Economic Impacts of Student Dropout in Higher Education in Hungary and Ukraine

Abstract

The study examines the economic impacts of student dropout using a comparative approach in the higher education systems of Hungary and Ukraine, based on a synthesis of publicly available statistical data from the past decade, policy documents, and international academic literature. The methodological framework of the research consists, on the one hand, of descriptive statistical comparison, and on the other hand, of a conservative lower-bound cost estimation that quantifies the direct fiscal losses of dropout to the state budget. The analysis demonstrates that student dropout is not merely an educational policy issue but a complex economic phenomenon affecting individual earnings, institutional efficiency, and overall economic performance simultaneously. This complexity stems from the fact that returns on investments in higher education materialize only over the long term; thus, the interruption of study trajectories distorts the cycle of human capital accumulation and reduces the potential growth rate of the economy. The results indicate that in Hungary, dropout rates have declined in recent years; however, they continue to generate significant economic losses, particularly among fee-paying and socially vulnerable student groups. According to the estimates, the direct fiscal loss amounts to several billion forints annually, primarily reflecting the cost of lost student-years. At the same time, this figure should be considered a conservative estimate, as it does not include long-term fiscal effects such as foregone tax revenues, reduced contribution potential, and productivity losses. In addition, underutilization of institutional capacities can also be observed, which reduces the operational efficiency of universities and increases the per-student unit costs. In the case of Ukraine, the economic impacts of dropout cannot be interpreted without considering the wartime context. Institutional relocation, infrastructural damage, student and academic migration, as well as reforms in financing and governance jointly shape higher education outcomes and the conditions for the reproduction of human capital. In this context, dropout signifies not only the interruption of the educational process but also the permanent loss of potential workforce, which has particularly severe consequences for economic reconstruction. System instability further amplifies these risks, while higher education could play a key role in post-war economic recovery. The main conclusion of the study is that reducing dropout rates is of strategic importance in both countries and should be understood not merely as an issue of equity but as a clear investment in public finances and the labor market. The findings emphasize the need for targeted support systems, performance-based funding mechanisms, and stronger institutional integration. Particular importance is also attached to reliable data collection and systematic monitoring, which enable more precise identification of dropout processes and support the design of effective, evidence-based policy interventions.