The Politics of Higher Education Tuition Fees and Subsidies

Julian L. Garritzmann

Students in Finland and Germany study free of charge. In the U.S. and in Japan, in contrast, they pay tremendous tuition fees, leading to often six-digit student debt amounts after graduation. At the same time, most students in Finland and in the U.S. receive public financial student aid, while the majority of students in Germany and Japan remain dependent on their parents’ financial contributions or their own part-time work. Why is that the case? Why do some countries charge tuition fees while others don’t? Why do only some governments support students financially?

My research (Garritzmann 2015; 2016) investigates these and related questions. Here, I want to summarize three key insights: the four worlds of student finance, how have the four worlds of student finance emerged, and why policy change becomes increasingly unlikely. Interested readers can find much more detailed analyses in my recent book “The Political Economy of Higher Education Finance: The Politics of Tuition Fees and Subsidies in OECD Countries, 1945-2015”.


 The Four Worlds of Student Finance

How do the higher education tuition-subsidy systems differ across countries? (How) Have they changed over time? Along which dimensions do higher education systems differ at all? In order to answer these questions, I compiled information on more than 80 aspects of the higher education funding systems of 33 OECD countries between 1995 and 2015. This dataset allows to comparatively answer questions such as: How many students pay tuition fees? Do all, some, or no students pay? How much do students pay on average? Do all students pay the same and if not, how do the amounts vary and why? Who sets the level of tuition fees in the first place? How much public financial support do students receive? Do they have to pay back this money or not? Chapter 2 of my book presents and discusses this data in detail.

A core insight from the detailed analysis of this data is that the advanced economies (OECD countries) fall into four groups:

-       In a first country cluster, hardly any student pays fees, but public financial student aid is also meager at best. This is the case in most continental European countries.

-       In a second country group, students also study free-of-charge, but at the same time they receive large public support. This is mainly so in Nordic Europe.

-       A third group, comprising the USA and other Anglo-Saxon countries, is characterized by the combination of substantial tuition fees and generous public support (at least in the form of student loans).

-       In a final group, students pay similarly high tuition amounts, but the majority does not receive any public support. This is the case in Japan, South Korea, Chile, and other Latin American and Asian countries.

I call these four groups the “Four Worlds of Student Finance”.

How have the Four Worlds of Student Finance emerged?

The main research question that my book seeks to answer is why and how the Four Worlds have developed. Why do the countries differ so considerably? This question is particularly interesting because I also found that when we look back at the 1940s and 1950s, these country differences did not exist at all. In the immediate post-World War II phase the higher education systems of all countries were almost identical: Tuition fees were low or inexistent in all countries, there was no public student aid, and enrollment levels were very low everywhere (about one to five percent of each cohort went on to higher education at this time). So why have the countries developed into four very different directions although they had an almost identical starting point?

My research shows that the reason for this development is political. Detailed qualitative case studies of four countries (Finland, Japan, Germany, the USA) over seven decades (1945-2015) as well as thorough analyses of a large amount of quantitative data show that the emergence of the Four Worlds of Student Finance can be traced back to the respective partisan composition of government. Whether students pay tuition or not and whether they receive subsidies or not depends on which political parties were in government during the postwar period.

More particularly, I show that in some countries (for example in Sweden) progressive leftwing parties were in office for decades, seeking to establish equality of opportunities and socio-economic upward mobility. To achieve this, they banned tuition fees and introduced generous student support systems to facilitate access for children from lower strata. The low-tuition—high-subsidy system was born.

In other countries (for example in Japan), conservative rightwing parties were predominant over a long period of time. These governments pursued very different goals: They tried to keep higher education as elitist as possible and feared that the expansion of higher education would lead to a “massification” and a decline of the quality of higher education. Conservative parties therefore did not install any student aid and “outsourced” the expansion of higher education in the tuition-dependent private sector, safeguarding the elitist character of their public universities. This pushed countries in the direction of high-tuition—low-subsidy regimes.

In still other countries, neither leftwing nor rightwing parties predominated in office, but rather took turns. My analysis shows that in these cases it matters crucially for the higher education systems how long leftwing and rightwing parties were in office. That is, not only the partisan composition of government but also the duration of parties in office matters. This can, for example, explain the development in Germany (low tuition, low subsidies) and the U.S. (high tuition, high subsidy).

“Nothing’s gonna change”: Policy change becomes increasingly unlikely

A third major finding is that over time the higher education systems of all countries have become increasingly path-dependent. That is, while there has been a lot of policy change in the 1960s and 1970s setting countries on their respective paths, no country (with the exception of England) has altered its higher education finance system considerably after the 1980s. Countries that charged tuition at the beginning of the 1980s continue doing so today and – if anything – have raised the amounts. Countries without tuition fees remain tuition free. The same applies to financial student support: Path dependencies prevail and the Four Worlds of Student Finance seem increasingly stable.

Why is that the case? I show in the book (see also Garritzmann 2015) that over time the influence that governments can exercise on higher education finance systems decreases. This is so because of “positive feedback effects”, that is citizens adapt their political preferences to the respective systems that they are socialized in. As a consequence, a public opinion develops that favors the respective status quo over any policy change. It thus becomes politically very costly for parties to change the higher education system fundamentally. The experiences by Labour and the LibDems in England (the only country that has experienced major change) underline this perfectly. We are thus increasingly unlikely to witness any considerable policy change. Put bluntly, Sen. Sanders will not abolish tuition in the USA and Finland will not introduce any (for most of its students).

Taken together, my research shows that when we want to understand why higher education systems differ across countries and time, the answer is politics. Careful attention to the political process also helps understanding which reform potentials are still possible today and how policies could be designed to enable at least incremental change.

Dr.Julian L. Garritzmann is post-doctoral researcher at the University of Konstanz (Germany) and senior researcher at the University of Zurich (Switzerland). His research interests include education systems and policies, political parties and party competition, the interrelation of social policies and educational policies, and public opinion towards social investment and social compensation policies. In addition to his new book, his research has appeared in Journal of European Public Policy, Journal of European Social Policy, and West European Politics.


This entry was initially posted on Europe of Knowledge blog.



Garritzmann, Julian L. (2015) Attitudes towards Student Support: How Positive Feedback-Effects Prevent Change in the Four Worlds of Student FinanceJournal of European Social Policy, 25(2):139-158.

Garritzmann, Julian L. (2016) The Political Economy of Higher Education Finance. The Politics of Tuition Fees and Subsidies in OECD Countries, 1945-2015. Palgrave Macmillan.