Problems in the planning of higher education

Abstract

With the growing demand for places in German universities, the present system of allowing entrance to everyone who holds the Abitur has become unsatisfactory. This paper looks at ways of controlling the size of the higher education system and allocating resources from the viewpoint of economic theory.

Three “ideal type” educational planning models are sketched, one of which - a “market model” - is argued to have the greatest advantages. It would involve a state credit scheme for students with repayments via a graduate tax; student fees would provide all or most of the universities' funds. It would remove the inequity of the present system which involves a transfer of income from today's (relatively poorer) earners to tomorrow's, and from those with lower earning potential to those with higher. Since students would be in a position to choose the most satisfying and/or cheapest courses of study and would find it easier to change courses if they wished, it would reward cost-saving and student-satisfying innovation. By providing more finely graded levels of qualification within subject areas, it would reduce the extent to which jobs are ordered hierarchically in an irrational and inefficient way; and the universities would respond more flexibly to changes in labour market demands.