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The Higher Education Pact 2020 aims to equip the German higher education system for the challenges of the future. Between the years 2011 and 2020, for example, the number of first-semester students is expected to rise by 275,000. Additionally, international competition will make it necessary to further raise universities’ research profile. Accordingly, the Federal Government and the Länder have decided to create the financial framework conditions for more productive and internationally more prominent higher education institutions. After all, Germany has a steadily increasing need for highly qualified people in demanding occupations and there is an especially high demand for graduates in the so-called MINT subjects (mathematics, informatics, natural sciences and technology). Furthermore, the pact is also intended to promote equal opportunities for women.

Increase in number of student places

The Higher Education Pact secures a solid financial basis for an expansion of student numbers until 2015. In concrete terms, the Federal Government and the Länder are investing some 22,000 euros for each additional first-semester student during the first phase of the Higher Education Pact until 2010 and roughly 26,000 euros per place during the next phase until 2015. The funds provided by the Higher Education Pact give higher education institutions the opportunity to create new jobs and thereby improve their standing.

More funds for German higher education

The pact also envisages the introduction of what is known as overhead funding. This means that the third-party funds from the German Research Foundation (DFG) which previously only covered direct project costs, will be increased by 20% from federal funds. The additional money will give universities and colleges greater flexibility and enable them to develop viable institutional strategies. This will create greater competition in the German research system and a higher level of international competitiveness.

The decision in favour of so-called full-cost funding means that Germany has adopted the international practice. In financial terms, overhead funding involves some 1.7 billion euros of additional funding for higher education institutions. The DFG confirmed the positive effects of this measure on German higher education institutions in a 2009 report. Overhead funding will be comprehensively assessed at the end of 2013.