Encyclopedia of Educational Philosophy and Theory

2017 Edition
| Editors: Michael A. Peters

Private and Public in European Higher Education

Reference work entry
DOI: https://doi.org/10.1007/978-981-287-588-4_487



The dichotomy public/private has become increasingly crucial in higher education. More precisely, there is a growing pressure to make higher education more private and less public. In many countries, this is also currently the dominant trend.

This aim to increase the level of privatization must be understood in light of the traditional perception of higher education as a public good. The original idea of the university as in terms of universality, i.e., as a community of teachers or students, bears similarities with the notion of higher education as a public good, something held in common to which all contribute and from which all profit. In the Middle Ages, universities formed a trans local community, a network of seats of learning, sanctioned by the Catholic Church. Higher education thus enjoyed a certain degree of independence from local authorities. With the rise of nation states, religious authorities lost most of their power over higher education. From the seventeenth century, and especially from the nineteenth century and onwards, universities became important pillars in the process of nation building and were crucial, not only for forming a national State bureaucracy but also for supplying national literary canons and national histories. Higher education as a private good is of a more recent date, having arisen in conjunction with the expansion of capitalism as an economic system and invoking such concepts as markets, supply and demand, commodities, and profits. The fervor for higher education as a private good has accelerated greatly during the last three to four decades and is related to the rise of the global knowledge economy. In this new economy, higher education and research are perceived as crucial assets and a necessary infrastructure for national economies and businesses to be competitive on a global market.

There are a number of processes that aim at supporting and increasing the private dimensions of higher education. At a policy level, the general introduction of neoliberal policy from the late 1970s and early 1980s has had large impact on higher education. This includes a movement toward the privatization of higher education, increasing the number of private institutions and strengthening their position, and augmenting the private funding of higher education, mainly by introducing or raising tuition fees. The latter has become more urgent since the costs for higher education has increased rapidly with the second phase of the massification of higher education (Verger and Charle 2012).

The privatization wave is also closely related to the internationalization of higher education. The influx of international students has increased steadily, and foreign students today account for a substantial section of the enrollments in a number of the most prominent host countries, including the USA, the UK, Australia, Germany, and France. An important vehicle here is the inclusion of higher education in the General Agreement on Trade in Services (GATS) by the World Trade Organization (WTO), which includes cross-border supply (provision of a service at a distance, distance learning, e-learning, etc.), consumption abroad (studies in other countries), commercial presence (branch campuses set up in other countries), and the presence of natural persons (staff teaching abroad) (Robertson et al. 2002). In some countries, such as Denmark and Sweden, international students from outside the EES area are charged full cover tuitions fees, while European and domestic students pay no fees at all. In the UK, the limit of 3000 £ for tuitions fees does not apply to non-European students, making it more profitable to recruit these full fee paying international students rather than other categories of students. A similar development has occurred in research, where decreased public direct funding and increased private and external funding have created a higher education system that can be described as academic capitalism (Slaughter and Leslie 1997).

Yet another aspect of privatization is the introduction of new public management (NPM) in higher education. In very general terms, this means that management and steering models from the private sector have been implemented in the (traditionally) public sector, including higher education. This implies a focus on accountability, efficiency, transparency, decentralization, and deregulation. It is clear that the market model is presupposed.

Three Dimensions of the Private/Public Divide

The public/private divide of higher education is, of course, manifold and complex (see also Marginson 2007). At least three basic dimensions can be identified. A first dimension relates to the funding of higher education. Should it be funded by public or private means? The funding can also be mixed and could differ between student categories, such as national or international students. The control of higher education forms a second dimension. Control includes different levels, from the supranational to the national, the regional down to the local, including the individual higher education institutions. The State often functions as the controlling stakeholder but can subsidize a system of higher education including privately controlled seats of learning. A third and more diffuse dimension relates to the organization of higher education, which can be more or less inspired by private corporate models and market-driven principles. The three dimensions can go hand in hand. A higher education system with a substantial share of private funding might also have a large private institutional sector and a high degree of market-oriented offerings. Naturally, even other combinations are possible. In the following, European countries will be analyzed according to the three different dimensions.

