Funding
Financing of higher education institutions by the Länder
Public higher education institutions are, with a few exceptions, maintained by the Länder, and are supplied by these with the funds they need to carry out their work from the budget of the Ministry of Education and Cultural Affairs or the Ministry of Science and Research. The financing procedure usually comprises several stages of coordination between the responsible ministry and the higher education institutions. First the higher education institution notifies the Land authorities of its finance requirement in the form of an estimate to be included in the budget of the Land ministry responsible for higher education. The entire budget is then compiled by the competent minister by agreement with the other responsible ministries and finally included in the budget proposals the government presents to parliament for its approval. The funds are made available once the parliament has discussed the budget and adopted it. Financing is generally oriented in accordance with the responsibilities of and services provided by the institutions of higher education in the field of research and teaching, in the transfer of scientific findings into societal aplication, in the promotion of up-and-coming academics, in the area of internationalisation and the equality of opportunity for women in science. The provision of funds by the Land is followed by internal distribution and management of the higher education institution, which in turn is subject to varying degrees of control by the Land. The Länder conclude framework agreements with their institutions of higher education on the development and ‑funding of higher education institutions, which are generally valid for a period of several years.
The framework agreements define, for example, the objectives of the Land, the structural development of the institutions of higher education, the expansion plans, the strategic performance and development goals, taking into account the tasks regulated by law and their achievement, the type and scope of state funding for institutions of higher education and the further development of the budget management and management of higher education institutions. This procedure is intended to increase the planning security of the higher education institutions.
In 2022, according to the financing statistics, the public sector expended Euro 35.4 billion on higher education institutions. The Länder share was Euro 30.5 billion, or 86.2 per cent of expenditure, while the Federation share was Euro 4.9
billion or 13.8 per cent of expenditure.
Financing of higher education institutions by Federation and Länder
The funds provided by the Länder from their budgets cover personnel and material costs as well as investments, in other words expenditure on property, buildings as well as for first and major equipment. These funds are supplemented by the grants and third-party funding from institutions for the promotion of science and industry described below.
Following an amendment of the German Basic Law, the Federation and the Länder have had additional scope for action in the joint promotion of science since January 2015. Pursuant to Article 91b, paragraph 1 of the Basic Law, in cases of supraregional importance, they may now thus mutually agree to cooperate in the promotion of science, research and teaching. This means that institutions of higher education can now also be supported permanently by federal funds, whereas this only used to be possible through fixed-term programmes such as the Higher Education Pact 2020 or the Excellence Initiative. Agreements between the Federation and the Länder which primarily concern institutions of higher education require the consent of all Länder.
Excellence Strategy
In June 2016, the Federal Government and the Länder concluded an agreement on the promotion of top-level research at universities (Excellence Strategy) as a successor to the Excellence Initiative launched in 2006. For the first time, this programme makes use of the possibilities offered by the amended Article 91b of the Basic Law (GG) and now provides for the continuation of the promotion of excellence on a permanent basis.
The continuation of the Excellence Initiative which aimed to train top performers in research and to raise the quality of Germany as a location for higher education and science across the board, further strengthens top university research. Within the scope of the Excellence Strategy to encourage top-level research at universities, the Federation and Länder will provide a total of up to Euro 533 million annually as of 2018 in the two funding lines “Excellence Cluster” and “Excellence Universities”. As in the Excellence Initiative, 75 percent of the funds will come from the Federation and 25 percent from the Land in which the sucessful university is located. In the Excellence Clusters funding line, a total of around Euro 385 million will be made available for the project-related funding of internationally competitive research fields at universities or university alliances. Project funding of around 45 to 50 excellence clusters will be provided. The funding period is generally two times seven years. In the Excellence Universities funding line, a total of around Euro 148 million will be provided to permanently support eleven institutions. The selected universities will undergo an independent and external evaluation every seven years, the results of which decide whether funding is to be continued.
In September 2018, 57 clusters of excellence at 34 universities were selected for funding from 1 January 2019. With the selection of the clusters of excellence, the second part of the Excellence Strategy was initiated. Universities with at least two or university consortia with at least three clusters of excellence could apply for funding as universities of excellence until the end of 2018. Since November 2019, ten universities of excellence and one excellence consortium are funded.
In November 2022, the Federal Government and the Länder agreed on a further development of the Excellence Strategy in the Joint Science Conference of the Federation and the Länder (Gemeinsame Wissenschaftskonferenz – GWK). In particular, funding of Euro 539 million per year will be made available for up to 70 clusters of excellence to strengthen the competitive space from the second funding period onwards. From 2026, a total of Euro 687 million per year will thus be available in the Excellence Strategy. In the second funding round, a maximum of four additional institutions can be funded in the Universities of Excellence funding line from 2027. It remains the case that 75 percent of the funds come from the federal government, 25 percent from the respective host state of the cluster of excellence or the university of excellence.
