Bulgarian Higher Education – Back to Socialism or a Change for the Better

In one of his recent public appearance the Bulgarian Prime Minister Boiko Borisov was provocative as usual. In his characteristic style, always seeking to point fingers at someone, Mr. Borisov turned his attention to the Bulgarian students. He was particularly dissatisfied with those whose education is being subsidized by the government. Is it fair when a student receives education paid by the state and then leaves the country, he asked rhetorically. A bit hesitantly, the education minister also showed his support for Mr. Borisov’s idea to look for a way to tie the education subsidy to a commitment to remain in the country after graduation.

There are people who would agree with Borisov. After all, they would say, it seems not profitable for the state to invest in education that way. There is something wrong when we prepare qualified workers, and other countries (richer than our own) bear the fruits of their skills and knowledge. When students emigrate, they do harm to our economy and to the state budget.  When they leave there are deficits for workers in some sectors of the economy and there is a drop in tax revenues. You spend money and in return you get nothing – bad investment. Something has to change.

We should not blame the students. They are just taking advantage of the system in its current form. The heavily subsidized free education is a result of the socialist traditions in higher education. We kept one part of the model, but abandoned the other – the compulsory allocation after graduation. This second part was the guarantee that students would fulfill their obligation to the state.

Here comes the real question – does the Prime Minister want to return to the old socialist system or build a new model for the Bulgarian higher education? It looks like that Borisov wants to establish a contemporary version of the old student allocation, that is why he has to be constantly reminded that Bulgaria is through with the socialist system. There are few state-owned companies where he could allocate the fresh graduates. In the private sector, hiring is not directed by the state and is depended on the need of each particular business and the skills of the workers. The education minister Mr. Ignatov correctly pointed out that there could be no obligation to secure jobs for the graduates if the market cannot provide these jobs.  Naturally, Mr Totu Mladenov, the Bulgarian labour minister, has already prepared a special allocation program for the students, but this is not the way to solve the problem.

There is a solution both to the financial and the quality problems of the Bulgarian higher education system. But first the state should either reduce its presence or leave the system entirely. If Borisov thinks that students using taxpayers’ money (without contributing back to society) is the problem than he should stop or reduce the subsidy. What we mean is the state handing over the investment decision to those with highest stakes in it, the students themselves. When the state withdraws, this will create new incentives both for the students and the universities.

Student loan programs are one of the options for higher education without the state, which could become larger and more important in the future. These programs are very popular in the developed countries and have proven their effectiveness.  Students with loans have a much greater incentive to demand quality education because they need to be sure that well-paid jobs would be available for them upon graduation. This new form of state support is yet to gain momentum in Bulgaria. Interest is inevitable to increase when university fees start going up, when the state stops subsidizing the system. And if the state still wants to subsidize, the voucher system, where the money (or the voucher) follows the student, is a good alternative. Vouchers would be accepted both in state and private (licensed) universities, which will stimulate universities to compete for students. Last but not least, direct contracts, between students and companies, which will invest in their education, and in return the students will work for them for a given period, are another option for financing university education in a number of countries. Even today universities and a number of NGOs also provide scholarships for the best students.

There would always be ways to finance the education system, even if the state decides to step away from the sector. If the government wants to subsidize university education, than the PM should not be angry that students are leaving the country to look for better careers. They will stay only if they are satisfied with what they can achieve here. If the government wants to raise the standard of living and welfare, it should try to achieve higher economic growth, to catch up with Western Europe. What the government should do to increase economic growth is to provide a good business environment – low taxes and a simple tax system, effective administration, good infrastructure, rule of law and property rights defense. Plain and simple.