CURRENT CHALLENGES IN FINANCING HIGHER EDUCATION

B a c k g r o u n d . The key foundation for the qualitative development of a country's economy lies in the level of advancement of its education and science. Amid current challenges, this is critically important for the country's survival. The state of education and science in Ukraine largely depends on the availability of funding resources, the search for successful international models, and their implementation and adaptation to the country's present realities. It is also essential to apply rigorous criteria when prioritizing funding for education and science. The aim of this study is to analyze the state of higher education financing in Ukraine, its relationship with the Human Development Index, and to explore possible trajectories for further development of this sector. M e t h o d s . To achieve the research objectives, the study employed methods of analysis and synthesis (generalization and identification of key aspects), statistical analysis (processing data on the current state of higher education financing), and graphical methods (for visual representation of the studied processes). R e s u l t s . The article analyzes the financing of higher education as a critically important factor in developing Ukraine's knowledge-based economy. It identifies the link between education funding, the Human Development Index, and the country's innovation potential. The paper examines international practices-specifically, Germany's competitive grant-based funding model and Israel's strategy for building a "startup nation." It highlights key domestic challenges: low efficiency of resource use, a lack of innovative financial mechanisms, and weak integration of science into the global arena. The need for infrastructure investment and support for high-potential universities is substantiated. C o n c l u s i o n s . The study concludes that the development of a knowledge economy requires high-quality education and effective financing, including transparent use of public funds and encouragement of student loan systems. Major challenges include the absence of innovative financial mechanisms, weak business investment activity, and poor integration of Ukrainian science into the global research space, all of which reduce resource efficiency. A breakthrough in education demands investment in universities' infrastructure, optimized budget spending, and support for institutions with strong development potential.