Education financing reform proposed

RIGA - The president’s Strategic Analysis Commission will propose that budget-funded educational studies be liquidated and a long-term crediting model be introduced instead, reports news agency LETA. The Strategic Analysis Commission on June 28 presented an analytical report on higher education, on the basis of which the commission has prepared several proposals for reforming Latvia’s higher education system and introducing a new financing model.

Stockholm School of Economics in Riga lecturer, economist Vjaceslavs Dombrovskis, explained that in the new financing model, potential students will choose a university or college that will be ready to accept them for a certain tuition. The State Treasury will then sell a security for the tuition amount, and transfer the money to the given university or college’s account.
“As long as the student continues to study, the principal amount and interest on the loan are not repaid, which means that the studies are free for the student. He/she will begin to make the loan payments after graduating, provided that the person has a job and sufficient income,” explained Dombrovskis.

The main advantages of the new model is that it will improve students’ motivation to study, and studies will become available to practically all young people regardless of their family’s material status. Such a financing system was introduced in Australia in 1989, and the number of students there has increased 49 percent in twelve years. New Zealand, South Africa and Great Britain have similar financing models for higher education.

Strategic Analysis Commission Chairman Roberts Kilis said that 400 million lats (571.4 million euros) would be initially necessary for introduction of the new system. Kilis believes that the new system should be adopted already from Sept. 1 next year, or Jan. 1, 2015 at the latest.