A Differentiated Public/Private National Landscape in Europe

Starting with the financial dimension, European countries differ greatly regarding the extent to which higher education is financed by public means or by private resources. According to figures from OECD for 2012 (see Diagram 1 below), it is clear that, in a European context, public funding dominates, and it is the most crucial source of financing in all countries. There are, however, important differences. Three countries reached over 40% private funding (Portugal, Hungary, and the United Kingdom), and an additional three countries (Russian Federation, Latvia, and Italy) exceed 30%. These can be contrasted to those with 10% and below – implying almost complete public funding – including the five Nordic countries, as well as Austria, Belgium, and Luxembourg. Thus, there seems to be a geographical pattern in the privatization of funding. Eastern, Mediterranean countries, and the UK are more dependent upon private funding, while Central, Western, and Northern European countries tend to be more publicly funded.
Diagram 1

Higher education in European countries 2012. Total private expenditure, household expenditure and rate of students enrolled in private institutions (Source: OECD 2015)

From a global perspective, the level of private funding of higher education in Europe stands out as low. Both non-European Anglo-Saxon countries, such as the USA (62%), Australia (55%), and New Zeeland (48%), and Asian countries, such as Japan (66%) and Korea (71%), have higher levels of private funding than the most extreme cases in Europe. It should also be noticed that the UK constitutes an exception in the European context. The OECD data for the UK in 2012 is lower than for the years 2007–2011, when the country had levels of approximately 70%, which is of the same magnitude as the non-European countries mentioned above.

A further differentiation of private funding can be made. Within the category of private sources, household expenditure dominates. There is, however, no clear connection to the level of private funding. Among the countries with a high degree of overall private funding, some, such as Italy, Portugal, and Latvia, have a large proportion of household funding, while the UK and the Netherlands have lower levels of household funding. At the other end of the spectrum, where the total private funding constitutes a low share, the relative weight of the household funding also differs greatly. Within the Nordic countries, household funding stands for almost all the private funding in Iceland and in Norway but is nonexistent in Finland and very low in Sweden.

The second dimension, the control of higher education, based on student enrollment rates in private institutions, adds to the complexity (see Diagram 1 above). The UK and Latvia, two countries with the highest level of private funding, have 100% and 92% of the students studying at private institutions, whereas the four other countries with the highest level of private funding, Portugal, Hungary, the Russian Federation, and Italy, have only between 9% and 18% of their students in private institutions. Belgium, with 58% of the students in private institutions, has a low level of private funding (10%). There is also a set of countries with a very low level of private funding and relatively high rates of students in private institutions (Iceland, Finland, and Norway).

The evidence thus suggests that there are at least six typical combinations of private funding/private enrollment: high/high (the UK), high/low (Italy), medium-high/high (Estonia), medium-high/low (Ireland), low/high (Finland), and low/low (Denmark). The conclusion to be drawn is that funding and control are two separate dimensions of the public/private relationship in higher education in Europe. In non-European countries, there tends to be a stronger link between a high level of private funding, large share of household expenditure, and a large private sector in these countries in comparison to the European countries. Once again, the European countries stand out as less privatized and with greater variation.

Internal National Differentiations

In addition, there is often a differentiation of public and private enrollment within each national context. In most countries, shorter programs with a focus on practical, technical, or occupational skills for direct entry into the labor market (so-called type B higher education in the OECD statistics) have a larger share of students enrolled in private institutions than largely theoretical programs designed to provide sufficient qualifications for entry into advanced research programs and professions with high skill requirements (type A higher education). For 2012, the national average for first category was 37% compared to 25% for the latter (OECD 2015).

Also, the typical pattern is that educational institutions primarily oriented towards the private sector, such as business schools or technical colleges, are more often private. In France, for instance, the vast majority of the business schools are private, as compared with 30% of the engineering schools. In Sweden, a country with a low level of privatization in higher education, only three institutions are private: one business school, one technical university, and one regional university college with an international business school.

When analyzing the more precise positions of the institutions within a global field of higher education, European countries differ from the USA, where private institutions dominate the upper echelons. While 22 among the 39 US universities ranked top-hundred by the Times Higher Education World University Rankings2015–2016 are private, the vast majority of European universities in this exclusive group are public. The figures for the Shanghai ranking (Academic Ranking of World Universities2015) are similar: 22 out of 51 US universities among the 100 highest ranked are private, as compared to handful out of 34 European universities. The private dominance in the American context becomes even more obvious when only the top-20 universities are considered: 11 out of 16 are private in the Shanghai ranking, and 12 out of 14 are private in the Times Higher Education ranking.

There is one area of European higher education where private institutions are competitive with public ones: business schools. While the American business schools are often part of larger universities, the European business schools are often institutions in their own right and frequently privately controlled. This is true for the leading French business schools, INSEAD, École des hautes études commerciales de Paris (HEC), and École Supérieure des Sciences Économiques et Commerciales (ESSEC), the leading European school, according to Financial Times ranking, the London School of Economics, the highest ranked Italian business school, Bocconi, and the most prestigious Swedish institution, the Stockholm School of Economics.

