Financing for Education Stagnant or Declining Despite Chronic Learning Needs Post-COVID-19

WASHINGTON —A new World Bank-UNESCO report released in time for the Transforming Education Pre-Summit taking place in Paris (June 28-30) shows that the COVID-19 pandemic has worsened existing gaps in education investment across and within countries. It warns that a reprioritization of funding for education is needed to avoid widening learning inequalities and exacerbating the blow to the future earning potential of today’s students, now estimated to be close to $21 trillion in lifetime earnings, above the $17 trillion estimated in 2021.

Education Finance Watch 2022, an annual report on the global state of education financing jointly produced by the World Bank, the Global Education Monitoring (GEM) Report, and the UNESCO Institute for Statistics (UIS), finds that despite the significant learning losses stemming from the COVID-related school closures, overall government education spending has remained stagnant. Since the onset of the pandemic, overall bilateral aid to education has fallen, while households continue to take on a large share of education costs in low-income countries.

Around 40% of low- and lower-middle income countries reduced their spending on education with the onset of the pandemic in 2020, with an average decline in real spending of 13.5%. The share of education spending in overall public spending also fell.

The available data on national government budgets for 2021-2022 reveal that in higher-income countries, education as a share of total government budgets remained stable in 2019-2021, and in 2022 it was higher than in 2019. However, in lower income countries, the share of education fell in 2020, rebounded a little in 2021, but fell again in 2022 and remains below 2019 levels.

“Overall, low- and lower-middle-income countries have not prioritized education in their national government budgets since the onset of the pandemic – education has not recovered the lost space in terms of its share in total government budget, which remains lower in 2022 than before COVID-19,” said Jaime Saavedra, Global Director for Education, World Bank. “This needs to change to ensure adequate funding for the urgently needed measures to recover and accelerate learning and safeguard the future of this generation of students, which is now threatened to lose $21 trillion in lifetime earnings.”

While achieving the recommended international benchmarks for government spending in education is challenging for many countries, others have shown that it is possible. Of 33 low- and lower-middle-income countries with data in 2020, 15 countries met both targets, four achieved one or the other, while 14 countries met neither.

Globally, governments are the main financing source for education, but household spending and international aid account for a significant share of total education spending in low- and lower-middle-income countries.

New data shows that bilateral donors collectively decreased their direct aid to education from 2019 to 2020. Understandably, countries prioritized health and social protection spending over education at the outset of the pandemic, and now additional aid is being directed towards mitigating the consequences of the war in Ukraine and other crises. Although a number of bilateral donors increased their aid in 2020, a majority reduced it, which led to a reduction in total bilateral aid earmarked to education. The report warns that diminished political prioritization of education will not enable countries to do what is needed to recover and accelerate learning and would over time undermine human capital development and long-term economic growth.

“We are walking head-first into an education crisis. Unless we radically transform our priorities, there will be no way back. If finance falters, families spending on education will suffer,” warns Stefania Giannini, Assistant Director-General for Education at UNESCO. “The more of the education bill that falls to families, the larger the risk of increasing inequality. Stuttering education finance at this critical moment will have ramifications on families for years to come. The precursor to the Transforming Education Summit taking place this week is the beginning of a critical movement to re-assess what matters for our future.”

The paper shows that, in the poorest countries, households pay three times more of the share of the total cost of education than in the richest countries. Within countries, the richest households spend almost twice as high a share of their income on education than the poorest, further fueling inequality.