they gain employment and the ability to pay those loans back, according to Schleicher.

Japan and South Korea also have high tuition costs and low levels of public-sector financial support, but education is so valued there that people put money aside for years in order to afford costly education, rather than giving it up, Schleicher said.

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