Educational expenditure indicators help to show what, how and where financial resources are directed to education. Every year, governments, private companies, students and their families make decisions about the financial resources invested in education. These investments are made with the well-established idea that expenditure on education enhances labour productivity by improving the skills of the workforce (Mallick, Das and Pradhan, 2016[1]) which might affect economic growth and social development. Therefore, analysing various aspects of educational finance helps clarify the efforts made by countries in education as well as its possible impact on future national economic and social perspectives. In addition, the search for effective financial policies in education requires evaluating educational expenditure of a country’s education system in light of other countries.

Annual expenditure per student on educational institutions from primary to tertiary level provides an assessment of the investment made in each student. In 2018, the average annual spending per student from primary to tertiary education in OECD countries as a whole was almost USD 11 700. But this average masks a broad range of spending across OECD and partner countries. Annual spending per student at these levels ranged from around USD 3 100 in Colombia to around USD 18 000 in Norway and the United States, and to more than USD 24 900 in Luxembourg (). The drivers of expenditure per student vary across countries and by level of education: the countries with the highest expenditure per student enrolled in primary through tertiary education (e.g. Luxembourg and the United States) are also among those that tend to pay their teachers at primary and secondary level the most (see Indicator D3). In contrast, Colombia has one of the highest ratios of students to teaching staff, which tends to drive costs down (see Indicator D2).

The share of national wealth devoted to educational institutions is substantial in all OECD and partner countries. In 2018, OECD countries spent on average 4.9% of their GDP on educational institutions from primary to tertiary levels ().

The largest share of funding on primary to tertiary educational institutions in OECD countries comes from public sources, although private funding at the tertiary level is substantial. Within this overall average, however, the share of public, private and international funding varies widely across countries.

The share of total public expenditure devoted to education varies across countries. In 2018, total public expenditure on primary to tertiary education as a percentage of total government expenditure for all services averaged 11% in OECD countries. However, this share varies across OECD and partner countries, ranging from around 7% in Greece to around 17% in Chile ( and ).

Entry into tertiary education often means costs for students and their families, both in terms of tuition fees, foregone earnings and living expenses, although they may also receive financial support to help them afford it. Most national students entering tertiary programmes enrol at bachelor’s or equivalent level in OECD countries (see Indicator B4). Public institutions do not charge tuition fees to national students at this level in nearly one-third of countries with data, including Denmark, Estonia (for programmes taught in Estonian), Finland, Norway, the Slovak Republic, Sweden and Turkey (). In a similar number of countries, tuition fees are moderate, with the average cost for students under USD 3 000. In the remaining countries and economies, tuition fees range from about USD 3 800 to over USD 8 000 per year. They exceed USD 12 000 in England (United Kingdom), where there are no public institutions at tertiary level and all students enrol in government-dependent private institutions ().

Expenditure on education is composed of current and capital expenditure. Current expenditure includes staff compensation and spending on the goods and services needed each year to operate schools and universities, while capital expenditure refers to spending on the acquisition or maintenance of assets which last longer than one year (see Definitions section). Differences in current and capital expenditure allocation across countries reflect the degree to which countries have invested in the construction of new buildings – for example as a response to increases in enrolment– or in the restoration of existing school premises, due to obsolescence and ageing of existing structure, or the need to adapt to new educational, societal or safety needs. Unlike current expenditure, capital expenditure can show large fluctuations over time, with peaks in years when investment plans are implemented, followed by years of troughs.

On average across OECD countries and economies, the salary cost of teachers is USD 3 196 per primary student, USD 3 680 per lower secondary student and USD 3 552 per general upper secondary student (). Each of these averages masks a wide range of salary costs across countries. For example, in primary education, the salary cost of teachers per student in Germany (USD 5 097) is over four times the cost in Latvia (USD 1 235). Higher salary costs are a result of higher teachers’ salaries and/or a higher number of teachers per student, which in turn is driven by smaller classes, longer required instruction time for students or shorter teaching hours for teachers.