Cyprus is recalibrating its higher education model, as universities upgrade programmes, expand research structures and strengthen links with industry, while the government increases student sponsorship in a bid to improve access and address labour market gaps.

During 2024-2025, both public and private institutions shifted towards a more outward-looking approach, seeking to align academic output with economic priorities.

The emphasis has moved beyond theory, towards applied knowledge, employability and innovation, reflecting the needs of a digital and increasingly technology-driven economy.

At the same time, student sponsorship has been modernised. The annual budget has risen to €62 million, the number of beneficiaries has expanded and income and property criteria for families with five or more dependent children have been abolished.

The move is intended to ease financial pressure at a time when study and living costs remain a critical factor in educational choices.

Higher education has also become a sizeable economic sector in its own right. More than 50,000 students are enrolled in universities and colleges, around half of them from abroad, reinforcing Cyprus’ role as a regional education hub.

However, growing international competition, including developments in Greece and increased student mobility across Europe, is forcing institutions to invest more heavily in quality, research and international visibility.

A new strategic plan for higher education, approved in December 2024, sets out priorities centred on quality and excellence, stronger links with the labour market and greater internationalisation.

Public universities can now offer undergraduate programmes in foreign languages, while the framework also allows for the operation of non-profit branches of foreign universities.

The core challenge remains the persistent skills mismatch. Forecasts by the Human Resource Development Authority (Anad) show that around 40 per cent of total employment demand between 2022 and 2032 will concern STEM professions.

Yet only about 25 per cent of the active population has relevant qualifications.

In 2023, STEM students accounted for 14.9 per cent of tertiary enrolments in Cyprus, compared with 26.9 per cent in the EU and well below the European target of 32 per cent by 2030.

Although participation in ICT programmes is above the EU average, overall enrolment in STEM remains low, while OECD’s Programme for International Student Assessment (PISA) results point to weaknesses in basic skills.

This gap persists despite Cyprus recording one of the highest tertiary attainment rates in the EU. In 2024, 60.1 per cent of 25–34 year-olds held a university degree.

Employment rates for recent graduates reached 83.8 per cent, yet 30 per cent of tertiary-educated employees were working in positions that did not require such qualifications, underlining structural imbalances.

On the research front, legislative changes adopted in 2024–2025 allow public universities to establish new Research Units and Centres of Excellence and to participate more flexibly in spin-off companies.

The aim is to convert research results into commercial applications and attract additional funding.

Although Cyprus’ innovation performance has improved since 2018, recent data suggest that progress is slowing relative to the EU average.

The closer link between academia and innovation is reflected in the startup ecosystem. According to the StartupBlink Ecosystem Index 2024, Cyprus recorded the largest global improvement and was named the fastest-growing startup ecosystem in the EU.

The country ranks fourth worldwide among states with populations under two million and reports a sharp increase in startup activity since 2020, particularly in fintech and gaming.

Private universities, for their part, continue to emphasise flexibility and direct links with employers, embedding internships into academic programmes and organising career fairs that connect students with technology firms, consultancies and startups.

Public institutions are also expanding applied research partnerships and structured internship schemes, seeking to narrow the gap between studies and employment.