Higher education in Albania has seen remarkable changes over the past few decades. The country's transition from a communist regime to a market-oriented democracy brought about significant reforms in the education sector. Since the early 1990s, the country has undergone a process of decentralization and privatization, which has reshaped the financing landscape of higher education. These reforms have had both positive and negative implications for the financing of higher education.

Today, Albania boasts a mix of public and private universities and colleges, all of which must secure funding from various sources. Public universities are funded by the government, while private universities rely on tuition fees and private investments. Since 2003, Albanian higher education follows the Bologna Process, with a three-tiered system comprising bachelor's degrees (3 years), master's degrees (2 years), and doctoral degrees (3-4 years). Public higher education financing in Albania faces several challenges and issues, which can impact the quality and accessibility of higher education in the country.

Public higher education institutions (PHEI) in Albania receive a significant portion of their funding from the government. This allocation covers salaries, infrastructure development, and basic operational costs. However, government funding has not kept pace with the growing demand for higher education, leading to resource constraints in public institutions. A lack of competitive salaries and opportunities for academic and research positions has led to a significant brain drain, with highly educated individuals seeking opportunities abroad.

Higher education plays a vital role for the country’s development. Public financing is essential for higher education to prepare better citizens and contribute to the country’s progress. In Albania, financing of public higher education institutions (PHEI) is the lowest among the European Union (EU) and the OECD countries. Currently, this support constitutes only 0.5% of the Albania’s GDP. Likewise, the government funding for scientific research is at a very low level compared to the EU countries which invest 1.5-2% of the GDP. The 2015 reform of higher education was expected to strengthen the state support and the financial autonomy of the Albanian PHEIs. However, the state support for higher education remained low in the years following the 2015 reform. 

This paper examines the financing of public higher education in Albania and how government funding supports the Albanian PHEI’s tripartite mission of teaching, research and community outreach. It explores the various sources of financing, issues of access and equity, and potential policy solutions to ensure sustainable and equitable funding for higher education in Albania.

Specifically, we:

Examine the new financing model of higher education according to Law 80/2015 on higher education and scientific research in higher education institutions of the Republic of Albania.

Analyse the main sources of financing public higher education in Albania including government funds, tuition fees, revenue from sales and services, revenue from auxiliary activities, research grants, private donations, and foreign aid.

Explore the state funding of public higher education by institution and the purpose of the funds for academic activities, institutional development, student financial aid, research, capital investment, and auxiliary activities.

Identify challenges and opportunities for Albanian PHEIs for efficient utilization of resources, lowering costs, and diversifying revenue sources.

To guide the research process, in this study we employ human capital and public goods theory as conceptual framework for evaluating the incentives structure of public and private sector for funding higher education.

The study concludes with policy recommendation for increasing the state support for higher education as well as diversification of the funding sources leading to greater autonomy of the Albanian PHEIs.

This study was carried out in 2024 with financial support from the READ Program of the Albanian-American Development Foundation (AADF). To conduct the study on financing of public higher education in Albania, we employed mixed methods, a combination of qualitative and quantitative approaches, including survey and focus group research. Data on the PHEIs financing was collected from primary sources by conducting a survey with PHEI’s administrators. Also, we used data secondary sources including Albanian INSTAT, the Ministry of Education and Sports, the Ministry of Finance and Economy as well as from previous studies conducted by domestic and international organizations. Additionally, secondary data on higher education financing in the EU and OECD was compiled to compare the level of financing in Albania with similar countries from the region. An expert survey was conducted with university rectors of the Albanian PHEIs in Tirana, Durres, Shkoder, Elbasan, Korce, Gjirokaster, and Vlore as well as with other stakeholders from the Albanian government agencies. The survey questionnaire included semi-structured and open-ended questions. The objective of this survey was to gauge the university experts’ opinions and perceptions about the state of higher education financing, the level of government support, the higher education act and related government regulations, opportunities for diversification of revenue generating activities, the tuition fees and other student charges, salary support for university personnel, domestic and international research grants, and so forth. As a part of the research process, we reviewed the major budgeting/financing models of higher education in developed countries and drafted expert survey questionnaire. We also conducted pilot testing of the questionnaire with a small sample of university senior managers in Tirana. We visited university campuses in Tirana, Durres, Shkoder, Elbasan, Korce, Gjirokaster, and Vlore to conduct the expert survey. We also conducted extensive Interviews with experts, specialists and officials from the Ministry of Education and Sports and other government agencies dealing with the financing of higher education in Albania.

We are in the process of writing the study report and what we will present below are preliminary findings. We will have the full paper ready in a few weeks. Some of the preliminary findings include: Albanian public higher education is unfunded and underperforming with lowest international rankings among regional universities in Southwest Europe. Over 90% of the PHEI funding comes from government support and student tuition fees. Government funding for scientific research programs is low and insignificant. The PHEI’s revenue from self-generated sources are null or negligible. We found that most university senior administrators have a distorted vision of the strategic direction of their institution. Most of them seem to be pleased with the current levels of government funding as long as that funding covers personnel salaries for 12 months. The budget planning process is ineffective, and not information based. The allocation of state funds is not based on performance. Government agencies in charge of resource allocation and budget planning lack analytical capacity to assess financial performance of the PHEIs. In all Albanian PHEIs, the departments do not manage any funds designated for research. Overall, the PHE system is in deep institutional, academic, financial, and operational crisis. The current system is inefficient, with high transaction costs, and dysfunctional governing and organizational structures. In many PHEIs, there is a leadership deadlock between the rector as the sole leader for the academic side and the administrator as the leader for the administrative side. Albanian public higher education system is facing a drastic decline in undergraduate enrollments due to emigration, slowing birth rates, limited employment opportunities and a growing number of youths choosing to study abroad. This drastic enrollment decline in all levels of education has major academic and financial implications for the future of programs and universities in the country.

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