The case of Hessen

This case illustrates the political disagreement in Germany concerning the issue of university tuition fees. The first discussion, started after the change of balance that took place in September 2008 between the parties represented in parliament, concerns the abolishment of university tuition fees[1]. The abolishment of the university fees was proposed by Social Democrats, the Left, and the Green Party. The Conservative Party (CDU) and the Liberal Party (FDP) stood in favor of the university fees. The expert evaluation made earlier in the same year criticized the proposals of the Left and of the Social Democrats/Greens[2] . Their proposals referred to equality and the role of the state. The Liberals argued for greater university autonomy, a closer link between university tuition fees and the concrete steps for improvement of the quality of higher education, and for the responsibility of the university. The Free Democrats appealed for “shared responsibility of the higher schools” (Mitverantwortung der Hochschulen) for guaranteeing social acceptability.

The different titles reflect different concepts of justice and equity and the aim of the proposals is quite different[3]. A key term used by the Social Democrats is access to higher education for strata that are lower educated. The Free Democrats referred to the function of social control. Three years after the introduction of student tuition fees, a report should be submitted to the Landtag concerning the social situation and the social composition of the students. On the basis of this report decisions should be taken as to whether the effects of selectivity are occurring in the educational system. This should be done on the basis of a comparison between the social composition of the students prior to and after the introduction of the fees. The responsibility for this is shifted from the government to the university.

The case of Saarland

The example of Saarland’s parliamentary decision on higher education policies further illustrates the social acceptability of university fees as a recognized aim. The Parliamentary Commissions on Economy and Science turned to the Applied Institute for Higher Education while preparing a stand on the proposed new law.  The Law was passed by the CDU fraction in Parliament and concerns amendments of the Higher Education Act of the Länder[4]. The provision was included that the interest on educational loans will be payable by the state budget and not by the individuals. The expert evaluation was positive and considers the Law to be of key importance for the social acceptability of tuition fees. Working in the same direction are the open access to loans, flexibility and the individual scheme for repayment of loans, and the minimal income above which students are required to repay the loan. Additional effects have been stressed: enlarging the circle of users of educational loans, minimizing unintended effects such as renouncing the pursuit of higher studies for financial reasons, alleviating the financial burdens for the students and their families during the period of study. Also mentioned is a marketing advantage of the new draft law with regard to the competition between the federal states for new students.

Student loans

While the scholarship system in Germany is still being developed, student loans have in the meantime become a useful supplement to traditional forms of funding (student jobs, parental support, BAföG bank loans, etc.), and they are available to everybody. The Federal Act for Individual Support (BAföG) of the education works on the federal level; it was passed in 1971 (BGBl. I S. 1409), and revised in 1983 and, most recently, in 2008[5]. The Act provides a practical argument in support of the thesis that access to education must not be restricted by the financial constraints experienced by the students, their parents, or partners. This act targets support at individuals, not at educational institutions, which is an important characteristic relevant for the present research. 

Parallel to the Federal act, a Program for Loans for Education has been implemented since 2001. The loans can be obtained through this program irrespectively of students’ and parents’ income.  Different federal provinces provide different reductions of interest rates.  Since 1 April 2009 new regulations have come in force. The institutions empowered are the federal government and the bank responsible for the Loans Program (Kredit Bank für Entwicklung)  The changes are targeted more flexibly, at the individual needs of people for a loan, and they make loans conditional on the amount needed and the way of receiving, favoring students preparing bachelor’s degrees. In comparison, the direct payment of tuition fees provided by the Bulgarian Student Loan Act is applied for the private universities. In 2007 this type of loan was used by 70 000 students in Germany.  Beside bank loans, there are additional options for postponed payment of education in Germany, such as credits and funds (Career Concept)[6] directed to the students to ensure wider access to education.

The test for the quality of student loan offers across Germany is how well they meet the needs of students. The comparison is based on indicators like: the purposes of the loan - overall living costs, tuition fees, stays abroad and internships[7]. Additional indicators used in the test are: whether the obtainment is tied to specific disciplines, to the selection of a particular university, whether they can be used for visits abroad. The student loans and the other forms of individual funding were evaluated with respect to availability, associated costs, independence from parental support, risk limitation and flexibility. The conclusion is that students’ preferences are oriented towards options offered by the state. The leading values that determine the choice of financial instrument are: enhancing the access to education and independence from the parents (Müller, Langer 2008:15).

