From Public to “Private” Universities: Model Change in Hungarian Higher Education

Jan Steen "A School for Boys and Girls" // Public Domain

The necessity of a reformed Hungarian higher education system became clear in the 2000s: after the regime change in 1990, the number of higher education students was increasing heavily, which decreased the quality of higher education and the value of university diplomas.

A possible way to start this reform process was implementing a tuition policy that was worked out in 2006 by MSZP (the larger ruling party between 2006 and 2010).

Interestingly, in order to avoid dissatisfaction among students, the word “tuition” was rarely used by politicians, the official name of this new financial obligation was “partial contribution to development”.

According to the plan, it should have been paid by every student except for ones in the first year, PhD students and students with an underprivileged background. The money should have stayed in the university budget, it was never planned to channel it back to the annual Hungarian public budget.

The main goal of the renewed system besides quality increase was to make the higher education system fairer and to distinguish between well- and underperforming students by rewarding the best ones.

That is why the best 15 percent of students should not have paid at all and would have received extra financial aid on top. The effect of the system cannot be evaluated, since as a consequence of political conflicts the opposition urged a referendum to abolish tuition in the higher education system and the new financial obligation was revoked by the parliament.

Although, it should be noted that the result was rather a reaction to the government, not the idea of tuition itself.

The current Hungarian government party that was in opposition in 2006 and campaigned against introducing any kind of tuition, started to reform the higher education system in 2011, only months after having come to power.

Among others, the number of public-financed places at universities was decreased and in several fields of study the minimum points required for a successful application was determined centrally that went against former practice. Those who did not reach this earlier defined level of points, could only be accepted in the form of self-financed studies if the institutional capacity made it possible.

Later, the minimum grade point average of public-financed studies was increased and forced more students into self-financing.

For self-financed studies, a new student loan type was created that enabled students to take out loans for financing their tuition in particular and could not be spent on other expenses such as living costs.

Another important reform was that from 2013 students need to sign a contract that commits them to stay and work in Hungary for a certain period of time after their graduation.

These measures had a clear negative impact on student’s perception: according to an educational report of the European Union from 2019, the year when the government announced the cut of public-financed places and the introduction of the above-mentioned student contract, 18 percent less students enrolled at universities.

In parallel, the secondary education system was also formed in a way to make university applications more difficult: from 2020 on, at least one final exam (out of the five subjects) must be at an advanced level and an intermediate language exam was planned to be set as another minimum requirement.

Later, fulfilling the requirement of an obligatory language exam was postponed by the government. The goal is clear: lowering the number of university graduates by setting stricter application conditions and decreasing public-financed places.

Prime minister Viktor Orbán described this phenomenon as a “self-financing higher education system”.

The new measures are worrying, if we analyse the current data of the number of graduates: in 2018, the rate of university graduates among people of 30-34 years was 33.7 percent in the whole population, which is less than the European average of 40,. percent.

When it comes to the age group of 25-34 years, between 2014 and 2017 Hungary was one of the two countries in the whole European Union, where the rate of university graduates declined.

The next milestone in Hungarian higher education reforms came in July 2019, when the leading university in economics, Corvinus University of Budapest was transformed from a public into a private university.

This change also meant that the university was no longer controlled by the government, but a foundation called Maecenas Universitatis Corvini. The foundation received all the properties of the university and a significant financial background through dividends of MOL and Richter shares (an oil-gas and a pharmaceutical company) that earlier belonged to the Hungarian state.

The dividends cannot be sold by the foundation and must be used to finance the university: as reported by the president of the foundation and the CEO of MOL, Zsolt Hernádi the overall sum of money derived from these dividends will be more predictable and higher than the former state-funded budget of the university.

The goal of the model change was to boost the university’s overall performance and to attract new private resources through a more flexible regulatory environment.

In the first year of the model according to a report of Corvinus University, the faculty structure was disassembled, a number of study programs were renewed, the aim for more internationally acknowledged research was set and the Corvinus Scholarship was created to finance the studies of high-performing students irrespective of their social background.

Analyzing this report, it can be stated that the requirements of the scholarship and the overall university approach are indeed achievement-oriented, which might prove the positive effects of this model change in the long run. On the other hand, the model also has its weaknesses.

For instance, since the negative impact of coronavirus on the oil industry was quickly noticeable, MOL announced in the spring that the company would not pay any dividends this year. Since Corvinus University heavily relies on these dividends, the decision has a serious impact on the institution and shows us the disadvantages of similar financing forms.

In 2020, eight more universities were transformed into “private universities.”

Theoretically, the model of Corvinus University should have been used in their case, as well, but unluckily, these universities did not receive a proper financial background from the state: they will continue to operate through state support defined in long-run framework contracts, have public-funded places and thus stay financially dependent in the future.

However, as they are no longer public universities, all authorities in connection with maintenance will belong to the universities’ foundation and employees will lose the legal status of public servants. The foundations can decide among others about the university budget, the annual institutional report, organizational and operational regulations, which means that their excessive power could only be balanced by a strong, autonomous senate.

In Hungary, the question of an autonomous senate is even more essential, since a lot of members of the foundations are close to politics, including ministers, MEPs and mayors of the government party. What is more, no time limit for their membership in the board is set.

This broad spectrum of rights caused serious conflicts at one of the eight universities, the University for Theatre and Film Arts. The senate of this university claimed that their complete autonomy was taken by the foundation, since they no longer had the right to choose the rector of the institution, appoint teachers, start university classes, adopt the budget or the organizational and operational regulations.

Protesting against the model change, the whole senate resigned, employees were striking, students organized a blockade and demonstrations were held in the capital city.

As a summary, it can be stated that there have been two tendencies in the Hungarian higher education: the first one is directing universities towards a more self-funding system and the second one is keeping state control through seemingly independent foundations.

Creating a more flexible legal environment and trying to boost achievement should not be equal with excluding underprivileged students of higher education or destroying university autonomy. But it is also clear that in Hungary, several aspects of the new model should be re-thought.

Most importantly, universities should have a proper financial background, a functioning senate and a strong trade union to represent employees’ rights.

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Hanna Berbas
Republikon Institute