Between 2016 and 2026, the Hungarian government executed one of the most extensive structural overhauls of higher education in Central Europe, transferring almost all state universities into so-called Public Interest Asset Management Foundations (KEKVA from now on). These KEKVAs are a unique Hungarian legal construct, technically classified as private-law entities, to which the state has outsourced its former public duties, primarily the running of universities, research, and culture. They were endowed with considerable public wealth, in the form of real estate and state-owned corporate shares, yet they operated outside the standard public procurement and transparency regulations that govern state institutions.
FIDESZ (ruling party of Hungary from 2010 to 2026) narrative framed this transformation as a necessary step toward modernization of higher education. The government promised universities more predictable funding and market-based operation by removing them from the rigid public financing. The reform also promised to boost competitiveness, improve market links, and bring higher education institutions closer to economic stakeholders. And, ultimately, to strengthen universities by ensuring the long-term legal and financial stability, shielded from changes in party politics.
However, beneath the rhetoric of administrative efficiency lays a well-engineered mechanism of state capture. The system reform was a constitutional manoeuvre designed to remove public assets and strategic decision-making from democratic oversight. By permanently transferring the governance of public universities to unremovable, life-long governing boards – heavily populated by sitting ministers, party loyalists, and politically connected economic figures – the political elite constructed a parallel power structure. University senates quickly lost their traditional autonomy. They were stripped fundamental rights such as budget approval and the election of rectors. To ensure its permanence, the government cemented the KEKVA system in cardinal laws, a legal barrier requiring a two-thirds parliamentary majority to alter, deliberately designed to outlast any regular change of government.
This internal restructuring triggered a direct conflict with the European Union. Recognizing the systemic conflict-of-interest risks and the hollowing out of public transparency, Brussels integrated the foundation model into its broader Rule of Law Conditionality Regulation. The subsequent freezing of billions of euros in EU cohesion and structural funds set a clear precedent in European governance. The systemic privatization of public authority and assets would not be financed by European taxpayers.
This carefully designed system, however, was shattered by the April 2026 elections. Tisza Party’s landslide victory granted them the supermajority necessary to rewrite the cardinal laws and begin dismantling the captured institutions. Yet, as the new administration focuses on satisfying Brussels’ financial transparency requirements to unlock frozen funds, a profound dilemma has emerged. While the financial structures of state capture are being swiftly and decisively untangled, meaningful educational reform still seems conspicuously absent from the political agenda.
Proof of Concept: How Public Money Lost its “Public Character”
The institutional architecture of the KEKVA network was not conceived overnight, it was first tested on a smaller, yet highly controversial scale. In 2014, the Hungarian National Bank (Magyar Nemzeti Bank or MNB), under the leadership of Governor György Matolcsy, established a network of six private foundations. The central bank funnelled approximately 260 billion HUF (approximately 840 million Euros at the time) – a sum exceeding the entire annual state budget for higher education at the time – into these newly created entities. The official justification was to foster an independent economic education curriculum to counter “failed neoliberal doctrines” and later finance the construction of a university campus in the city of Kecskemét.
However, as media reports raised questions about the foundations’ contracting practices and potential conflicts of interest, the government attempted to shield their financial operations through legislation. In 2016, a FIDESZ party MP submitted a proposal to classify the foundations’ expenditures as state secret, arguing that once public funds are transferred to an independent foundation, they fundamentally “lose their public asset character.” – a justification that quickly became a defining catchphrase of the Orbán era.
This mechanism drove the infamous MNB scandal. Hundreds of billions of HUFs in public funds were moved through foundation networks into luxury real estate, overpriced construction contracts, and unredeemed corporate bonds. The scheme was comprehensively documented by investigative journalists from the start and corroborated years later by an official State Audit Office report in 2025. The same year the news outlet Telex released a documentary film detailing the case (available with English subtitles). Although a final resolution has not yet been achieved, the new central bank leadership is actively working on recovering the assets. On October 21, 2026, authorities detained the former governor of the central bank, György Matolcsy over his alleged involvement in these transactions. A court officially arrested him two days later with charges of severe economic fraud and document forgery, while international arrest warrants were issued for key figures in the network, including his son.
Although the Constitutional Court ultimately struck down the initial legislative attempt to shield these central bank foundations’ finances, ruling that public money cannot simply be transformed to private wealth, the Kecskemét experiment provided the government with a blueprint. It demonstrated the utility of using higher education and private-law foundations to channel public wealth into politically controlled networks. When the government decided to scale up this concept to the entire Hungarian higher education system in 2021, they did not leave it to chance or future court rulings, they entrenched the new KEKVA model directly into cardinal law.
The Expansion of the KEKVA network
The so-called model change of Hungarian higher education unfolded through a series of increasingly aggressive phases. The government initiated the transition in 2019 with a single institution, Corvinus University of Budapest. Policymakers argued the new foundation model would raise the university’s international competitiveness.
The cautious approach ended in the spring of 2020. Six more institutions were abruptly transitioned, sparking the first major wave of resistance. The most iconic standoff occurred at the University of Theatre and Film Arts, where students blockaded the campus for 70 days and faculty members resigned in protest of the forced installation of a government-aligned curatorium.
Despite the backlash, the government pushed forward with its most radical move. In 2021, the parliament passed the cardinal KEKVA law, triggering a massive expansion. By August of that year, the vast majority of the country’s major regional science and medical universities were reorganized the foundation system. By the end of the transition, foundations-controlled institutions were educating more than two-thirds of all Hungarian university students, leaving only a few of the major universities under direct state maintenance.
The government consistently communicated to the international public that the transition to the KEKVA model was entirely voluntary, initiated by the universities themselves. However, many report states that the process was driven by severe financial conditioning and institutional pressure. Converting to the foundation model was the unspoken prerequisite for receiving promised state development funds and vital European Union grants.
