Public Money and Private Providers: Funding Channels and National Patterns in Four Countries

Abstract

A rich body of literature has emerged that seeks to shed further light on how concepts like globalization and internationalization shape higher education systems and their institutions. This paper examines how the rise of private higher education in various national contexts has engendered global patterns of public financial support for private institutions and particularly the various ways in which public funding is channeled to such providers. A cross-national typology of public/private higher education sectors and a system-level ‘map’ of how public funding is directed to institutions are both used to explain why different patterns may emerge. This framework is then used to examine the policies and practices in four representative systems: England, Germany, New Zealand, and the state of Pennsylvania in the United States. The available evidence suggests that in systems with weak or newly emerging private sectors, unclear regulations and concerns about quality implies that public funding tends to be channeled into private institutions indirectly (e.g. through tax-abatements and student financial aid). In systems where private institutions play a more substantial role, public funding is channeled to privates using a mix of indirect and direct mechanisms.