The Verkhovna Rada of Ukraine adopted as a basis the draft law 10399 on financing higher education. A mechanism for distributing grants based on the results of entrance exams is being formed. 

On the one hand, the model of budget financing of higher education institutions has long been in need of change. On the other hand, the distribution of grants eliminates one injustice, but does not eliminate another – an applicant who has been given a grant does not lose this right throughout the entire period of study. Volodymyr Bakhrushyn, a member of the National Team of Experts on Higher Education Reform, an expert of the RPR Coalition, told us more about this issue.

On March 20, the Verkhovna Rada of Ukraine adopted as a basis The existing model of budget financing has long been in need of changes. The mechanism of public procurement has long been neither public nor procurement. After the introduction of the formula for the distribution of budget funding between higher education institutions based on their performance in 2020, the term “public procurement” has become an outdated name for budget funding for higher education institutions. The formulaic distribution was in effect in 2020 and 2021. But in 2022 and 2023, the CMU suspended the relevant Resolution and returned to the old model. In 2024, the formulaic allocation was renewed. The main problems with the current model are that the formula indicators and corresponding coefficients are not justified and are largely based on a compromise between the opinions of different stakeholders. The main contribution to the total funding of higher education institutions is the number of students who receive higher education at the expense of the public budget. However, today there are no objective estimates of the required amount of state funding by specialty. 

Recently, the problem of uncontrolled redistribution of the state funding allocation between specialties has intensified due to the fact that representatives of some privileged categories who are entitled to free education but did not get into state-funded places through competition choose the specialties and educational programs they want to study. Recently, the number of such applicants has increased significantly. As a result, there is a substantial shortage of applicants in some “unpopular” specialties, and in some “popular” specialties the volume of state funding far exceeds the projected need for specialists. 

Another problem with the current mechanism is that the competition for state-funded places among applicants is based on the “all or nothing” principle. That is, the one who passes the test pays nothing for education, while the one who fails pays the full price, even if the difference between the competitive scores of the respective applicants is 0.001 points. This is not fair.

The main goals of the draft law were to solve these problems. It provides for the division of budget funding into state orders and grants to contract applicants who had high competitive scores. It is assumed that the amount of the grant will depend on the results of the EIT/ST. That is, a student with high scores at admission will only partially pay for their education.

The proposed approach partially, but not completely, solves existing problems and may create new problems that are no less complex.  

The mechanism of distributing grants based on the results of entrance exams eliminates one injustice, but does not eliminate another – an applicant who has been given a grant does not lose this right throughout the entire period of study. Regardless of how their academic performance rating changes compared to other students. EU countries mostly use a different approach and provide similar grants/scholarships based on social indicators. It is unclear how to apply the proposed mechanism for awarding grants to master’s students, where the transfer of the competition to the use of standardized test results is inappropriate, since, unlike bachelor’s degrees, applicants have studied in different educational programs, and master’s programs, even within a specialty, may have significantly different requirements for students. In EU countries, if standardized test results are used for admission to a master’s program, it is as one of the indicators or as a condition for admission to other tests.

The attempt to combine the mechanism of state order and formulaic distribution of budget funding based on performance raises many concerns. These mechanisms have different goals. Therefore, there should be different tools to achieve these goals. In addition, the proposed model of higher education at the expense of the state or regional order contains significant corruption risks.

Therefore, there is a lot of work to be done before the second reading. It is also worth noting that this mechanism will be able to work when it is reflected in the Budget Code.