Bulgaria – the case of the Student Loan Act (2008)

The Parliamentary discussion

The critical question for this part of the research is: Why was it not possible to pass the Student Loan Act for such a long time – more than 10 years, considering that student loans have existed in Germany since the 1970s? One possible reason is the low mutual trust among the political actors. The representatives of the Bulgarian Socialist Party (BSP) use the institutional   change in education concerning the relations between the state and the higher schools as a legitimizing resource for its own interest (Hadjililova 2005: 61). The attitude was the same regarding the Student Loan Act. The BSP, then in opposition, proposed the law in  1998 and 1999. Both times the proposals were not even discussed in the plenary hall. In 2002 BSP again made the proposal under the parliamentary majority of two liberal parties (NDSV+DPS). The law was rejected at the first reading. In 2005 the law was proposed by the Council of Ministers and accepted at first reading (16.03.2005). However elections postponed the next steps of its adoption. In 2008 the law was again proposed by the Council of Ministers, but this time the government was a coalition between Socialist and the two liberal parties (BSP, NDSV, DPS). After three different parliaments and three different governments, consensus has finally been achieved about the law. But the demonstrated interest in the law was never great.  At the second reading slightly more than half of the parliamentary members were present (Tabl.3). The conclusion is that reaching consensus between political parties has been an extremely long process.

Table 3. Parliamentary votes for the Student Loan Act (2008)

	For	Against/ abstained
Budget Commission	17	-
Educational Commission	14	-
First reading	159	2
Second reading	138	-

The Legal Discourse

The representative of the party “Ataka”, an opposition party that uses leftist rhetoric, supported the proposal. “This is among the rare cases when we will vote together with the ruling majority in support of the Law. The reason for this is the transition from a monetary Bulgaria to a social Bulgaria…This is the first sign of the transition from a country of brutes to a country of people.”

The representative of the BSP’s “Coalition for Bulgaria” suggested expanding the grounds for canceling the obligation of repayment of the loan, so as to include students who are willing, upon completing their studies, to work in municipalities with a population of less than 50 000 inhabitants, and graduates in disciplines and professions that are necessary but not preferred by students.  The arguments and suggestions were not accepted during the debates and were perceived as reminiscent of the planned economy of the past. The BSP is heterogeneous in its ideology, so not only the opposition but some MPs of the BSP itself were against the proposal.

The representatives of the “Movement for Rights and Freedom” (DPS) supported the law for its quality of limiting the unfair competition among universities and strengthening the financial autonomy of the universities. These effects, however, are stated but not guaranteed through any specific mechanism. For example, there is no provision for introducing a voucher system that would allow state financing to follow students’ preferences for a university. The principle of equal access should be complemented by benefits allotted to people with high academic achievements (implementation of meritocratic criteria). The suggestion was that high grades should lead to canceling the repayment of the credit. This suggestion was not accepted due to doubts concerning the quality of evaluation in different universities.

Distrust in the law prevails in the comments coming from the right-wing party “Democrats for Free Bulgaria“ (DSB), which asserted that: the government intends to finance education in a non-transparent way through specific banks, the Law is not social but socialistic, the role of the state as a guarantor of the credits amounts to the provision of “social crutches”. The conclusion of the MPs was: “The Bulgarian people cannot be led out of the crisis by persons relying on social crutches, no matter from what direction these are offered”. The opposition supports the Law as an additional option for increasing the individual’s ability to choose. However there is strong doubt that the Law will be practically implemented. The comments of right-wing opposition parties indicate that the low level of social trust explains the poor performance of the reforms aiming to enable individuals to access missing resources.

The mutual mistrust between the parties, the lack of a clear ideological divide, and the reminiscence of socialism, prevail over considerations of the social acceptability of the tuition fees. Distrust between the political parties blocked the inclusion within the Law of various options that exist in more stable democratic societies.  The role of the state is viewed as a central one. The interests of universities, banks and students were not at all articulated during the parliamentary debates. The interests of specific groups could not be identified in the discourse. None of the parliamentary members defended the interests of the banks, which are partners of the government in the implementation of the policy. This neglect for the interests of banks later resulted in the failure to implement the Law.

Public discussion

The low trust in the parties from the ruling coalition is a reason for the modest support for the legal norm in society: “During the mandates of the government led by NMSS and the government following it, that of the triple coalition (BSP, MRF, NMSS), the ruling parties were lobbying for the opening of several colleges in small towns in different regions …. The negative impact of the establishment of these new colleges is quite obvious: they lack well qualified university teachers as part of the permanent staff; the material resources and technical equipment is bad; there are greater opportunities for corruption in the form of paying to pass exams and obtain diplomas” (university professor).

