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　　How Private Universities Could Help to Improve Public Ones

　　A.　　There are many rich Germans. In 2003 private assets are estimated to have been worth €5 trillion ($5.6 trillion)， half of which belongs to the richest tenth of the population. But with money comes stinginess， especially when it comes to giving to higher education. America devotes twice as much of its income to universities and colleges as Germany (2.6% of GDP， against 1.1%) mainly because of higher private spending—and bigger donations.

　　B.　　Next year's figures should be less embarrassing. In November Klaus Jacobs， a German-born billionaire living abroad， announced that he would donate €200m to the International University Bremen ( IUB )—the biggest such gift ever. It saved the IUB ， Germany's only fully fledged private and international university (with 30 programmes and 1，000 students from 86 countries) from bankruptcy. It may also soften the country's still rigid approach to higher education.

　　C.　　German higher education has long been almost entirely a state-run affair， not least because universities were meant to produce top civil servants. After 1945 the German states were put in charge， deciding on such details as examination and admission rules. Reforms in the 1970s made things worse by strengthening， in the name of democracy， a layer of bureaucracy in the form of committees of self-governance.

　　D.　　Tuition fees were scrapped in the name of access for all. But ever-rising student numbers then met ever-shrinking budgets， so the reforms backfired. Today the number of college drop-outs is among the highest in the rich world， making tertiary education an elite activity： only 22% of young Germans obtain a degree， compared with 31% in Britain and 39% in America. German universities come low in world rankings， so good students often go abroad.

　　E.　　In the 1980s it was hoped that private universities might make a difference. Witten-Herdecke University， founded in 1980， was the first. Teaching at IUB， which will change its name to Jacobs University soon， began in 2001. Today， there are 69 (non-faith-based) private institutions of higher learning， up from 24 a decade ago. There is growing competition， particularly among business schools.

　　F.　　At the same time the states have been introducing private enterprise into higher education. In 2003 Lower Saxony turned five universities into foundations， with more autonomy. Others have won more control over their own budgets. Some states have also started to charge tuition fees. And in October a jury announced the winners of the first round of the “excellence initiative”—a national competition among universities for extra cash.

　　G.　　Yet all this has led to only small improvements. Private universities educate only 3% of Germany's 2m-odd students， which may be why they find it hard to raise money. It also explains why many focus on lucrative subjects， such as the Bucerius Law School in Hamburg. Others have come to depend on public money. Only recently have rich individuals' foundations made big investments， as at IUB or at the Hertie School of Governance in Berlin.

　　H.　　Public universities， meanwhile， still have not been granted much autonomy. There is less direct control， but far more “administered competition”： a new bureaucracy to check the achievement of certain goals. This might all be avoided through price competition， but tuition fees， now €1，000 a year on average， are fixed centrally by each state. The excellence initiative is a mere drop in the bucket.

　　I.　　That is why Mr. Jacobs's donation matters. For the first time， Germany will have a private university worth the name and with a solid financial footing (if it keeps up its academic performance， that is： Mr Jacobs has promised to donate €15m annually over the next five years and another €125m in 2011 to boost the endowment， but only if things go well)。 If it works， other rich Germans may be tempted into investing in higher education too.