Educational expenditure
More money for schools and universities

Although the federal states are responsible for education in Germany, the federal government should be able to give greater financial support with funding in future
Although the federal states are responsible for education in Germany, the federal government should be able to give greater financial support with funding in future | Photo (detail): © gpointstudio/Fotolia

Germany spends more on education than other European countries – in absolute terms, though not as a proportion of its gross national product. This has a number of reasons, and is set to change in the near future.

When it emerged that Germany had unexpectedly ended 2016 with combined federal and state budget surpluses of 14 billion euros, a discussion quickly ensued: what should the money be spent on? One area that was most frequently mentioned was schools and universities. There were calls for the funds to be channelled into renovating school buildings. Others demanded that the money be used to improve the salaries of the country’s many poorly paid university lecturers. It was also claimed that the budget surplus could help modernize the inadequate IT infrastructure. Yet others proposed that the money would be well spent on inclusion, all-day schools and more teachers. The longer the debate went on, the more one came to feel that education in Germany is a neglected and seriously underfunded sector.
Though actually that is not the case. A total of 129.2 billion euros was spent on education in Germany in 2016 – five billion more than in 2015. Germany is a country that invests a lot of money in education; no other country in Europe spends more. It is followed in second place by France and the United Kingdom, which each spend 115 billion euros; though both have significantly smaller populations.

Expenditure low by OECD standards

However, Germany’s educational expenditure is high only in absolute terms. Looking at the relative figures reveals a rather different picture. Spending on education accounts for 4.2 percent of gross national product (GNP) – and as such is well below the average for developed countries. The Organisation for Economic Co-operation and Development (OECD) measures educational expenditure each year. On average, OECD states spent around 4.8 percent of their GNP on education in 2013. Traditionally, it is the Scandinavian countries and the United Kingdom that particularly lead the way in Europe. Their expenditure rate is significantly higher: the UK invests 6.7 percent of GNP in education, while the figures for Denmark and Norway are 6.4 and 6.3 percent respectively. Outside Europe, New Zealand (6.5 percent) and Costa Rica (8.3 percent) are far ahead of the rest. In the European Union, only the Czech Republic, Slovakia and Italy spend a smaller proportion of their GNP on education than Germany.
The OECD also studies how educational expenditure changes over time. It found that the proportion of GNP spent on education declined in Germany between 2010 und 2013. There is a reason for this: GNP in Germany is rising more quickly than expenditure on education. Statistically speaking, Germany’s economic success thus translates into a disadvantage when analysing education spending.

More money for universities

Economists consider it important to examine certain key areas within the education sector: how much funding is available for instance for early-years education, for schools and for universities? The best way to compare such spending is to measure it on a per learner basis.
Expenditure on higher education has increased overall in Germany; nonetheless, per student spending is still below the OECD average. Germany spends around $9,000 per student, while the average figure in OECD countries is $10,200. By way of comparison, the United Kingdom spends almost $16,000 per student, and the USA as much as $21,000. Germany has fallen behind in this area because the number of students has grown faster than expenditure. One thing is special about Germany: most higher education costs there are covered by the state, the finance ministry stumping up 86 percent of the total. 57 percent of the tuition costs in the United Kingdom are paid by the state, while the figure is a mere 32 percent in the USA. In other words, students there have to shoulder a much greater share of their university expenses.

Financial burden for parents in early-years education

The situation is precisely the opposite when it comes to early-years education, with parents in Germany having to pay 25 percent of the costs. That is high by international standards. Andreas Schleicher, education director at the OECD, thinks this is wrong: “While most countries expect those on decent incomes who have really profited from their education to share some of the costs of their university degree, in Germany it is the youngest who are made to pay – that is to say at the point where something can most easily be done to offset the disadvantages of a non-educated family background.”
The OECD repeatedly assesses how funding is distributed within the school system: per capita, Germany invests $8,100 in each primary school child, but nearly $11,000 in each pupil in upper secondary education. Once again, for comparative purposes: on average, $8,500 is spent per primary school pupil in OECD countries, Norway and Denmark being far ahead of the field with expenditure of $13,300 and $11,500 respectively. In terms of upper secondary education spending, Germany exceeds the average by a significant $2,000.

Federal funding for schools

The comparisons reveal that Germany is lagging behind in terms of educational expenditure by international standards. That said, things are beginning to move in this respect: for years now, the federal government has been making billions of additional funding available to higher education. Soon it should be possible for this federal financial aid to be channelled into schools, too. Previously this was not an option: Germany has a federal system, which means that the country’s 16 federal states have sole responsibility for funding their schools. However, because the states are no longer able to cope with the burden, the federal government plans to help the federal states – from Bavaria in the south to Schleswig-Holstein and Mecklenburg Western Pomerania in the north. From 2018, there are plans to make a total of 12 billion euros in additional funding available over the following four years.