The best formulated arguments in favor of the bank loans are given by economists. “Introducing schemes for student crediting could be looked upon as an effective and relatively just mechanism for financing higher education. Justice is ensured through the fact that the individual, not the taxpayer, shares in the cost of educational services, which improve an individual’s capacity to generate higher income in the future” (Industry Watch)[8].  But these opinions are not well accepted by the academic community. “Recently the economic approach to science and education has been predominantly taken. This is contrary to the step-by-step nature of education and science, which is based on knowledge, culture, intelligence.” (university professor)[9].  

In order for economic considerations to be accepted by wider social strata, the improvement of the public financing of the students should be correlated with the improvement of the quality of education. Students applying for loans need more guarantees that they will receive a high quality education, which will make possible a quick and smooth transition to the market and, respectively, better returns on their investments in higher education. The comparison with Germany indicates the important role of the universities for guaranteeing the link between loans (financing) and quality of education[10].

Student grants and credits are received directly by individuals. They are discussed as an alternative to other, indirect, forms of allotting funding to institutions, which create the possibility for the state to make decisions in a non-transparent way, which increases the risk of corruption. The practice of the Ministry of Education to make decisions about the support of the student campus and about subsidies for lodging has led to the bad conditions evident in the so-called “student’s town” in Sofia, conditions which provoked the student protest of January 2009. The summary of the pro and contra arguments concerning the Student Loan Act  are given in Table 4. Without introducing mechanisms for control, positive results cannot be obtained from the Student Loan Act. Such mechanisms are: competition between universities for attracting students by offering better quality of higher education; improvement of the quality of education by introducing student tuition fees.

Table 4.  Summary of the discussion concerning the Student Loan Act   

Pro	Contra
Increasing the financial autonomy of  higher schools	Corruption
Increasing the competition between the higher schools (including between private and state)	Higher schools of lower quality could obtain additional financial resource
Better (more just) public financing of higher education	Some students obtaining their education in Bulgaria subsequently emigrate and find jobs in other countries
Increasing the quality of education	Insufficient control over the quality of education
Ensuring equal access to higher education, minimizing the constraints of social origin	Some academic disciplines are necessary for society, but the individual returns on them are not very high
Increase of the personal involvement and motivation of the student	Combining work and study provides similar opportunities

Quality of the legal norm

The reason for the blocked implementation of the Students’ Loan Act is a “struggle between institutions”[11]. The institutions within the student loans system are: Ministry of Education and Science, higher schools, students, and the commercial banks. The establishment of a National Council for Student Crediting[12] is provided for by the law. Its composition, however, does not satisfy the banks. The representation of the different institutions in the Council is problematic for the bank institutions. The latter are represented by only two voices: this means they will not be able to introduce the rules and must follow decisions taken by other participants concerning, for example, the amount of bonuses for good service. The greater part of the suggestions of the Association of Banks in Bulgaria (ABB) has not been accepted. As a result, the legal norm could not be implemented. 

The proposals of the banks include the establishment of a register of loans; facilitating the procedure whereby banks receive payment for bad credits from the state; shortening the grace period; giving to the banks the permission to gather administrative taxes for loans management. Only the first proposal was accepted, that for creating a register of students taking credits. According to this rule, the banks can obtain an access to the register in real time. The banks want a one-month period for the cases, provided for by the Law, when the state has to repay the loans – (invalidity or birth of a second child).

"The law will remain no more than a good wish, if the banks are not adequately compensated for the risk and the cost of the resource", warned the bankers (CEO of bank and vice chairman of the Trustee Fund of ABB)[13]. This statement was made ten days after the law was passed by Parliament, but such a concern was not voiced during the debate. At the same time bank crediting of students as a relationship between the bank and individuals still exists but is not used very often. About 15 banks offer credits for students. Often families prefer direct consumer loans. In this case it is administratively easier to obtain a loan, but students are not parties to the contract at all; their parents are. Such loans do not stimulate the motivation of students; the higher quality of their educational involvement is not so important a value for them as independence from the parents, as indicated in the German evaluation.

Crediting through banks and without the intervention of the state depends on the family status: the banks require guarantees and this is usually given by the parents. State involvement is the new component in the policy under discussion. It is needed precisely in the cases when young people cannot rely on their family. The banks calculate the credit rating of their client. UniCredit Bank, for example, offers credit for students of the American University in Blagoevgrad. The fact is that many students are forced to work while pursuing their studies due to their shortage of financial resources. How often and in which cases this happens will be investigated through questionnaires addressed to students.