Dutch subsidy 'too high'

February 1, 2002

Dutch students should pay significantly more for their higher education, according to a government economic think-tank.

In a study of the role of knowledge in the Dutch economy, published last month, the CPB Netherlands Bureau for Economic Policy Analysis says that students' personal benefit in the form of higher earnings significantly outstrips the social benefits.

The CPB, the main economic adviser to the government, suggests adopting the Australian Higher Education Contributions Scheme, under which the cost of tuition is recovered through the tax system after graduation.

The Dutch state subsidises about 80 per cent of the costs of universities and polytechnics. Students and their parents pay the rest in tuition fees.

CPB economists say the state subsidy for the already better off to improve their personal chances in the labour market is an inefficient use of taxpayers' money. Education minister Loek Hermans said that after May's general election, the new government should consider seriously the CPB's advice.

Dutch economic growth is forecast to crumble to nearly zero in the coming year, which will leave little scope for investments in education.

If the Netherlands were to stop subsidising higher education altogether, it would have to introduce a graduate tax of 7 per cent.

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