INTRODUCTION

Public universities in Germany do not charge tuition fees for Bachelor’s and Master’s programs unless the student pursues a Master's degree that focuses on a different subject than the one the student studied as a Bachelor’s student. The German tuition-free system is available to all foreign students, regardless of their country of origin. Students only have to pay an administration fee which usually costs between 100 – 350 EUR/semester. This fee covers the student organization services and enrollment. In contrast, universities in the U.S. are not tuition-free which has resulted in Americans currently owing a total of more than US$1.7 trillion in student loan debt, 93% of which is federally backed.

A BRIEF DISCUSSION OF HIGHER EDUCATION IN GERMANY

A. Overview

Germany is composed of 16 federal states (Länder). Higher education in Germany is governed by the Länder. In 2019, according to the financing statistics, the public sector expended Euro 32.1 billion on higher education institutions (HEIs). The Länder share was 83.3% of expenditure, while the Federation share was 16.7% of expenditure. HEIs in Germany receive their funding in a lump sum and therefore have considerable budgetary responsibility and financial autonomy, although many Länder require HEIs to submit annual spending plans for approval. In general, no tuition fees exist in Germany, but students have to pay a small fee to the respective student services. (OECD (2020), Education Policy Outlook: Germany at 19, available at: www.oecd.org/education/policy-outlook/country-profile-Germany-2020.pdf.)

Germany has a smaller percentage of its younger population educated to university level. This is due, in large part, to Germany’s robust dual education system. In Germany, only 32.3% of people aged between 25 and 34 have a university degree. Annual expenditure per student in HEIs, for all services, is US$17,429.00. Relative proportions of public and private expenditure on educational institutions (primary to tertiary education) are: 85.9% from public sources and 14.1% from all private sources (including international sources).

According to the OECD, engagement of sub-national actors across all education sectors in Germany plays a strong role; this is a key feature of the vocational system – for example, where employers contribute to aspects of governance and funding – and is a developing feature of tertiary education, where institutional governing boards with external representatives are increasingly being established. The latter development forms part of ongoing initiatives to strengthen institutional autonomy in the higher education sector, alongside more recent efforts to harmonize quality assurance processes across the Länder.

B. Tuition Fees

Tuition fees were banned in West Germany in 1976, but some Länder successfully challenged this in the Constitutional Court in 2005 on the grounds that education is their responsibility. The experiment was notably short-lived. Hesse abolished fees after just a year, in 2008/09, and the last state to get rid of them was Lower Saxony in 2014/15. There are now no undergraduate tuition fees for public universities anywhere in Germany. In some Länder, fees are levied on students who take longer than the standard time to complete their course. Fees are charged at the 100 or so private HEIs, but they are typically small and educate only around 5 per cent of all students.

Germany manages to power a tuition-free university system without breaking the bank because, in part, unlike the U.S. it does not invest in expensive athletic facilities and pursue NCAA championships to attract students. “You have huge gyms and a very comfortable student life on campus. But at the end of the day, you have to pay for that,” said Ulrich Rüdiger, the rector – the German equivalent of a university president – of RWTH Aachen. “We are really focused on teaching and research. Having a top soccer team, this is not the main task we have. We don’t care.” (https://www.washingtonpost.com/world/europe/bernie-sanders-and-other-democrats-are-embracing-free-college-europe-shows-theres-a-cost/2019/06/25/2939047c-8bc4-11e9-b6f4-033356502dce_story.html).

Dorothee Stapelfeldt, SPD Senator for Science and Research in Hamburg, claimed, “It is a core task of politics to ensure that young women and men can study with a high quality standard free of charge in Germany.” (Nick Hillman, Keeping Up, HEPI Report 77, September 2015 at 14).

Andreas Schleicher, Director for Education and Skills at the OECD, has drawn a sharp contrast between the current English and German student finance models:

“European countries like France, Germany or Spain, too, say higher education is important, but their governments are neither willing to put in the required funds nor allowing universities to charge tuition. They end up compromising quality and restricting access, with the effect that all workers end up paying for the university education of the rich parents’ children.” (Andreas Schleicher, ‘The sustainability of the UK’s higher education system’, 6 January 2015 (http://oecdeducationtoday.blogspot.co.uk/2015/01/the-sustainability-of-uks-higher.html).

C. Dual Education System

The mature employer-focused German apprenticeship system (known as the Duales Ausbildungssystem) has influenced the development of longer and more prestigious vocational pathways.

