Higher education For Germany's students, life is expensive

Even though universities don't charge tuition fees, degrees in Germany are far from free. As living and rental costs soar and less financial aid is available, many are strapped for cash.
Quelle: dpa
Money on their minds.
(Source: dpa)

In Germany, higher education might be free, but that doesn’t mean students are free of financial stress.

Ever since the government phased out tuition fees at public universities in 2014, undergraduates have only paid a nominal administrative fee. The Free University in Berlin, for instance, charges €311.59 ($382) per semester, and most of that goes toward a public transit pass. This is a stark contrast to countries like the US, where tuition fees can skyrocket to €40,000 per year.

But life as a student in Germany can still be costly, especially in cities. As more people move to urban areas, it is becoming harder for students to find affordable housing. Rental prices in Berlin have risen by 42 percent since 2010, according to a recent index of student housing prices by the German Economic Institute. Things aren’t any rosier in Munich, Stuttgart or other cities.

An average student's budget goes like this: rent plus utility bills cost €323 per month. On top of that comes €168 for food, €94 for travel and €80 for health coverage. Since prices for these items have gone up, students tend to save on clothing, leisure and even study materials, spending €123 a month on these latter goods – down from €150 in 2012.

Soaring costs have left many students struggling to make ends meet.

These may seem modest compared to standards in the United States but assumptions about studying for a degree, cost and status differ in Germany. Observers note that while in the US, higher education is viewed as a privilege and high sums are invested that people are expected to pay off later. In Germany, though, studying at university is viewed more as an extension of high school education which people expect to be free.

Traditionally, degrees also took longer to attain in Germany until it introduced standardized masters and bachelors degrees, in line with an EU guideline in 1999. Some states experimented with higher fees but reverted to charging only basic administrative costs. So unlike in the US and the UK, there is no accompanying, developed system of student loans. Ultimately, taxpayers bear the lower cost of studying in Germany. Many say the country benefits, although calls are growing in universities for higher fees to help institutions compete internationally.

So as prices rise, students in Germany see costs soaring, and many struggle to make ends meet. Three-quarters plug the gap with part-time jobs - the highest level since 2003. Half of students sorely need that income in order to keep studying.

The problem is compounded by a decline in the number of people receiving financial aid. Germany's financial aid system makes a maximum of €649 available to students per month when their parents earn no or a low income. In 2016, just 377,000 students received any aid – down from 440,000 in 2012. And at the same time, the total number of students rose by 350,000 to a record 2.7 million – meaning the proportion receiving the benefits fell from 19 percent in 2012 to 14 percent.

Quelle: dpa
The hard part isn't necessarily in the library.
(Source: dpa)

That seemed like good news to politicians, who spun it as a sign of incomes rising and more people working. But experts say the causes are different.

In Germany, financial aid calculations are based partly on the assumption that a student's parent also receive child allowance. Up through 2006, the government paid these benefits for young people enrolled in higher education until the student turned 27. However in Germany, every third student is older than 25. Calls are now growing louder for the financial aid system to be overhauled.

But how to better tailor aid to students' real needs? Employers and Germany's main industry association wrote a policy paper arguing for more publicity around student loans, a low-interest federal student loan available for everyone, and converting child benefit into a basic budget.

Critics also point out that students receive other additional benefits from tax credits to discounted health insurance. One education expert at the IW economic institute, Christiane Konegen-Grenier, says the overall effect is students from high-income households are subsidized to the same extent as students from low-income backgrounds. A strong argument for a fairer system.

Barbara Gillmann covers politics for Handelsblatt in Berlin, Stephanie Ott is a journalist writing for Handelsblatt Global and based in New York. To contact the authors: [email protected] and [email protected]