In
2006, Germany opted to lift a universal ban on college tuition and
fees, which lead to the charging of tuition in seven states. However,
this ban was short lived and was recently repealed in Lower Saxony,
Germany, reverting back to the pre-2006 tuition and fee free university
model. German political figures in support of the tuition free system
referred to charging tuition as "socially unjust."
But what does this really mean for college students? Is there really such thing as a free college education? According to economists, the free college education system now in place in Germany will actually cost college students, and German citizens for that matter, more in the long run.
It comes as no surprise that even though German colleges are tuition free there is still a significant cost in keeping their doors open
to students. So how does the tuition free system make up for the lost
revenue? Like many colleges and universities around the world, German
universities rely heavily on government subsides to make up for the revenue. However, with the newly revived tuition free system, German universities will be entirely dependent on government funding.
This increased governmental expenditure will inevitably lead to higher
income tax rates. According to the Organization of Economic Co-operation
and Development (OECD) Germany already imposes the second highest
income tax burden of the 34 OECD countries. In 2012 the tax burden
placed on German citizens was a staggering 49.8 percent, which is sure
to increase.
Not
only will German citizens feel the increased weight of funding the
universities through their taxes, but what economists are calling a
"Moral Hazard" will likely also increase the average cost per students
to obtain a degree. This "Moral Hazard" arises when students are
relieved of the financial burden and realities realized through paying
for one's tuition. By absorbing the financial burden traditionally
imposed on students, the tuition free system is also removing the
incentive students had to graduate on time and making them less cost
sensitive. Due to such, it is likely that Germany will see an increase
to the average time students spend obtaining their college degrees.
In
addition to the increased cost in obtaining a degree, the loss of cost
sensitivity may also lead to decreased accountability for the quality of
education provided by the German universities. Like in many situations,
people, or students in this case, are less like to hold another party
accountable for the product or service they receive when they are not
financially burdened. Take for example the K-12 education system in the
US: the public K-12 system has long been criticized for it's
ineffectiveness and declining standards while the private K-12 system
seems to be flourishing.
Finally,
economists point out that, all things being equal, students who receive
the same college degree will pay vastly different amounts for their
"free college education" after graduation depending on what career path
they choose. Take for example two students who take the exact same
classes and obtain the same degree: if one student goes to work for the
government after graduation and the other for a private company (doing
the same work as the other student), it is likely that because of higher
wages the student working for the private company will pay
substantially more in taxes for his education. Granted, similar
situations play out in any country that subsidizes colleges and
universities, however, it will be substantially more prominent in
Germany due to the increased taxes that will be needed to fund the
tuition free universities.
Even with all the aforementioned hidden realities of the German tuition free system there is one undeniable benefit: increased access to higher education. Though the system disguises its true costs, it does so in an effort to make college education more accessible to everyone.
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