Funding Initiative “Innovative Institutions of Higher Education and Programme to Support Up-and-Coming Academics"
In addition to the Excellence Strategy, the Federation and Länder resolved two schemes in June 2016: the funding initiative “Innovative Institution of Higher Education” and the programme to support up-and-coming academics.
The initiative “Innovative Institution of Higher Education“ to support the research-based transfer of ideas, knowledge and technology helps institutions of higher education that already have a coherent strategy for their interaction with business and society to raise their profile in their so-called third mission “Transfer and Innovation”. The initiative has been endowed with up to Euro 550 million for ten years and is aimed particularly at Fachhochschulen as well as small and medium-sized universities. The Federation provides 90 percent of the subsidies, the respective home Land 10 percent. At least half of the funding and at least half of the funding cases should be allocated to Fachhochschulen (FH) Hochschulen für angewandte Wissenschaften (HAW) or consortia coordinated by a FH/HAW. The Federal Government and the Länder are providing up to Euro 285 million for the second funding round for a maximum period of five years. In May 2022, a total of 55 higher education institutions were selected for funding in 16 individual and 13 collaborative projects. These include 39 Fachhochschulen and Hochschulen für angewandte Wissenschaften, 3 colleges of art and music and 13 universities and Pädagogische Hochschulen.
The goal of the Federation-Länder programme to support up-and-coming academics that has been endowed with Euro 1 billion is to make the career paths of up-and-coming academics at universities and equivalent institutions of higher education easier to plan and more transparent. It aims to improve the international appeal of the German scientific system and help the universities and equivalent institutions of higher education attract and permanently retain the best junior scientists from home and abroad as far as possible by encouraging the tenure-track professorship, an internationally recognised and accepted career path to a professorship. The Federal Government provides up to Euro one billion for the programme, while the host countries of the funded universities provide the overall funding. The 1,000 new Tenure Track Professorships funded by the Federation are to be advertised again and again and maintained by the Länder in the long term. At the same time, the Länder will increase the number of permanent professorships by 1,000.
Higher Education Pact 2020
In 2007, in order to enable institutions of higher education to cope with an increasing number of new entrants and to maintain the efficiency of research at higher education institutions, the Federation and the Länder on the basis of Article 91b, paragraph 1, No. 2 of the Basic Law adopted the Higher Education Pact 2020 (Hochschulpakt 2020). Through the Higher Education Pact, the Federation and Länder have created a needs-based range of courses, thus ensuring the quantitative expansion of higher education.
During the term of the Higher Education Pact from 2007 to 2020, around 1.6 million more prospective students were able to take up higher education studies than would have been the case without the provision of additional study opportunities. The term of the Higher Education Pact 2020 ended on 31 December 2020, the funding phase runs until the end of 2023. Over the total duration of all three programme phases of the Higher Education Pact from 2007 to 2023, a total of more than Euro 20 billion from the Federation and about Euro 19 billion from the Länder will flow to the universities.
Contract for the Future of Higher Education and Teaching
The Federation and the Länder are providing institutions of higher education with additional funding to maintain study capacities in line with demand and to improve the quality of studies and teaching with the Future Contract for Teaching and Learning. In their agreement on the Future Contract in 2019, the heads of government of the federal and Länder governments agreed that the Federation would provide Euro 1.88 billion annually from 2021 to 2023 and Euro 2.05 billion annually from 2024 onwards. The Länder will provide their own funds in at least the same amount.
In November 2022, the GWK decided to dynamise the Future Contract from 2023 onwards. According to this, the funds provided by the Federation and the Länder will increase by three percent in 2023 compared to the previous year, by around 5.9 percent in 2024 compared to the previous year, by 1.5 percent in 2025 and by three percent in 2026 and 2027. The Federation and the Länder will each provide a further Euro 338 million in the period from 2023 to 2027 as a result of the agreed dynamisation. With the dynamisation of the Future Contract, the budget development of higher education institutions will be aligned with that of non-university research institutes.