The OECD argues that an increasing proportion of jobs will require high levels of skills and qualifications – and it rejects the idea that there is an over-production of graduates. The OECD warns that the biggest risk is not to disgruntled graduates, but to young people with few qualifications competing for an evaporating pool of unskilled work. In the U.S., the Pew research group highlighted that while graduates might have had a tougher time during the recession, the real losers were those with few qualifications. The so-called “precariat” – those trapped in low-skilled, low-pay, insecure jobs – might not get the same attention as under-employed graduates, but they are the other side of this polarization of the workforce.

The dual education system in Germany is made up of “Tertiary-type A” and “Tertiary-type B” programs.

Tertiary-type A programs are largely theory-based and are designed to provide sufficient qualifications for entry to advanced research programs and professions with high skill requirements, such as medicine, dentistry or architecture. Tertiary-type A programs have a minimum cumulative theoretical duration (at tertiary level) of three years’ full-time equivalent, although they typically last four or more years.

Tertiary-type B programs are typically shorter than those of tertiary-type A and focus on practical, technical or occupational skills for direct entry into the labor market, although some theoretical foundations may be covered in the respective programs. They have a minimum duration of two years full-time equivalent at the

tertiary level.

Vocational education and training complements university education in Germany’s dual education system by simultaneously instructing and training students at vocational schools in 1 of 356 apprenticeships with private corporations that follow strictly regulated federal standards as they teach students the theories and skills necessary to proceed in their desired vocation. This results in: (a) a decreased demand for university education; (b) a decreased percentage of university students nationwide; and (c) an increased percentage of persons entering the workforce with skills-based, on-the-job training. In sum, Germany’s robust apprenticeship system enables people to get decent-paying jobs without a college degree.

Future Agreement Strengthening Studies and Teaching

The Future Agreement Strengthening Studies and Teaching (Zukunftsvertrag Studium und Lehre stärken) is intended to ensure that the capacity of study places is maintained in line with demand and to ensure the high quality of studies and teaching. At the same time, HEIs gain financial planning security. In particular, permanent support can be used to promote the expansion of permanent employment contracts for staff involved in study and teaching. From 2021, the Federation will annually provide Euro 1.88 billion and from 2024 annually Euro 2.05 billion on a permanent basis for the Future Agreement. The Länder provide the same amount of funding each year. This means that Euro 3.8 billion will be available annually until 2023 and Euro 4.1 billion from 2024 for the promotion of studies and teaching.

D. Internationalization

Public universities in Germany do not charge tuition fees for Bachelor’s and Master’s programs. The German free tuition system is available for all foreign students, regardless of their country of origin. Most German universities are public, so you will only have to pay an administration fee, which usually costs between 100 – 350 EUR/semester. This fee covers the student organization services and enrollment. There are exceptions to this tuition-free rule. If you don’t finish your degree course on time and you study in Bremen, Lower Saxony, Saarland, Saxony, Saxony-Anhalt or Thuringia, you may have to pay tuition fees.

When calculating the value of incoming students, Germany considers the post-study work contribution they make, such as income taxes. The German Academic Exchange Service (DAAD) has calculated that if 30 per cent of international students in Germany remain in the country to work for five years then the cost of educating all international students is recouped. (Claudia Münch and Markus Hoch “The Financial Impact of Cross-border Student Mobility on the Economy of the Host Country,” DAAD, November 2013, p.11).

Moreover, keeping international students who have studied in the country is the ideal way of immigration. They have the needed certificates, they don’t have a language problem at the end of their stay and they know the culture.

Post-Study Work

Germany has recently adopted a more generous post-study work offer: graduates from other countries are allowed to extend their residence permit for up to 18 months after completing their studies for the purpose of looking for employment.

Growth in Internationalization

The German Foreign Office has its own Directorate-General for Culture and Communication which emphasizes the soft power benefit of educating the future leaders of other nations.

Since the 2016/17 academic year, the number of foreign students attending university in Germany has constantly risen, climbing from 358,895 students five years ago to 411,601 students last year. Most foreign students study in North Rhine-Westphalia, followed by Bavaria, Baden-Württemberg, Berlin and Hesse. The top five countries sending students to Germany are: Turkey, China, Russia, Poland, and Austria.

The German Government is also ambitious in regard to outward mobility. In 2017, approximately 140,000 German students were studying abroad. The top five countries for hosting German students are: Austria, Holland, the UK, Switzerland, and the United States.

