Minister of Education Kristina Kallas' opinion piece, based on her presentation at the University of Tartu's development conference, shifted the higher education debate from one focused on excellent academic quality on the one hand and insufficient funding to support it on the other onto a more substantive track. I would like to contribute my own thoughts to this discussion.

In developed countries, more than 40 percent of young people attain tertiary education; in Estonia, the figure is slightly higher. As the minister rightly pointed out, nearly all countries are facing increasing difficulties in funding this level of education from public budgets. This raises questions about the economic efficiency and social fairness of such investments. It is highly likely that in the coming years, the share of GDP allocated to higher education and research will decline rather than increase, even in Estonia.

Estonia's situation is even more complicated than elsewhere, as the majority of our students are enrolled in (research) universities where instruction integrated with scientific research is several times more expensive than in universities of applied sciences and especially compared to the so-called short-cycle colleges (offering two- to three-year programs) found in many other countries. In Finland, the number of students at universities of applied sciences is nearly equal to those at universities; in Estonia, only 20 percent of students are enrolled in applied higher education institutions. Alongside the overall volume of higher education, the potential and appropriateness of structural changes in the sector also require attention.

Study motivation below the critical limit

Directly tied to the previous topic are issues related to the length of studies and student dropout rates. On average, it takes students in Estonia twice as long to complete a degree as the nominal duration of their programs. Survey-based studies have identified a number of declared reasons for this: family obligations, disappointment with one's field of study, rigid academic structures, work-related stress and so on. But the underlying common denominator is a drop in learning motivation below a critical threshold — students no longer see value in obtaining an (academic) diploma, whether from a personal perspective or in terms of labor market returns. Have we drawn any conclusions from this message?

In countries where this problem is less pronounced, degree programs are typically shorter and more clearly aligned with labor market demands and students' preferences. Following global trends, we could adopt a much more flexible approach by combining degree studies with micro-degree programs, relying more on students' choices and less on narrowly academic conceptions.

A related observation that deserves reflection is the gender imbalance among students: only 40 percent are men and among graduates the share drops to just 37 percent. Meanwhile, the gender pay gap trends in the opposite direction, suggesting that university diplomas hold limited market value in the eyes of employers. Also worth discussing is to what extent higher education is justified when graduates earn significantly below the national average — something seen even in some prioritized fields like the natural sciences. We lack insight into the reasons behind this reality: Is it an oversupply of graduates, inadequate learning outcomes, poor teaching quality or something else?

The academic community's most serious concern is career insecurity — it can take up to 20 years from the start of doctoral studies to reach a stable, so-called tenured position. We should ask ourselves why the median age for earning a PhD in Estonia is 34, compared to 26 or 27 in England. This makes little sense from the perspective of the doctoral candidate or of the academic and non-academic labor markets. Why is this the case? It's worth considering whether the formal requirement of three published articles, originally introduced as a quality standard for PhDs, is still appropriate or whether it primarily serves the publishing metrics of supervisors and universities rather than the interests of doctoral candidates and society at large.

Increasingly, we also need to analyze why Estonia's growth in the volume of education and research, greater than that of many other countries, has not led to a corresponding increase in labor productivity, which in recent years has actually fallen compared to the EU average. It is possible that these issues also point to a mismatch between (higher) education outputs and the real needs of the labor market.

'Do your homework and then we'll talk'

It's no secret that most ministers of education have, during government budget debates, encountered claims that education in Estonia is more overfunded than underfunded. In international comparisons, this may even be true, but the more important message behind such statements is political: "Do your homework first, then we'll talk." I dare say that when it comes to university education, this view is shared not only by the politicians dividing up the state budget but also by many stakeholders and members of the wider public.

Last year, the total revenue of Estonia's public universities was €639 million, expenditures stood at €612 million and the operational result was €27 million.* There were 35,403 students enrolled in universities and 7,435 graduates across various levels. The universities employed the equivalent of 7,736 full-time staff, slightly more than half of whom were academic employees. A simple calculation puts the annual cost of educating one student at €17,000 and the "price of a diploma" at €82,000.

It's true that these expenses also include costs related to research, scholarships, EU funding, dormitories and university museums, but in one way or another, all of these contribute to university education — universities' main output to society. The other primary output is research, namely the approximately 7,000 academic articles and other publications produced annually. The most significant applied research output from universities came in the form of contract research, totaling €25 million. Revenue from the sale of intellectual property — patents and the like — which is central to driving a knowledge-based economy, was not significant at any university.

You won't find these income and expense figures in the state budget. There, higher education is represented by a single line item: "Ensuring access to higher education," with a total of €273 million, of which €200 million reached universities as operational support. It's important to note that this money, which is intended directly for student education, accounts for less than one-third of universities' total revenue and attention from stakeholders is allocated accordingly.

This basic fact lies at the heart of many of the accumulated problems: universities are expected to "milk from the mouth and lay eggs from the beak." The obvious inadequacy of core funding gives rise to a desperate scramble for additional income between universities, faculties, institutes and individual researchers, which leaves too little time and attention for core duties, especially teaching students. I am convinced that without structural changes to the funding model at both the state and university levels most of the problems in our universities cannot be solved.

Universities' expert opinion increasingly seldom seen in public forums

Allow me to highlight a few more aspects of higher education policy that are quietly gaining momentum. How should we respond to a shrinking population — are international students the answer? For what purpose are we funding the studies of foreign students in Estonia? How can we ensure academic capacity and expertise in all areas essential to Estonia when the pressures of research funding increasingly steer attention toward so-called global problems? Why do we hear fewer expert opinions from universities in public discourse, aside from a few outspoken individuals? Could we reasonably expect our universities to take a stronger leadership role in addressing Estonia's socioeconomic challenges?

These questions deserve a broader discussion than what typically takes place during administrative agreement meetings between universities and the ministry, because the answers will significantly shape Estonia's future. Entrepreneurs, representatives of other government agencies and interest groups from the public should all have a voice in this debate.

The responsibility for organizing this much-needed strategic exchange of ideas could reasonably lie with the ministry or even with the Cultural Affairs Committee of the Riigikogu. Still, I want to offer one urgent recommendation. For such a discussion to be effective, it must be based on an organizational vision, a clearly defined mandate and strong leadership. This is the only way to avoid the chronic ailment that has plagued recent education debates: the production of sprawling consensus documents that deliberately sidestep substantive questions and hard choices. The result is not a strategy but a dusty "letter to Santa" on a shelf, one that fosters unrealistic expectations and the inevitable disappointment that follows.

Strategy is the art of decision-making, grounded in an honest assessment of the current situation and available options and clarity about our goals. From this foundation grows mutual trust, something whose erosion is not a problem merely for higher education.

* Source: Saldoandmik data. To calculate the total public expenditure on higher education, one should also include the budgets of state-run universities of applied sciences, including the Estonian Academy of Security Sciences and the Estonian National Defence College, which together amount to an estimated €60 million.

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