Federal-Länder Agreement on "Innovation in Higher Education Teaching"
Since 2021, the agreement between the Federation and the Länder "Innovation in Higher Education Teaching" (Innovation in der Hochschullehre) concluded in June 2019 as the successor to the Teaching Quality Pact (Qualitätspakt Lehre) promotes the further development of higher education teaching and its strengthening in the higher education system as a whole. To this end, the Foundation for Innovation in Higher Education Teaching (Stiftung Innovation in der Hochschullehre) was established under the auspices of the Toepfer Stiftung gGmbH. Appropriate funding formats are intended to motivate institutions of higher education to continue their efforts to improve quality and innovations in teaching and learning. In addition, the exchange and networking of relevant actors as well as the transfer of knowledge are to be supported. The Federal Government and the Länder are providing Euro 150 million annually to promote the Foundation for Innovation in Higher Education Teaching. Financing was provided by the Federation from 2021 to 2023 and jointly from 2024, with the Federation contributing Euro 110 million and the Länder Euro 40 million annually.
Funding for Investment Projects at Institutions of Higher Education
With its funding to promote research buildings, large scientific installations and national high performance computing at institutions of higher education on the basis of Article 91b, paragraph 1, No. 3 of the Basic Law, the Federation and the Länder aim to create the infrastructure for research of supra-regional importance. Up to Euro 401 million in funds research buildings and Euro 170 million in funds for large-scale equipment are available annually for this purpose. The Federation and the respective host Land each provide half of these funds for the corresponding investment projects
Funding for national high-performance computing serves to provide level 2 high-performance computing capacities for researchers at higher education institutions on a nationwide basis and in line with demand, to strengthen cross-location and interdisciplinary cooperation, to strengthen the methodological competence of users, to promote young scientists and researchers, and to provide training and continuing education in scientific computing. An annual sum of Euro 62.5 million is available for this purpose. On the basis of a competitive and science-driven procedure within the framework of a review by the DFG and an evaluation by an independent strategy committee appointed by the Joint Science Conference,nine computing centres have been selected by the GWK and included in the funding.
Female Professors Programme
In 2008, the Federation and the Länder launched the Women Professors Programme (Professorinnenprogramm) to support women in their academic careers and increase their share of professorships at German institutions of higher education. In three program phases to date, the programme has sustainably improved equal opportunities in the academic system and is the central instrument for promoting equality between women and men at institutions of higher education. It has also made a very concrete contribution to increasing the proportion of women among professors throughout Germany from one sixth in 2008 to over a quarter today. To date, around 850 professorships have been funded through the Women Professors Program.
In November 2022, the Joint Science Conference (GWK) adopted the Federation-Länder agreement on the Women Professors Programme 2030. This will bring the Women Professors Programme into a fourth phase. Building on the successful previous three program phases, the cultural change towards more gender equality at institutions of higher education is to be further strengthened. The aim of the funding programme is to dynamically increase the number of female academics in top positions in the field of science towards parity and to anchor gender equality even more firmly in the structure of institutions of higher education. The institutions of higher education first submit an equality concept; after a successful assessment, they can apply for funding for up to three professorships for women. The program is funded in equal parts by the Länder and the Federation, whereby in Bayern the counter-financing comes from the budget of the respective institution of higher education. The Women Professors Programme 2030 will run for eight years (2023 to 2030) and has a total funding volume of Euro 320 million.
Bund und Länder haben 2008 das Professorinnenprogramm erstmals aufgelegt, um Frauen in ihrer wissenschaftlichen Karriere zu unterstützen und ihren Anteil an Professuren an deutschen Hochschulen zu steigern. Das Programm hat in bisher drei Programmphasen die Chancengerechtigkeit im Wissenschaftssystem nachhaltig verbessert und ist das zentrale Instrument, um die Gleichstellung von Frauen und Männern in Hochschulen zu fördern. Es hat zudem ganz konkret dazu beigetragen, den bundesweiten Frauenanteil in der Professorenschaft von einem Sechstel im Jahr 2008 auf heute über ein Viertel zu steigern. Bislang wurden rund 850 Professuren über das Professorinnenprogramm gefördert.
Financing of research at higher education institutions by external funding
The funds allocated from the budget of the Land ministries responsible for higher education are the main source of finance for higher education institutions. However, members of the institutions engaged in research are also entitled, within the scope of their professional responsibilities, to carry out research projects which are not financed through the Land budget, but by third parties, e.g. organisations concerned with the promotion of research. Competitively raised research funds, a significant portion of which is provided by the public sector, are increasingly supplementing the basic funding of higher education institutions. In 2021, the institutions of higher education received a total of around Euro 9.5 billion in external funding.
The most important institution involved in promoting research in higher education is the German Research Foundation (Deutsche Forschungsgemeinschaft – DFG). It promotes research projects by, for example, providing individuals, institutions or collaborations with financial assistance. The Federation and the Länder annually supply funds of around Euro 3 billion for institutional research funding (including programme allowances) through the DFG.