Andreas Schleicher of the OECD has argued that England’s student loans should be regarded as an investment in the future, despite the substantial and controversial loan write-off costs:

“Sure, those loan and grant systems cost money, and have shifted risks to government which will end up paying for any bad debt. Indeed, it is very likely that repayment rates will end up a lot lower than what the [UK] government anticipated. But these costs are just a tiny fraction of the added fiscal income due to better educated individuals paying higher taxes. Keep in mind that the added tax income of those graduates who end up in employment, on average over £80,000 in the UK, is many times larger than any conceivable bad debt.” Andreas Schleicher, ‘The sustainability of the UK’s higher education system,’ 6 January 2015 (http://oecdeducationtoday.blogspot.co.uk/2015/01/the-sustainability-of-uks-higher.html).

E. Research

Germany conducts most of its business-focused research in separate non-teaching research institutions rather than in its universities. There are approximately 1,000 public and publicly-funded institutions for science, research and development across Germany (not including those run by private companies).

The German education system is governed by the rules and regulations of the Basic Law. The Federal Ministries of Education, Cultural Affair and Science is the main authority for making education, science and arts policy guidelines, and for adopting related laws and administrative regulations.

Following an amendment of the German Basic Law, the Federation and the Länder have had additional scope for action in the joint promotion of science since January 2015. Pursuant to Article 91b, paragraph 1 of the Basic Law, they may now mutually agree to cooperate in the promotion of science, research and teaching. This means that HEIs can now also be supported permanently by federal funds, whereas this only used to be possible through fixed-term programs such as the Higher Education Pact 2020 or the Excellence Initiative.

Excellence Strategy

The Excellence Strategy (2019) is a joint measure between the federal government and the Länder to raise the quality of research. It has two funding lines: Excellence Clusters (project-specific funding for 7 years) and Universities of Excellence (institution-focused permanent funding for universities hosting multiple Clusters). The total annual budget is set at EUR 533 million with a federal contribution of 75%, and 25% from the Länder. Funding for the first 57 Excellence Clusters began in early 2019. Funding for ten Universities of Excellence and one Excellence Alliance consisting of three universities began in late 2019. The Excellence Strategy follows the successful Excellence Initiative (2007-17) which aimed to develop high-performing researchers and raise the attractiveness of Germany as a location for research. In 2016, an expert commission reported that the Initiative made the German university system more dynamic and internationally competitive, having fostered strategic institutional profiling.

Higher Education Pact 2020

In 2007, in order to enable institutions of higher education to cope with an increasing number of new entrants and to maintain the efficiency of research at HEIs, the Federation and the Länder pursuant to Article 91b, paragraph 1, No. 2 of the Basic Law adopted the Higher Education Pact 2020. Through the Higher Education Pact, the Federation and Länder will create a needs-based range of courses, thus ensuring the quantitative expansion of higher education. Moreover, the Länder have pledged to grant more persons holding a vocational qualification access to the institutions of higher education. In December 2014, the Federation and Länder resolved the third phase of the Higher Education Pact. Beyond the existing agreements, a range of courses for an additional 760,000 new students is to be provided by 2020 and financed up until 2023.

Between the start of the Higher Education Pact in 2007 and the reporting year 2016, more than one million prospective students were able to enroll in higher education than would have been the case without the provision of additional study opportunities. Over the total duration of all three program phases of the Higher Education Pact from 2007 to 2023, a total of more than Euro 20 billion from the Federation and more than Euro 18 billion from the Länder will flow to the universities.

HEIs also receive funds from companies, if the companies commission them with certain research and development work. In 2017, the share of external funding from the commercial sector accounted for over 18.3 percent or Euro 1.45 billion of all external funding.

F. Funding Tuition-Free Higher Education in the U.S.

Educated individuals are a benefit to society. The primary beneficiary of a well-educated workforce are the corporations that employ these educated individuals. Therefore, it is only logical that the corporations should fund tuition-free higher education in the U.S. The taxes of individuals who forgo college should not help to pay for the education of those who attend.

A simple corporate tax increase, let’s call it a Higher Education Tax (HET), should be passed by the Congress. The federal government would pay 90% of the cost to fund tuition-free higher education and the states would pay 10%.

As U.S. Representative Pramila Jayapal recently pointed out, “While President Biden can and should immediately cancel student debt for millions of borrowers, Congress must ensure that working families never have to take out these crushing loans to receive a higher education in the first place.”

As U.S. Senator Bernie Sanders further notes, “If we are going to have the kind of standard of living that the American people deserve, we need to have the best educated workforce in the world….It is absolutely unacceptable that hundreds of thousands of bright young Americans do not get a higher education each year, not because they are unqualified, but because their family does not have enough money….In the 21st century, a free public education system that goes from kindergarten through high school is no longer good enough….The time is long overdue to make public colleges and universities tuition-free and debt-free for working families.”