Fewer students? Beware Japanese or Portuguese scenarios

How do other countries deal with a declining number of students? Researchers see two dangers lurking: fierce competition as in Japan and South Korea, or stagnation as in Portugal.

Over the past decades, higher education has grown considerably: from just over 100,000 students at universities of applied sciences and universities to around 830,000 students at its peak in 2022.

But since then, student numbers have already fallen by 60,000. That also means less money for educational institutions, which are partly funded by the government on a per-student basis. And that leads to budget cuts and reorganisations.

Learning from other countries

The Netherlands is not unique in this respect. Other countries are also dealing with declining student numbers, according to higher education researchers at KiTeS (formerly CHEPS) at the University of Twente. For the Ministry of Education, Culture and Science, they examined what the Netherlands can learn from those countries.

Because doing nothing does not seem to be an option. Demographic decline can cause damage ‘to programme provision, the international position or even the viability of institutions’, the researchers write.

Free market

In South Korea and Japan, a large part of higher education is left to the market. This makes it possible to see how educational institutions behave when they are allowed to make their own decisions.

That works reasonably well during periods of growth, but in times of decline it results in fierce competition. An interesting phenomenon, the researchers note, is that new universities and programmes were actually added.

In Japan and South Korea, demographic decline therefore leads to additional competition and ‘market fragmentation’. Institutions try to tap into ‘niche markets’, KiTeS observes. Meanwhile, tuition fees are rising, because having fewer students does not immediately make education cheaper.

The South Korean and Japanese governments are now forcing educational institutions to merge. Tuition fees are also being regulated and programmes must meet stricter quality requirements.

Portugal

Dutch politics sometimes sees calls for more stable funding in higher education. Portugal provides an example of how that might work out. Higher education also contracted there, but universities of applied sciences and universities continued to receive roughly the same budget.

According to the researchers, this leads to stagnation in programme provision. It is not unreasonable to make funding less dependent on student numbers, but the danger is a lack of innovation in educational programmes, KiTeS warns. Programmes may then become increasingly less aligned with the labour market.

Accreditation

In the Netherlands, new programmes must first receive approval from a special Higher Education Efficiency Committee. Universities and universities of applied sciences must demonstrate why the labour market is waiting for their new programme.

Existing programmes, however, no longer have to justify their alignment with the labour market. In times of decline, that may be less desirable, the researchers suggest. They propose that the minister could amend the law: during the six-yearly quality assessments (accreditation), the ‘viability’ of existing programmes could also be taken into account.

‘Focus on market share’

Last week, the Inspectorate of Education also warned about the problems caused by declining student numbers. The ‘continuity’ of universities requires ‘tough choices’, according to a report on their financial position. The prediction is that programmes will disappear in any case.

Dutch educational institutions should cooperate more, the inspectors believe. The institutions themselves also tell the Inspectorate of Education this, but in practice they still find it ‘difficult’. The funding system for Dutch higher education, which is strongly dependent on student numbers, contributes to a ‘focus on maintaining market share’.