Higher education institutions also receive funds from companies, if the companies commission them with certain research and development work. In 20201, external funding from the commercial sector amounted to more than Euro 1.5 billion.
Financing of Berufsakademien
The financing for training at state-run Berufsakademien is met partly by the Land and partly by the training establishments. Whilst the costs for the in-company training are met by the training establishments, the state Studienakademien (study institutions), where students receive the theoretical part of their training, are funded in full by the Land. The privately funded Berufsakademien in individual Länder are an exception.
Financial Autonomy and Control
The strengthening of the autonomy of higher education institutions in recent decades has also led to a paradigm shift from detailed state control to self-responsible action by higher education institutions in the area of finance. The reforms primarily concerned distribution modalities. Budget funding is hence partly apportioned via performance-related parameters, taking into account such criteria as the number of students within the Regelstudienzeit (standard period of study) and the total number of graduates or the level of external funding, known as Drittmittel, attracted for research purposes and/or the number of doctorates. In this context, changes in the Higher Education Acts of the Länder have strengthened the governance structures of higher education institutions and increased their financial autonomy. The relationship between the state and higher education institutions is now, amongst other things, marked by agreements on objectives and performance requirements. Higher education institutions now have some scope as regards specific measures to implement the agreed objectives. They have also been given greater flexibility in the use of the funds thanks to the introduction of global budgets, for instance. In addition to their basic funding, higher education institutions apply for funds from public and private bodies to promote research and development, technology and knowledge transfer as well as to support teaching and up-and-coming academics.
Fees within Public Higher Education
The Länder may, at their own discretion, impose study fees on students. After a number of Länder had charged these in the interim, general study fees have been abolished in all Länder. Baden-Württemberg will charge students arriving from outside the EU or the EEA for the purpose of studying tuition fees of Euro 1,500 a semester from the winter semester 2017/18 onwards. Exemptions should ensure the social compatibility and international scientific exchange at the institutions of higher education in the Land. In Bayern und Sachsen, institutions of higher education are free to charge fees to students from non-EU countries.
Some Länder charge an administration fee for registration or a contribution for the use of the institution’s social facilities. If the institution has an organ of student self-administration (General Student Committee – Allgemeiner Studierendenausschuss) within the framework of a constituted student body (verfasste Studierendenschaft) (in all Länder with the exception of Bayern) students also pay an additional contribution. In some Länder, fees for long-term students, study courses providing continuing education and for an additional course of study are now being charged.
In parts, the Berufsakademien also impose admission fees or contributions for the use of social facilities.
Financial Support for Learners’ Families
In addition to the direct support provided to students from low-income families by the Federal Training Assistance Act (Bundesausbildungsförderungsgesetz – BAföG), all students up to the age of 25 are supported through their families by the tax allowances or child benefits under the Income Tax Act or the child benefits under the Federal Child Benefit Act (Bundeskindergeldgesetz). In specific individual cases, the child supplement may also be considered. If students finish studying before their 25th birthday, the financial benefits enjoyed through their family come to an end with the end of the course of study.
Financial Support for Learners
Financial Assistance under the Federal Training Assistance Act
Students in the tertiary sector who have no other means (mainly from their parents' income) of maintenance and financing a course of study (Bedarf) can also receive financial assistance under the terms of the Federal Training Assistance Act (BAföG). Training assistance is granted to German students and also to foreign students who have a long-term prospect of remaining in Germany such as, for instance, students with a settlement permit or citizens of a member state of the European Union with a rigt to permanent residency under the EU Freedom of Movement Law.
Since 22 July 2022, training must generally be commenced by the age of 45 in order to be eligible for support under BAföG. The duration for which such assistance is payable largely depends on the course of study chosen. The assistance limit corresponds to the standard period of study as stipulated in the respective examination regulations. From the fifth subject-related semester, students only continue to receive funding if they provide a certificate required for admission to examinations (Leistungsnachweis). The amount of the assistance is generally dependent on the income and assets of the student as well as the income of a spouse or civil partner and their parents.
Since 22 July 2022, students at universities and academies who do not live with their parents can now receive up to Euro 934 per month (Euro 812 for their living expenses and accommodation, Euro 94 health insurance supplement and Euro 28 nursing care insurance supplement), as well as a childcare supplement of Euro 160 for each child, if applicable. As a rule, half of the amount is provided over the maximum period for which assistance is payable as a non-repayable grant, while the other half takes the form of an interest-free state loan. The childcare allowance is paid out as a subsidy. Repayment terms for this state loan depend on social considerations and income and takes place through.
