The question of who shoulders the cost of education has never been more urgent, as funding structures shift and long-term value hangs in the balance.

Understanding Education as an Economic Engine

Across the world, education is more than a social good—it is a potent driver of long-term economic growth. The global education market is projected to reach almost US$10 trillion by 2030, with early childhood and workforce programs leading the surge.

Research from the World Bank underscores that every additional year of schooling corresponds to a 9% increase in hourly earnings. Beyond individual benefit, higher education levels strengthen institutions, spur innovation, and foster social cohesion.

However, the COVID-19 pandemic inflicted severe setbacks. International reading scores dropped by more than the equivalent of one year of schooling between 2016 and 2021. The World Bank now estimates a potential loss of US$21 trillion in lifetime earnings for this cohort—about 17% of today’s global GDP.

Who Pays for Education?

Financing education involves a complex web of public, private, and external funding. UNESCO data reveals an annual global financing gap nearing US$100 billion to meet 2030 targets. In practice, households cover about a quarter of all education expenditures, while aid and public spending fill the remainder.

• Households: approximately 25% of global education costs
• Public budgets: vary by country, often below UNESCO’s benchmarks
• External aid: set to decline by about 25% by 2027, threatening low-income nations

These funding shifts create both opportunity and risk. In many regions, reduced aid pressures governments to choose between public investment and passing costs onto families.

Public Funding in Practice: The U.S. K–12 Example

The United States illustrates the scale of public commitment. Total K–12 spending exceeds US$857 billion annually, averaging US$17,277 per pupil. Combined federal, state, and local funding amounts to US$878.2 billion, leaving a US$21 billion unused or reserved.

Despite high spending, the U.S. allocates just 12.7% of total public expenditure to education—below UNESCO’s 15–20% benchmark—and 5.59% of GDP, above the OECD average of 4.61%.

This distribution highlights the significant role of state and local governments, accounting for nearly 86% of funding, while federal contributions remain comparatively modest.

Tuition, Debt, and the Household Burden

Globally, households absorb rising tuition fees, private tutoring costs, and expanding “shadow education” markets. In low- and middle-income countries, this trend exacerbates inequality and shifts risk from the public sector to families.

Parents often invest heavily in their children’s schooling—sacrificing current savings for future potential—while young adults increasingly rely on student loans, constraining their early career decisions. This intergenerational dynamic raises pressing questions: Are we funding the next generation’s promise, or perpetuating cycles of debt?

Private Markets and EdTech Opportunities

The international and private education sector continues to expand. ISC Research reports US$69.4 billion in global fee income for international K–12 schools in 2025, with rapid growth in Central Asia, Eastern Europe, Latin America, and Africa.

Meanwhile, the EdTech landscape is in flux. HolonIQ notes that despite a near US$10 trillion market outlook, investors have adopted a “back to basics” mantra, prioritizing profitability and proven models over speculative ventures. Generative AI, once a source of debate, is now practically embedded in learning tools, signaling a shift toward sustainable innovation.

• Early childhood and workforce education leading investment growth
• AI integration focused on practical classroom support
• Public funding poised to favor vocational and adult learning

Policy volatility and geopolitical tensions pose headwinds for international higher education, where visa restrictions and shifting regulations can reverse gains.

Policy Debates and the Road Ahead

OECD data reveals tertiary attainment rising across member nations, yet public expenditure on higher education as a share of GDP has fallen in the U.S. and Canada since the early 2010s. This public disinvestment shifts more risk onto individuals, raising critical policy debates about the balance between treating education as a public versus a private good.

Governments face tough choices: should they increase taxes to fully fund public education, cap tuition to protect students, or rely on private capital and loans to fill the gaps? Each path carries consequences for equity, innovation, and long-term economic growth.

Investing in a Shared Future

Education shapes not only personal trajectories but also the collective prosperity of societies. By understanding the complex interplay of funding sources and investment trends, stakeholders—from policymakers to parents—can advocate for models that balance individual opportunity with societal benefit.

Ultimately, the question remains: will we invest today to secure the promise of tomorrow, or will we defer costs onto future generations? The answer lies in forging partnerships across public, private, and philanthropic sectors, ensuring that education fulfills its dual role as a beacon of hope and a driver of sustainable prosperity.