Georgia’s Education Sector Positioned for Growth Based on Increased Domestic, Foreign Demand

Georgia is quickly becoming a hub for higher education in the region and beyond.

The education sector has become a star performer in the Georgian economy, worth around $3.3 billion and accounting for seven percent of the Georgian economy and rising. Three drivers, say analysts, are behind its expansion – the growth in private school and university education, foreign students, and government spending.

The preference for private education continues to spread, despite increased government spending in the public sector. While rising costs and teacher shortages are squeezing profit margins at private schools, bringing sector consolidation, the resulting economies of scale are reinforcing the private establishments.

Universities with a Global Reach

An influx of fee-paying foreign students, predominantly from India, is bringing changes and bolstering investment in Georgian universities. Degrees in medicine and health-related professions appear to be driving the growth: interest from foreign university and medical school students has surged, with Georgia’s inbound mobility rate (percent of foreign students to total) ranking among the highest globally, at 17.3 percent. That places Georgia not far off Switzerland’s 19.1 percent and above the Czech Republic’s 15.6 percent. Numbers for this academic year have been put at around 31,000, up from 25,000 last year and 18,000 in 2021-22. There are good prospects for further growth.

Tamara Mechurchlishvili, the head of the International Relations Department at the Georgian American University (GAU), notes the country has already become a regional hub for higher education and has the potential to become an international hub.

Currently GAU hosts foreign students from over 30 countries and exchange students from many more. The university’s own students are also studying abroad, in Europe, Japan, South Korea, and the US, to name a few. In addition, most of the exchange programs are fully financed, with monthly stipends.

“We have more demand than we have places,” Mechurchlishvili notes, adding that the university is adding more capacity and obtaining more international accreditations for its course programs to attract students. Under the Bologna Process, university programs that are accredited in Georgia are automatically accredited in the EU, she explains. Universities in Georgia are constantly expanding their accreditation efforts so degree programs are recognized in other countries as well.

“I’m quite interested in international accreditation. We are already accredited because Georgian accreditation means European accreditation,” Mechurchlishvili says. “But there are addition accreditations, like CEEMAN accreditation, and others. We are working on that.”

Accreditations are also at the core of the Caucasus University’s efforts to expand study abroad programs as well as attract more foreign students. Around 20 percent of the student body is made up of foreign students from over fifty countries currently.

“There is a huge potential for Georgia to become an international hub for education,” Irena Melua, the university’s Vice-President for Internationalization. “We have to continue international accreditations and adding more programs that are in demand globally… it is important to enrich, improve and foster our programs through international experience. We currently have verity of active programs with more than 260 international partners.”

Melua notes that there are many factors that attract foreign students to Georgia—as well as a growing number of double/joint degree and exchange programs with foreign institutions.

“Georgia is very attractive for international students because of affordable tuition, the quality of education, and the lower living costs compared to Western Europe—as well as the full degree, accredited programs in English,” she explains.

“Besides Georgia has a simplified visa policy and is safe, which is attractive for students as is the culture. International students in Georgia add to the country’s multicultural identity and enrich its economy and its higher education sector. They allow us to reinvest in infrastructure, boost our global competitiveness, and push for internationalization and global recognition through accreditations.”

Those factors, as well as improved air connectivity with India and the Middle East, are some of the reasons analysts at investment bankers Galt & Taggart, naming Georgia as a new “hot spot.” They forecast that there is sufficient demand for foreign university student numbers to reach 48,000 by 2028, contributing ₾0.5 billion to the economy, although the English-speaking facilities may need to be expanded.

Georgia has also benefitted from the relocation of Indian students from Ukraine and Russia since the onset of the Russia-Ukraine war. It is now the ninth largest market for students from India, which augurs well for future revenue from this source, as India has become the world’s second largest source market after China for foreign students. Current fees are around $4-5,000 annually, but are expected to rise.

But India is by no means the only source of university students. Interest in studying in Georgia’s English language programs has been increasing over recent years from Jordan, Egypt, Israel and others, attracted by the low cost of living and rents – far below those of the EU or North America. A planned shift towards three year bachelor and one-year masters programmes starting next year is likely, believes Galt & Taggart, to further increase the inflow. Currently 16 percent of foreign students are taking bachelor degrees, and the rest masters. While by far the largest number of students are interested in health and welfare there is enrollment in social science, business, and engineering and construction courses.

Ana Khurtsidze, the dean of the Law School at the University of Georgia, notes the demand for medical school is particularly high.

She says, however, there are a number of constraints that limit the number of students coming to study in Georgia. For some students, it is difficult to get a visa and a residents permit. In addition, there is a lack of medical clinics where future doctors can get the practice they need to complete their degrees.

The University of Georgia has started investing in medical clinics and expanding its own facilities to accommodate the growing interest in the program. In addition, the university is planning a new campus with a medical school.

In 2023-24, the revenue of the higher education sector overall showed robust growth of 19.6 percent at ₾ 1.1 billion, following a 14.8 percent increase in 2022, and comprised 8,317 students. Prior to this, the sector had maintained a steady growth of 8.8 percent CAGR during 2013-21. Higher education is predominantly funded through private payments, which accounted for 87 percent of the total revenue in 2023, according to Galt & Taggart estimates. Revenue rose on a year earlier by 29.7 percent, thanks to the foreign student influx.

