RWI Positionen

RWI Positionen 66

BAföG Plus: Deutschlands Hochschulfinanzierung neu denken

by Katja Fels, Christoph M. Schmidt and Mathias Sinning

06/2015, 21 S./p., ISBN 978-3-86788-633-8

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Abstract

While many countries around the world recognize that the use of taxpayer money for financing higher education of students entails a redistribution of resources from the poor to the rich, university education in Germany is largely free, and tuition fees are even widely perceived as unfair. As a result, parents face a higher private share of expenses for the pre-school education than for the university education of their children. The design of a suitable financing mechanism for tuition fees constitutes an important first step towards reducing these imbalances. In this paper, we propose an extension of the publicly funded “BAföG” loan system. The extended system (“BAföG Plus”) would provide student loans for financing tuition fees of all German students at a real rate of interest of zero percent, similar to the Australian student loan system. To provide default insurance and avoid consumption hardship, the repayment rate of these loans would depend on the taxable income of university graduates. The German tax office would administer the debt collection. Means-tested loans for financing living expenses of the current BAföG system could stay in place and would be complemented by a loan component for financing tuition fees that could be made available to all German students without means-testing. This would provide universities with urgently needed extra funding while widening the scope for the federal states (Bundesländer) to reduce fees for pre-school education.

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