Apart from the production of knowledge by research activities the shaping of higher education systems and their institutions is associated with the socio-political task of guaranteeing the transfer of knowledge by academic teaching. Some recent and expected developments lead to the discussion of a more thoughtful handling of diverse (potential) student population: The anticipated shortage of skilled labour intensifies the discussion about teaching in the areas of science politics and university research. Although - for the time being - the total numbers of new students are increasing for various reasons, this has not been true for all regions of Germany (cf. Dohmen, 2010). Particularly, internationalisation and the process of admitting various target groups to university studies are suggested as possible solutions for cushioning the negative consequences of the demographic change.1 Both factors suggest that - to an ever more increasing degree - students with varying concepts and individual objectives, with different qualifications and capabilities will enter higher education institutions (HEIs). So, any discussion about the differentiation of the higher education system will imply at least two questions: Do we, firstly, expect any HEI to meet the specific needs of each and every student, or do we expect that starting from the differentiation between universities and universities of applied sciences there will be further types of HEIs, developing specific offers for specific target groups? And secondly, how will it be possible for us to take into consideration the consequences resulting from the choice of an institutional design, as to the successful graduation of the students of specific HEIs?In this essay2, we present two possible and already applied ways of recording the diversity of higher education systems at institution level and of taking such diversity into consideration, in terms of a performance rating. In the first section, we explain the underlying diversity concept. At the same time, we illustrate the connection between the differentiation of various types of HEIs, in particular between universities and universities of applied sciences, and the diversity of students using the German higher education system as an example. In the second section, we present a first option of recording institutional diversity developed in the European context: the so called U-Map classification3 of European HEIs, an example of the classification approach, in which HEIs are classified in different classes and/or types, following certain criteria. The third section introduces the Australian model which has been in use for more than a decade in Australia but has rarely been adopted in Europe. It provides a second and well-proven option of recording differences between HEIs. This option uses a performance-indicator based statistical balancing method which takes the composition of the student body into consideration. Based on the results, the HEIs are to be supported (financially) in order to be able to react adequately to the specific needs of their students, so that the latters' success in studying is made possible regardless of their individual qualifications (DETYA 1998). Weighting the pros and cons of the two presented approaches, we will discuss in section four if it might be worthwhile adapting the Australian approach to the German system.1. Diversity in the German higher education systemThe alternative approaches of describing the variety of HEIs and the subsequent fund distribution procedures, which are discussed in this article, are both based on the assumption that modern higher education systems need to fulfil a multitude of tasks for different target groups. For that reason, different types of institutions have been developed in higher education systems. Higher education systems are characterised by a more or less extensive institutional diversity.Institutional and/or external diversity in a higher education system is defined to be the degree of variance among the HEIs at a specific point in time, as opposed to internal diversity (van Vught 1996, p. …
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