Steady Demand Amid Increased Competition for Private Schools

While Georgia’s state school education system has scored notable successes, such as a 99 percent national literacy rate, many challenges remain, says the Georgian Foundation for Strategic and International Studies (GFSIS) in a look at education reform. It lists wide regional discrepancies in performance, declining completion rates at schools, universities, management and teacher quality. Despite advancements, GFSIS says, “a sizeable portion of Georgian students continue to leave school without having mastered basic competences for life and work”.

Factors behind parents’ willingness to pay for their children’s education are shown all too clearly in the latest PISA results (Programme for International Student Assessment), measuring 15-year olds, published by the OECD. “Students in Georgia scored less than the OECD average in mathematics, reading and science,” it states following the 2022 assessment. The proportion of students scoring at acceptable proficiency level in math was 34 percent (OECD average was 69 percent), in reading 33 percent (OECD average 74 percent) and in science 35 percent (OECD 76 percent). Average 2022 results were about the same as in 2018.

No wonder Georgian enrollment last academic year in private schools, at 10.5 percent of the total, exceeded the figures for the region such as in Turkey (7.4 percent), Azerbaijan (5.2 percent), Armenia (2.9 percent), and Russia (0.9 percent). However, it lagged the EU’s overall 16.0 percent.

However, the government in 2022, within the framework of “Better Education for a Better Future” project, part of the United National Strategy of Education and Science for Georgia for 2022-2030, demonstrated a growing commitment to trying to raise the standards in education.

Adam Laughlin, the director of the QSI International School, says the increased interest in private schools—from parents and the ministry of education—is visible.

“I really do see their Department of Education starting to evaluate and think about how education is run here in Georgia and they are looking internally and externally for ways to grow… For example, last spring, they had me come speak at a symposium. I introduced our QSI American way and talked about our accreditations and things,” he says.

The government is seeking to expand engagement with international programs.

Laughlin notes that there are a growing variety of private schools and curriculums in Tbilisi today. “[There is a] range of options for academic and curricular choices, but also school culture and climate…We’re a little school. We’re very, very friendly. A big part of our curriculum is what we call the success orientations, which is like character development and things, which translates to being just a very kind, friendly. So the character development’s things like trustworthiness, responsibility, kindness, and politeness. These kind of universal traits that we want our children to grow up to becoming functional members of society.”

Of course, public education remains dominant in the sector; last year’s record ₾1.5 billion government spend paying for 90 percent of the children in general education (grades 1-12). Looking at the overall picture of Georgia’s education sector, investment bankers Galt & Taggart expect it to continue enjoying double-digit growth in revenues in total because of the mix of drivers, with support coming from “strong government funding, higher household incomes, and growing demand for private education.”

That demand brought a revenue surge of 21 percent to ₾355 million at private schools in 2023-24 as private pupil numbers reached 66,500, growth of 5.3 percent. Galt & Taggart point to the sharp rise in private sector growth: “before the pandemic, private enrollments had been growing steadily at a 2.8 percent CAGR over 2009-19.” Now pupil numbers are being forecast to reach 71,000 by 2028, despite a decline in school age children.

Although down from historic peaks, Galt & Taggart still puts private school profit margins at 33 percent for general education and 16 percent for higher. But squeezed by cost and staffing pressures, private school numbers are contracting a little every year and fell from 216 to 210 in 2023. For those still in the market, Galt & Taggart point to the doubling of revenues per student over the last ten years.

As TBC Capital’s research analyst Ia Katsia has commented, some small and medium sized schools are being forced by rising fixed costs either to leave the market or to merge with larger schools. “Those private schools in particular are also having trouble attracting skilled teachers as they compete with public schools, which offer competitive pay raises for teachers that can pass certification exams,” she says.

Tuition fees—increasing by five or 10 percent a year—do not seem to be discouraging enrollment, she notes.

Contributing to cost pressures for private schools have been rising property prices, as most are in the up-market part of cities, close to their pupils. In Georgia’s capital, Tbilisi, private schools are primarily located in the Vake-Saburtalo district. Tbilisi has the highest enrollment at private schools, at 18.9 percent of the total, followed by Batumi with 17.1 percent and Kutaisi at 12.5 percent. However, as urban areas are nearing expansion limits, and families move out of city centres, there is a growing trend toward suburban expansion where more land is available, albeit prices are rising there, too.

Opportunities for Growth

Further potential for growth in Georgia’s private education market is certainly seen at the higher levels, through tapping the spare capacity in the medical programs, widening student source countries and by diversifying the programs offered. A report published online in June by the Investor Council, “Improving the Administrative Environment to Boost International Student Enrollment in Georgia,” notes that a major boost to foreign student numbers would result from removing “significant challenges navigating its bureaucratic landscape.” That encapsulates accommodation, visas, healthcare, and overall integration.

Preliminary research indicates ample room for expansion for private universities and institutions, states the Investor Council report.

This applies particularly to the medical domain but it adds: “Beyond this sector there exists even greater untapped potential.”