Increasing Privatization and Expansion

The increase in privatization of higher education should be understood in different contexts. First, it is related to the expansion of higher education, which generally came in two phases. The first occurred after the Second World War and the booming economies of the 1950s and 1960s, when higher education in many countries, in the terminology of Martin Trow (1974), was transformed from elite systems to systems of mass higher education. In the second phase, which stretches from the 1990s and onward, many Western countries entered a system of universal access. Especially this second phase of expansion has been associated with increasing demands for more private financing of higher education. In the OECD’s Education at a Glance, for instance, it is stated that “More people are participating in a wider range of educational programs offered by increasing numbers of providers than ever before. As a result, the question of who should support an individual’s efforts to acquire more education – governments or the individuals themselves – is becoming increasingly important” (2015, p. 238).

The last 15 years (1998–2012, see Diagram 2 below) also indicate a general growth of private funding in higher education in European countries. Some countries have increased very radically. Portugal has raised its share of private funding from 8% to 46%; Hungary from 23 to 46; the Netherlands from 13 to 29, and the UK from 37 to 70 (in 2011, falling back to 43 in 2012). Many countries have seen moderate expansion: Germany from 8% to 14%; France from 15 to 20; Poland from 17 to 22; and Finland from 3 to 4. Only four countries have negative figures: Spain, Ireland, Belgium, and Norway.
Diagram 2

Higher education in some European countries. Total private expenditure, 1998–2012 (Source: OECD: Education at a Glance, 2000–2015)

But the link between expansion and privatization is not direct. While the expansion poses questions concerning how to fund higher education, different solutions can be considered. It is possible, for instance, to increase enrollment without raising the funding at the same rate, creating an erosion of resources. Expansion can also occur by the exportation of students. Due to underinvestment in Mediterranean countries such as Greece, Italy, and Spain, many young people from have enrolled in higher education abroad.

Shifting Organizational Patterns

In order to fully comprehend the privatization of higher education, the third dimension relating to the organization of higher learning, which can be more or less inspired by private corporate models and market-driven principles, has to be taken into account. Here, profound changes in systems of higher education have occurred which cannot be captured by the statistics referred to above. Many of these changes are orchestrated by supranational organizations (Laval and Weber 2002).

One obvious and far-reaching such transformation is the implementation of the Bologna process in European higher education. The crucial aims of the process are to enhance mobility and employability. This implies the creation of an international market of higher education where it is possible to transfer from one national system to another facilitated by two pillars of the process, the standardization of the educational system in three cycles and the standardization of the credit system. The stress on employability shifts the focus of the higher education system from the cultivation of academic knowledge to the production of manpower for the labor markets.

Yet another crucial change is the introduction of new modes of management in higher education, often referred to as new public management. Guided by principles such as accountability, transparency, efficiency, and decentralization, the goal has been to transform public rule-based bureaucracies to private company-like administrations. A precondition is the market model. Administrative units compete on a market and are compared with each other according to key elements. The model for public administration is transparency, so that clients and customers (students, patients, etc.) can make informed choices. Since funding is often tied to these choices, the system works in the direction of steering funding towards the most efficient and goal-fulfilling units. The issue of how to measure quality, and how and to what extent it is tied to efficiency, has been a matter of some controversy (Rider and Waluszewski 2015).

Another issue related to the influence of private business models is the deterioration of collegial decision-making and increased concentration of power to management in chain of command structures. This also implies increasing power of external stakeholders in boards of higher education institutions. While these processes are often portrayed as enhancing the autonomy of higher education institutions, by decentralizing central decisions on funding distribution, employment structures, working conditions, etc., from the national level to the local level, a substantial reregulation is occurring. It is far from obvious that this leads to increased autonomy of the professionals, the teachers and the researchers, who seems better protected by national regulation than local feudalism.


Since the 1980s, a general shifting of power relations between public and private dimensions of higher education in Europe has occurred, where the latter has gained momentum at the cost of the former. There has been an increase in funding stemming from private sources, including households, enrollment in private institutions has increased, and organizational models originating from companies and private business have become more widespread in higher education.

If the development is seen in light of Burton Clark’s famous tri-polar structure of the coordination of higher education (1983), it is not only the case that many countries have glided from the State-dominated pole towards the market pole, but also that there has been a movement from the professional pole towards the market one, implying that privatization implies loss of professional power.


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© Springer Science+Business Media Singapore 2017

Authors and Affiliations

  1. 1.Uppsala UniversityUppsalaSweden