Those students eligible for financial support who begin or continue their studies in another EU member state or in Switzerland are funded as well. Study periods ranging from a minimum of one semester up to one year spent abroad outside the EU and Switzerland are funded if they are beneficial to studies and can be – at least partially – counted towards the training period, or are carried out within the framework of higher education cooperation schemes. In the latter case, a shorter period of at least twelve weeks is also eligible for support. In exceptional cases funding may also continue over a longer period. Compulsory placements of at least 12 weeks abroad can also be funded under certain conditions.
In 2021, 468,543 students received financial assistance under the Federal Training Assistance Act. Federation and Länder training assistance expenditure supporting students totalled over Euro 2.3 billion for the student sector alone. Students in receipt of assistance obtained an average of Euro 579 each.
Educational Credit Programme and Student Loan Programme
The support system is supplemented through the Educational Credit Programme (Bildungskreditprogramm) which can support pupils and students in an advanced stage of their training - also alongside or in addition to benefits under BAföG. The income and assets of the trainee or their parents are irrelevant. For trainees not receiving BAföG funding, the educational loan is used to secure and accelerate their education; for trainees receiving BAföG funding, it is used to finance extraordinary expenses not covered by BAföG, such as excursions or special study materials. Borrowers can freely choose up to 24 constant monthly instalments of Euro 100, 200 or 300 per training stage, subject to a maximum loan amount of Euro 7,200 per training stage. If the limit of 24 instalments and the total amount of Euro 7,200 is not exceeded, a one-off payment of up to Euro 3,600 can be paid out in advance in addition to the monthly loan. The borrower must provide credible evidence that they need the amount directly to finance extraordinary expenses. Eligible are adult trainees who have not yet reached the age of 36. As a rule students can only take up this credit until the end of the twelfth semester of study. The credit accrues interest as soon as it is paid out. However, interest is automatically deferred until repayment commences. The educational credit is applied for at the the Federal Office of Administration (Bundesverwaltungsamt – BVA) and disbursed by the Reconstruction Loan Corporation (Kreditanstalt für Wiederaufbau – KfW).
As part of the student loan programme of the KfW, since 2006, students of any study course are offered a loan in order to finance cost of living to the amount of Euro 100 up to 650 per month, irrespective of their income or assets.
Additional Means of Financial Assistance
In addition to financial assistance provided under the Federal Training Assistance Act, there are other sources of funding available to students. In some Länder, for example, the student associations at the institutions of higher education or the institutions of higher education themselves provide loans of varying amounts in cases of extreme social need. Several smaller, predominantly regional foundations, which usually have private funds at their disposal, also provide needy students with assistance. The student loan systems developed by the Länder are an additional support system for the promotion of academic studies.
Financial Assistance Through Grants
Particularly gifted and dedicated students can be supported with a grant from the thirteen organisations for the promotion of young talent supported by the Federation. The organisations for the promotion of young talent reflect the diversity of German society and mirror the various ideological, religious, political, business or union-based tendencies in Germany. The oldest and biggest organisation for the promotion of young talent is the German National Scholarship Foundation, which is also partly financed by the Länder.
Furthermore, gifted and high-achieving students at German institutions of higher education have been supported with the Deutschlandstipendium. The grant amounts to Euro 300 a month and is paid in equal halves by private sponsors (companies, foundations, private individuals) and the Federation.
In addition, the federal government's advancement scholarship supports high-performing skilled workers with training and professional experience to study at an institution of higher education for the first time.
The German Academic Exchange Service (Deutscher Akademischer Austauschdienst – DAAD) offers grants for foreign students and up-and-coming academics and scientists to pursue studies or further education of limited duration at a German higher education institution. Alongside the DAAD, some Länder also have special funds for providing assistance to foreign students at the local institutions of higher education.
On completion of a first degree, students may also receive scholarships to support their further studies in line with the postgraduate assistance acts (Graduiertenförderungsgesetze) and regulations of the Länder. The foundations for gifted students (Begabtenförderungswerke) also provide students who have already completed a first degree with grants to enable them to study for a Promotion (doctorate).
Indirect Forms of Financial Assistance
Students receive various indirect forms of financial assistance which include reduced health insurance rates, the fact that time spent studying is partially acknowledged by the pension insurance authorities, subsidised student ticket prices in local public transport, reduced dining prices in canteens and rents in publicly subsidised dormitories.
Students in higher education are also protected by statutory accident insurance against accidents occurring at an institution of higher education or on the way between their home and the institution. It is the Länder that are responsible for statutory accident insurance for students.
Private higher education
Study fees are charged at non-state-maintained higher education institutions in all Länder. As a rule, higher education institutions maintained by the church charge no or significantly lower tuition fees than the privately-maintained higher education institutions.