If Germany has done it, why can’t we? That’s the question being asked by many students around the world in countries that charge tuition fees to university. From this semester, all higher education will be free for both Germans and international students at universities across the country, after Lower Saxony became the final state to abolish tuition fees.

It’s important to be aware of two things when it comes to understanding how German higher education is funded and how the country got to this point. First, Germany is a federal country with 16 autonomous states responsible for education, higher education and cultural affairs. Second, the German higher education system – consisting of 379 higher education institutions with about 2.4m students – is a public system which is publicly funded. There are a number of small private institutions but they enrol less than 5% of the total student body.

Back and forth with fees

Until 1970-71, West-German higher education students had to pay tuition fees at the level of about 120 to 150 German Marks per semester. There were needs-based exceptions but basically these fees had to be paid by every student.

When they came to power in the late 1960s, Germany’s Social Democrats supported higher education expansion by promoting widening participation and equal opportunities and by increasing the number of higher education institutions. From 1971 onwards, a system of state financial assistance for students was established and tuition fees were abolished. The assistance came first as a grant, later as a mix of half repayable-loan and half grant.

During the peak period of higher education expansion in the late 1960s, exclusive funding of higher education by the states became too much of a burden. New provisions were introduced for a framework law laying down the general principles governing higher education across West Germany. The first law, introduced in 1976, included a prohibition of tuition fees.

Despite a flirtation with the idea of re-introducing tuition fees under the conservative-liberal coalition government in the 1980s, a stalemate ensued over whether tuition fees would lead state governments to reduce their regular funding to universities.

Fees win out in late 1990s

The fall of the Berlin Wall and German Unification put all reform plans on hold for several years until the whole East German system of higher education institutions and academies had been evaluated and reformed. A new discussion about tuition fees then started around the mid-1990s, with their re-introduction seen as a solution to a number of existing problems in the higher education system.

Around the end of the 1990s, the dam of resistance broke by allowing the introduction of fees for so-called long-term students: students who had been enrolled several semesters past the regular duration of their study programme and had not finished.

Those states with a conservative government filed a law suit in 2002 against the framework law of higher education, arguing that its prohibition of tuition fees was an illegitimate intervention into the legal authority for educational matters of the states. The Federal Constitutional Court upheld the complaint in 2005; immediately, seven states introduced tuition fees.

In 2006, the framework law was abolished under wider reforms of German federalism. Tuition fees were capped at 500 Euros per semester, but Berlin and all East-German states refused to introduce them.

Excellence and crisis

Yet the same reform of federalism led the states to reclaim complete authority and responsibility for their higher education. This led the Federal Ministry for Education and Research to refuse any further co-funding with states on higher education. And it left the federal ministry with a lot of spare money. A large part of this was eventually invested into the German Excellence Initiative, a competitive funding programme launched in 2005 to support a group of universities to become global players.

But this also meant that the poorer states faced a funding crisis for their higher education institutions. The problem was aggravated by the fact the a number of the poorer states were located in East Germany, where all states had decided not to introduce tuition fees in the hopes to attract more students.

Gradual abolition

In successive years, as soon as state government elections have elected social democratic or green party governments, tuition fees have been abolished. The state of Hesse, for example, had tuition fees for only a single year. In the end only two states were left with tuition fees: Bavaria and Lower Saxony. The conservative government of Bavaria gave into the mainstream and abolished tuition fees in the winter semester 2013-14, with Lower Saxony abolishing fees in the winter semester 2014-15.

But the heads of higher education institutions negotiated with their ministries, arguing that they could not properly do their job of offering high-quality student experience if the loss of income from tuition fees was not compensated one way or another.

So most states have agreed to compensate their higher education institutions with extra money – not quite covering the loss in fees though – which was to be invested exclusively into the improvement of the quality of studies and teaching. Most ministries decreed that students had to be involved in decisions about how and for what purposes the money was going to be spent.

How funding works now

The present situation is that all higher education institutions receive a budget from the responsible ministry of the state in which they are located, based on annual or biennial negotiations. This basic budget is complemented by additional agreements between higher education institutions and the state concerning the intake of additional numbers of students and the money to compensate the loss of income from tuition fees.

There are additional funding programmes – some funded jointly by the states and the federal ministry – for supporting and promoting research, in the competition for excellence.

Of course, most higher education institutions continue to feel underfunded. The pressure on academic staff to attract external research funding has increased, as has competition for such grants. Still, compared to other countries in Europe, German higher education institutions continue to be rather generously funded by their states – an estimated 80% of their overall budgetary needs. There are also ample opportunities and considerable amounts of external research funding available.

Publicly funded, but for how long?

Despite the fact that competition for funding and accountability has increased in German higher education, there is still a general consensus that it is a public system and should be state-funded. The abolition of tuition fees, even by conservative state governments, reflects this consensus too. In fact, the new Federal Minister for Education and Research, a member of the Conservative Party, recently announced a major increase in the levels of needs-based state financial assistance to students that will start in the 2016-17 academic year.

But funding varies considerably depending on different institutional and regional factors. The winners of the German Excellence Initiative have received and are receiving considerable amounts of additional funding in the hope that more German universities will be able to achieve better positions on world university rankings. There were 12 German universities in the 2014-15 Times Higher Education World University Rankings, up from 10 the year before.

Higher education institutions in the poorer states (most of them in the east of Germany) receive less money and academic staff are being paid lower salaries while higher education institutions in the richer states (typically in the south) are better funded.

The debate about tuition fees – though dead for the moment – can easily be revived in the future. It has not been dropped from the agenda once and for all. Government policies continue to be in favour of tuition fees, most representatives of institutional leadership are as well, though for different reasons. But there is currently a lack of general public support. Once this has changed – and influential advisory bodies and think tanks are working towards such a change – the idea of tuition fees will be introduced again.