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Foreign students add $23.8m to Danish economy despite state funding

An analysis has found that international students made a net contribution of 165.5m krone (US$23.8m) to the Danish economy over a 16 year period, despite public fears that they are a drain on government resources.
February 26 2015
3 Min Read

A study into 16 years of the financial impact of international students in Denmark has found that foreign tertiary-level students made a net contribution of 165.5m Danish krone (US$23.8m) to the Danish economy. Students completing long-term degrees proved to be the most economically beneficial for the country.

The independent think tank DEA used student, immigration and earnings data up to 2012 to analyse the economic contributions of students who completed a degree in Denmark between 1996 and 2008, to ensure a minimum of four years’ data on each student.

According to DEA, the report could ease growing public concern that international students are a drain on public finances.

“As long as the labour market can absorb more international students, there is really good business for society in increasing both recruitment and retention,” said Martin Junge, Head of Research at DEA.

“As long as the labour market can absorb more international students, there is really good business for society in increasing recruitment and retention”

Public speculation is mostly directed at students from within the European Union and European Economic Area as their fees are footed by the Danish government.

They may also be eligible for additional state-funded loans and grants, known as Statens Uddannelsesstøtte.

However, the research concluded that the tax revenue generated by foreign graduates who remain in the country outweighs this expenditure by the state.

Ulla Gjørling, International Director at Aarhus University, said she’s not surprised by the financial boost foreign students provide, but the complexity of the data and subsequent lack of press coverage could mean they may have “little effect” as reassurance to the public.

“People want to believe and promote what suits them, and the argument that tax payers are bleeding funding to pay for international students’ free education in Denmark is powerful and speaks into an existing agenda against foreigners that is increasingly dominating the European world,” she told The PIE News.

Almost 40% of the foreign students who completed a degree in Denmark between 1996 and 2000 were still in the country a year after graduation, according to DEA’s research.

Among graduates who stayed on for over a year, the report found that the average length they were in Denmark was five and half years.

Students on long-term degrees made the largest net contribution, adding 230m krone ($35m) over a 16-year period, while tertiary schools added 30m krone ($4.6m).

International students on medium-cycle (professional Bachelors) and Bachelors programmes proved to be the most costly to the government, with loses totalling an estimated 60m ($9.1m) and 40m ($6.1m) krone respectively.

However, in an analysis of the data, Junge wrote that the loss was to be expected “since the Danish labour market is not accustomed to this type of training, and the likelihood that people will travel again is thus correspondingly large”.

For Danish students, long-term degrees are by far the most popular option as they are legally entitled to a state-funded education to Masters level.

The loss on medium-term programmes is similarly predictable given their popularity among students from Scandanavian countries who are likely to return home upon graduation, and that they are often directed towards employment in the public sector, Junge added.

“The argument that tax payers are bleeding funding to pay for international students’ free education in Denmark is powerful”

The DEA results echo those of a 2013 study carried out by the Danish Rational Economic Agents Model group on behalf of Denmark’s Ministry of Science, Innovation and Higher Education, which found that attracting an additional 1,000 Bachelor-qualified international students annually could add between 0.4bn and 0.8bn krone ($60.9m-$121.8m) to the economy over the next 50 years.

Despite her doubts, Gjørling commented that she is “hoping that the fact that two institutions have reached the same conclusion will have some effect on politicians’ attitude”.

Like the DEA study, DREAM’s research attributes the “lasting improvement of public finances” to the tax generated by foreign graduates.

“There is a socioeconomic benefit in attracting international students to study a full Master’s programme, even if the programme is financed by the Danish state,” it concluded.

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