There are less prospective university applicants in Germany because of their tiered and somewhat controversial secondary education system. It does not have anything to do with tuition fees.<p>As for tuition fees, you can make a completely tax funded third level education system work. Developing countries do it all the time, successfully. You do this by restricting entrance to the brightest through a harsh selection process.<p>The problem with this is that in the long run you end up with a large percentage of the population who has only minimal education. People might sneer at somebody with a degree in English Literature but it does make a difference to live in a country where the majority have some tertiary level education experience, if only because they appreciate education more and can instil that sort of appreciation in their kids.