How could higher education be disrupted?

Financing higher education taking into account the introduction of tuition fees

Table of Contents

1 Introduction

2. Higher education - a good theoretical consideration
2.1. Higher education as a public good
2.2. Higher education as a merit asset

3. Education funding under scrutiny
3.1. The redistributive effect of meritorized higher education
3.2. The theory of external effects
3.3. Tuition fees from an incentive point of view

4. Conclusion

5. Bibliography

In order to make the text easier to read, feminine word endings have been omitted in many cases. All formulations are of course to be understood as gender-neutral.

1 Introduction

With the judgment of January 26, 2005, the Federal Constitutional Court cleared the way for the introduction of tuition fees for the first degree. An integral part of the ruling is social compatibility when introducing tuition fees. The Union-led countries had argued that education was a matter for the federal states and successfully sued the ban on tuition fees. First, in the winter semester 06/07, tuition fees were charged in North Rhine-Westphalia and Lower Saxony. In the summer semester of 2007, the states of Baden-Württemberg, Bavaria, Hamburg, Hesse and Saarland will follow.

Internationally, even before the judgment in Germany, there was a trend towards student participation in the costs of higher education. In Australia, England and Austria, tuition fees have been reintroduced in previous years (see Nagel 2003, p.46). With the new source of income, the respective federal states want to better equip their universities financially and increase teaching efficiency (cf. Lang 2005, p.1).

One of the problems we are faced with when introducing tuition fees is whether the tuition fees discourage potential students from studying because of the additional costs. If this is the case, it could result in a social disintegration of financially weak classes. Questions about equity issues are also raised. Overall, the topic stands in the tense relationship between economic efficiency and social justice.

As part of my work, I would like to discuss what kind of good education is. The answer to this question allows conclusions to be drawn about how education should be financed. Because if a good can be identified as a “public good”, then there is market failure and from an economic point of view the good should be made available through tax money (cf. Hunzinger 1993, p.28).

Under the aspect of social justice, the redistributive effect must also be discussed. Both with the current system and after the introduction of the degree, redistribution effects occur, which I will analyze in order to then evaluate the participation of the students in the costs under the aspect of equity.

An essential part of the discussion about university funding is the theory of external effects. The existence of “positive external effects” is listed for the legitimation of tax-financed university policy (cf. van Lith 1985, p. 5). On the basis of the external effects, I would like to discuss whether the existence of positive externalities can justify state subsidization of higher education.

It is then analyzed whether the tuition fees, which will serve to top up the universities' funds, can be expected to increase efficiency. resources are used more efficiently.

Ultimately, taking into account the following analysis and taking into account the introduction of tuition fees, the political implementation of university funding is carefully examined and assessed.

2. Higher education - a good theoretical consideration

2.1. Higher education as a public good

Education; Higher education in particular is often referred to in common parlance as a classic public good. I will discuss whether this assertion can stay that way on the basis of the criteria for labeling a public good. Public goods are characterized, among other things, by the fact that they are financed from taxpayers' money and that their provision is regulated by the state. Seen from this perspective, higher education initially looks like a public good. But, to put it in Marx's words, the essence of things and their appearance do not coincide. Therefore, a closer examination of the good of higher education is required. The identification of a public or private good has a decisive influence on its provision, because " If it (higher education) is a public good, it must be subordinated to the state sector; if it is a private good, it can be subjected to market economy criteria “(Hunzinger 1993, p. 28).

Pure public goods exist when there is non-exclusionability and non-rivalry in consumption (cf. Heise 2005, p. 40 f.). If both criteria apply, then the good is not marketable and has to be made available to the public due to the failure of the price and market mechanism. A classic example of non-exclusion is the lighthouse. No passing ship can be excluded from the light of the lighthouse. As a result, potential consumers will not agree to pay because they cannot get any additional benefit from it. They can also consume the benefits that the lighthouse generates for them free of charge. The same applies to the criterion of non-rivalry in consumption. Rivalry in consumption is understood as the fact that the consumption of a good by person A is not disturbed by the simultaneous consumption of the good by person B (see Hauser 1983, p. 19). There is no rivalry between these people. In such a case, there is no incentive for the producer to provide goods because there is no incentive for the consumer to pay a price. Market failure occurs and the state has to take over the provision of goods.

Provided that higher education fulfills the criteria of a public good, it has to be provided by the state and financed through tax revenues, because otherwise it would lead to market failure. Is higher education a public good? The unique identification of rivalry or Non-rivalry in the consumption of higher education fails because of the capacity limits within the university or lecture halls. "... because all students can consume the goods together as long as the number of students is less or the same as the number of study places, i. H. up to the capacity limit. At this limit, the good higher education changes, below the capacity limit non-rival consumption can be observed, above the good has an exclusive character “(Kuna 1980, p. 27 f.). In addition to this problem, there is also the fact that the capacity limits are changing. Where the lecture halls used to be partially manageable, today we often find full or overcrowded lecture halls. This shows that the same question, namely whether there is rivalry in consumption, has to lead to different answers over the course of time or requires new answers.

The fact is: the public character of the good education cannot be clearly derived from the criterion of non-rivalry. The second criterion of non-exclusionability cannot be clearly established either. The reason is that the use of the university is bound to admission requirements. The general higher education entrance qualification is an exclusion criterion, or the numerus clausus hurdle (cf. Maas 2003, p. 79).

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