Private Universities Getting the Formula Right

An attractive option: private universities offer an alternative to their public counterparts
An attractive option: private universities offer an alternative to their public counterparts | Photo (detail): © Jacobs University Bremen

Private universities are attracting more and more students. Yet some of them in Germany have had to file for bankruptcy. In the long term, they can only hold their own by adopting a well-honed strategy and managing without extensive research – unless, that is, they have a patron.

For Günther Goth, Chairman of the Board of the Bildungswerk der Bayerischen Wirtschaft (Vocational Training Centre of the Bavarian Employers’ Associations), students of the Hochschule der Bayerischen Wirtschaft (HDBW), a private university of applied sciences, are “uncut gems”. The university offers business professionals the opportunity to further develop their skills and better exploit their potential, said Goth at the HDBW’s opening in October 2014 in Munich. Most of the first crop of students have day jobs and study in the evenings. That’s possible because the new university offers part-time programmes in business management, mechanical engineering and industrial engineering that combine home-based e-learning with classroom teaching.

In Germany, private universities have a lingering reputation for elitism. And yet most of them offer mainly practice-oriented bachelor’s programmes and often allow their students more temporal and spatial flexibility than their public counterparts. That’s why they attract people who otherwise wouldn’t study at all. Germany’s largest private university – with some 26,000 students and 31 campuses – is the Essen-based FOM University of Applied Sciences, which like the HDBW was set up by business associations. Even trainees can study there parallel to their apprenticeship.

Education system in transition

There has been a huge increase in the number of private universities in Germany since the year 2000 – from less than 50 to around 120 – with others planned. This is the response of private funding organisations to the growing demand for higher education. The number of students at German universities has reached a record high of 2.6 million, with six per cent of them enrolled at private institutions. This trend will continue for a while yet, believes Piret Lees of the Verband der Privaten Hochschulen (Association of Private Universities): “A growing number of people want to study flexibly parallel to their work.” In addition, many occupations that have traditionally required an apprenticeship or traineeship are becoming increasingly academised: advertising professionals and media designers, physiotherapists, nurses, pre-school teachers and technicians are receiving their education or further education at universities.

Despite the demand, private universities must budget very carefully. They generally receive little or no public funding, being dependent instead on revenue from tuition fees, third-party funding and subsidies from their funding organisations. In recent years, a lack of funds has forced several private universities to close, the most recent case being that of the Humboldt-Viadrina School of Governance in Berlin, which went into liquidation in June of this year. “They’d found a nice little niche, but they were too small to survive,” says Andrea Frank of the Stifterverband für die Deutsche Wissenschaft, an initiative that is seeking to improve Germany’s education and research landscape. It led the most comprehensive study conducted so far on the role and future of private universities. The study concludes that a minimum number of between 1,000 and 1,500 students is absolutely essential to ensure viability. “Also, private universities that set their tuition fees too low or target students who would be better suited to public universities are soon going to run into difficulties.” Institutions that conduct little research are in a better position financially because laboratories and lab apparatus are generally expensive – nearly two-thirds of students at private universities study business administration, law or social sciences. While the overall proportion of international students at German universities has increased to over 11%, at private universities it is on average only around half that figure. That’s no surprise as the option of studying part-time while working is of little interest to applicants from abroad.

International popularity

The situation is different at the relatively small number of private universities that conduct high-quality research and select their students based on strict criteria. Quite a few of these institutions also offer English-language programmes. At the Otto Beisheim School of Management (WHU) in Vallendar, a quarter of the students come from abroad. And at the Jacobs University in Bremen, foreign students actually make up half of the student body. Private universities with a strong research orientation, which are attractive to international applicants, are particularly susceptible to financial problems on account of their high outlay. That’s why there is currently uncertainty again about the future of Jacobs University with its extensive range of subjects and large number of scholarship holders. It has already received several rescue packages worth hundreds of millions of euros from coffee dealer Klaus Jacobs and the Federal State of Bremen. Witten/Herdecke University, whose range of subjects includes medicine and dentistry, faces similar problems: the Federal State of North Rhine-Westphalia is providing temporary funding to keep it up and running.

“If you’re going to conduct research seriously, you need a foundation or a patron behind you,” says Andrea Frank. The distinguished Bucerius Law School in Hamburg, for example, receives subsidies that cover half its running costs from the “Zeit-Stiftung”, a non-profit foundation set up by Gerd Bucerius, the founder of the German daily Die Zeit. The WHU can count on Otto Beisheim, founder of the wholesale company Metro, whom the school is named after. And the European School of Management in Berlin is funded by 25 German corporations and business associations. But even Germany’s financially soundest private universities are, in terms of their funding base, light years behind the prestigious U.S. Ivy League universities: Harvard’s endowment is valued at 32 billion dollars.