The sector of higher education in Albania experienced a “furious” expansion on both the demand and supply side during the last five years. Liberalising access to public higher education has increased the number of students by around 2.5 times. This demand led to a fast development in the private sector. In 2009, there were 36 private higher educational institutions, compared to almost none before 2000.

The traditional concept of universities has evolved and public-private partnership is becoming a common way to financially support their development into open, modern centers of knowledge accumulation and exchange.

Initiatives to reform university funding mechanisms aim at strengthening the universities’ leading role in the country’s socio-economic development, at increasing the accessability of universities for the Albanian youth and, above all, at increasing the quality of higher education introducing a degree of competition among higher educational institutions (HEI).

Main Principles and Instruments of the Reform

The main principle of the financial reform is that the allocation of public funds to universities will be student-based; eligible universities will receive public funds for teaching according to the number of eligible students they are able to recruit.

There will be three kinds of instruments, which will be used to apply the student-based funding system to allocate public funds to HEI, i.e.
1. financial subsidies per student to cover parts of the tuition fees,
2. tuition fees that will be paid through the student loan scheme, and lastly
3. full scholarships.

Both public and private institutions are eligible for funding. While public universities are eligible by default, private HEI have to be non-for-profit entities and satisfy a quality threshold.

The number of eligible students will be defined by a student’s individual academic performance and the total capacity of the specific HEI. Academic performance will be measured by the student’s Grade Point Average (GPA) on the level of secondary education and the State Matura Examination results. The total budget allocated to HE as well as the overall capacity of the system to accept students without hurting the quality of education will constitute the upper limit to the number of students eligible for public subsidies in their studies.

The amount of subsidy each student will benefit from depends on the costs of their individual studies contingent on the academic field, the geographic region and related costs of service delivery.

The degree of cost recovery may vary for different fields of study. Fields of higher national interest, i.e. fields of national priority fostering the development of human capital and important to the development of the national economy, will receive more funding through a higher level of financing. The five percent of students in each field of study with the best results in the State Matura will be awarded full scholarships, i.e. merit scholarships. Graduate students will be supported through scholarships of excellence.

The difference between the tuition fees and the value of financial subsidy given to the students will be paid by the students themselves. The government plans to install a soft student loan to support payment of this amount. Every student enrolled in a public or private HEI will be entitled to receive such a soft loan, with a defined maximum value. The interest on these loans will be subsidised by the Albanian government. Students from poor families will be entitled to a loan in exactly the same way and on the same terms as all other students, with the repayments starting with their career entry.

Other Elements of Financing

The Strategic Development Fund of HEI will be a funding mechanism based on “competitive bidding” of project proposals that universities prepare. These are projects that help in the institution’s development, such as infrastructure development, projects to improve quality measures, the opening of new programmes, projects to enhance the cooperation between universities and businesses and projects that support regional development.

In summary, Albania’s scientific research activities will be funded in three ways; fundamental research activities associated with teaching and academic staff development will be covered by student-based funding. Scientific research activities in universities or research institutes within universities will be financed by public funding managed through the Agency of Research, Technology and Innovation. Other funding sources will be non-public research support such as various donor’s or commercial contracts and consultancy service, EU funding (FP7) that a university will be able to raise when participating in regional or national research projects.

The financing reform on higher education significantly expands the autonomy of universities. To ensure the adaptability and efficiency of the universities within the framework of this new scheme of financing, their management and governance as well as their internal system of quality assurance have to undergo changes and adjustments, necessary to ensure the accountability of universities.