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Where To Find €1.1 Billion?

Why do we see an increase in the student population? Who cares about the nominal study time? Who are the active students at Scintilla? Though these questions seem to be completely unrelated, the common denominator is – like almost everywhere in the world – money. Understanding where the money comes from and goes to is key in understanding the strategy, policy, and politics of universities. In this article I’ll elaborate on the question how universities are funded, what type of allocation is used, and various phenomena that result from that method of allocation. Note that the exact allocation is much more complex than discussed here, but else no one will ever read this… Stay put, because comprehending the financial structure makes you understand why certain decisions are made: from alcohol policy to the collaborations of the UT with the Vrije Universiteit.

A brief overview of Dutch university funding and the power of allocation methodology.

Let’s start with a brief overview of where the Dutch public universities get their money from. The total income of these universities can roughly be divided into three categories: almost 60% comes from the national government, about 30% comes from the students, and the remaining 10% is highly diverse. This 10% comes from governmental bonusses the university gets when students graduate, PhD’s make their promotion, and external project funding, e.g. from the European Union or industry. However, I will mainly focus on the first two contributors.

Firstly, lets dive deeper into the funding from the Dutch national government. In 2022, the government spends a total of about €5.4 billion on universities. The UT receives – similar to Eindhoven and Wageningen – about €278 million, but Delft receives more than double. Do institutions closer to The Hague get more government aid and attention? No – unlike various other topics in politics – this is not the case for university funding. The allocation of funds is a complicated, historically-grown architecture. There are numerous fixed components in the funding that correspond to the numerous (sub-)tasks, like research and education, to provide a stable foundation. However, an important flexible component is the student-related budget. Annually, the national government sets a fixed budget for this component and it is divided proportional to the amount of students enrolled to a university [1]. Let’s make it more concrete, what if next year all of a sudden the student population at the UT rises with +10% (usually this is about a few percent). Logically, the costs for the UT will rise significantly as well and the UT receives sufficient funds to cover the costs. However, what if all technical universities see a rise of +10% in their student population? Everyone, receives more funds, but often not sufficient, as the total amount of funds is fixed every year. Hence, for the government funding, we don’t care about our own growth so much, but more about the relative growth in students. Naturally, this results in market forces and competition among universities – we currently live in a neo-liberal society after all.

Secondly, a more familiar component: the 30% contribution of the students. The first thing to understand here is that – by far – not every students pays the same tuition fee. A main distinction can be made between EER and non-EER students: student from the European Economic Region and outside. In essence, we stimulate the exchange of students within Europe. Table 1 shows a clear overview of the tuition fees, and a fun outlook for the coming academic year.

Table 1: National (for EER students) and institutional (for non-EER students) tuition fees for 2022-2023 at the UT. The definition of “technical” is accredited by the NVAO, but highly dubious nonetheless [2]…

Programme Study type EER students [€] Non-EER students [€]
Bachelor Technical 2,209 10,875
Non-technical 2,209 9,375
ATLAS 4,419 13,084
Master Technical 2,209 16,500
Non-technical 2,209 12,750

Apart from the extraordinary high tuition fees ATLAS students are willing to pay, we see that non-EER students pay more than €8,000 extra for a technical BSc and more than €14,000 extra for a technical master. Do universities get that much more money for non-EER student compared to an EER student? No. The government funding discussed earlier, only applies for the number of enrolled EER students. Basically, the difference in tuition fee is to cover for the missing subsidies, in order to break- even. So universities don’t care – at least financially – whether they have EER or non-EER students? Definitely no, financially, there is a strong preference for non-EER students. This is due to another nice neo-liberal construction in the government funding: the funding only accounts for the nominal study time. Taking the example of a fourth year BSc EE student who participates in the full-time programme, this is seen as a financial burden of €8.500 a year. Even more interesting, the principle is institution independent: the nominal time is calculated from the starting date of the first enrolment. Taking the example of a fourth year BSc EE student whom studied already two years at Delft university, after the first year at the UT, the university receives no funding anymore. Hence, a burden for the UT of: 3*€8,500 = €25,500. Therefore, the universities have a strong preference – from a financial perspective – for non-EER students. Whether they studied for three years already in Delft or not, during their fifth year at the UT, they still pay the calculated break-even price of €10,875.

Overall, it is understandable that universities have financial struggles, if they want to uphold the quality of eduction and realise their ambitious research plans. Research from PwC estimates that universities in total lack about €1.1 billion this year [3], often resulting in reduced quality of education: higher student/staff ratio, cheaper academic staff (more PhD’s and assistant professors that teach compared to full professors), fewer contact hours, etc.

This lack of income results in various strange phenomena. An intriguing consequence of the policy of government funding can be seen in the increasing amount of diverse technical programmes. Besides the incentive of growth, it is key that the programme can be referred to as technical, at least by the NVAO. This is because of another interesting aspect of the government funding: a distinction is made between three types of enrolled students: regular, technical, and medical. The funding per type of student is multiplied with factors 1:1.5:3. Medical students result in the most funding, this is mostly because their residencies (in Dutch: co-schappen) are very expensive. Technical students result in 1.5x the funding, intended to cover for the costs of lab work, materials/chemicals, physical projects, etc., those a law student for example doesn’t make. This does sound rather fair, however, clever universities will always try to maximise this trade-off. In essence, what if we can set up a technical programme with minimum technical content (read: minimal costs)? The university receives their 1.5x funding and minimises the costs per student. Additionally, we know that non-technical studies are by far more popular than technical ones. Hence, a lesser intensive technical programme also alures more students, which fits perfectly in the goal of student growth discussed earlier.

To conclude, it’s evident that the Dutch universities have a financial problem. However, what can (or should) they do about it? Well, first of all, we can say that the government funding is lacking. However, do we then resolve the root-cause, or just the symptoms? On the cost-side we see that universities are reducing expenses, leading to lower educational quality – or even abolishment of untenable programmes. I believe a lot could be gained in the student-side: encouraging nominal study time, but mainly optimising efficiency without affecting the quality of education (or even enhancing it). For example, a third of the funding can be gained by reducing the study delay of all students by a single year. Though these proposals are often controversial in the Netherlands, if we want to have resilient and sustainable universities, they are necessary to consider. The fixed, national tuition fees should become flexible. There is no way seriously competing with other universities if all fees are equal for all EER students. More diversity in the type of education: do you prefer no contact hours at all, full digital education (where possible)? Fine, enrol for a reduced fee for that programme. More socially aware, is your education more relevant for the economy and society? More government funding and hence significantly reduced fees, but also vice versa. Ideally, as a university you have maximum student-efficiency, those who enrol will graduate in three years for their BSc. One way to increase this efficiency, is to raise the Binding Study Advice, e.g. the ATLAS programme has a BSA of 60 EC. Other methods are to enhance matching and entrance criteria. In brief, I believe the government should step up its funding, however, this is only reasonable if the exploration of one or more – controversial – means is done, in order to uphold the great quality of education at the UT, and nation-wide.



Maarten Bonnema

Guest columnist, former student member of the University Council and Faculty Council for EEMCS, MSc-student Electrical Engineering, secretary of the 90th board of E.T.S.V. Scintilla