Once the universities were forced into this new structure, the systemic issues of the KEKVA model became clear. Unlike Western universities, where the governing boards are typically large, rotating bodies that include internal academic representation and operate with limited mandates, the Hungarian KEKVA curatoria were established as five-member, life-long boards. The ruling party deliberately populated these boards with active ministers, such as Minister of Justice Judit Varga, Minister of Finance Mihály Varga, Foreign Minister Péter Szijjártó, Minister of Innovation László Palkovics, and Minister of Construction János Lázár, alongside state secretaries, ruling-party mayors, and key political loyalists like Political Director Balázs Orbán and former President János Áder. These boards were granted self-perpetuating powers that completely excluded both the state and elected university senates from future board selections. The legal framework allowed these politically appointed curatoria to strip the elected university senates of their most critical strategic powers, such as approving institutional budgets, rewriting organizational and operational rules, and crucially, they lost the final say in the election of university rectors.
The financing of these institutions was removed from a normative, transparent state allocation. Instead, the government established 15 to 25-year framework contracts and 3 to-6-year task-funding contracts with the KEKVAs, based individual financial bargaining. Some foundations were endowed with hundreds of billions of forints in state corporate shares and prime real estate, while others received little more than promises, creating an unjustified and politically motivated wealth gap across the higher education landscape. Furthermore, the government allocated nearly double the per-student funding to KEKVA institutions compared to remaining state universities, creating severe wage disparities that demoralized faculty and eroded the overall academic environment.
Effect on Students
The political narrative presented the KEKVA transformation as an essential step to elevate Hungarian universities into the global academic elite. However, empirical data and student experiences from subsequent years directly contradict this premise, exposing falling international rankings, isolation and systemic barriers to academic progress.
Trends in the QS World University Rankings for selected Hungarian universities (2017–2026). The chart tracks the global ranking of Corvinus University, Eötvös Loránd University, Budapest University of Technology and Economics, and University of Szeged. Source: QS Ranking
A primary measure of this promised competitiveness was international rankings. The Corvinus University of Budapest, the first institution to adopt the model in 2019, saw its position decline. The QS World University Rankings shows Corvinus dropping from the 700 to 800 ranks down to the 1000-1200 by 2023, and it has not recovered yet. Universities that remained under direct state control, such as Eötvös Loránd University maintained their global positions or even saw their rankings improve.
The structural changes led to direct consequences for students and researchers. In December 2022, the Council of the European Union suspended 21 KEKVA universities from receiving new Erasmus+ and Horizon Europe funding. The EU criticised the lack of transparency and the presence of political appointees in the curatoria as an unacceptable conflict-of-interest risks.
Instead of changing the university structures to meet EU requirements, the Hungarian government launched a fully state-funded alternative called the Pannónia Scholarship Program. Government officials claimed this new program was more successful than Erasmus, emphasizing that the 8,115 mobilities recorded in 2024, across the 21 KEKVA universities under Pannónia doubled their participation compared to their final year of Erasmus before the restrictions.
Global destination map of the Pannónia Scholarship Program. Source: Tempus Közalapítvány
In practice, however, Pannónia never had a realistic chance to provide an equivalent alternative to the European network. Erasmus+ programs still managed over 36,000 mobilities across Hungary in 2024, engaging both high school and university students and teachers. According to the National Union of Students, international mobility has remained extremely low, never exceeding 1.5% of the total Hungarian student population. which is nearly half the rate recorded in a regional peer of comparable size, the Czech Republic. Although Pannónia offered destinations in Africa, Asia, and Latin America, it cut students off from the integrated European higher education network. Similarly, the ban on Horizon Europe severely damaged academic research, forcing the government to introduce a domestic substitute, which could not prevent European consortia from systematically excluding Hungarian research teams and causing multi-million-euro losses in international grants.
Applicants and admitted students in Hungarian higher education (full-time, 2000–2025). Source: KSH 23.1.1.19.
The foundation model also failed to stimulate broader educational mobility or enrolment growth. Some state that the stagnation in student enrolment between 2014 and 2023 was a deliberate policy choice aimed at diverting young people toward vocational labour. Prime Minister Viktor Orbán repeatedly devalued academic credentials, claiming that an economy driven by university graduates would lead to national ruin. He publicly asserted that university applicants trusted a piece of paper over hard work. Instead, the government glorified vocational paths, declaring that the future belonged to skilled trades. This anti-university rhetoric was driven by the ruling party’s electoral realities. For years, polling data has consistently shown that Fidesz’s support base strictly divides along educational attainment, remaining demonstrably higher among voters with lower levels of education.
While public universities faced severe funding constraints, the state redirected over 140 billion HUF into vocational education. They introduced specialized scholarships, worker loans, and tax exemptions for young vocational workers. Consequently, Hungary’s tertiary education attainment rate stagnated and reached merely 32.6% by 2025, falling behind regional competitors and remaining significantly below the European Union’s 45% target.
Tertiary educational attainment among 25-34-year-olds in Europe (2025). The map shows a European comparison on the percentage of young adults holding a degree from a higher educational institution. The color scale indicates attainment levels, ranging from red for the lowest percentages to green for the highest. Source: Eurostat: edat_lfse_03
Steps Since the April 12 Elections
The elections of April 12, 2026, gave the new Tisza administration a mandate to dismantle the parallel state architecture built over the previous decade. The government wasted no time tearing down the financial and legal layers of the KEKVA system.
They established a clear legal distinction early in the legislative process. Universities received a one-year grace period to transition back to the state or to traditional foundation models. Non-university KEKVAs, however, faced immediate closure. By August 31, the Budapest Metropolitan Court dissolved 14 major non-university foundations without legal succession. This move transferred 1284 billion HUF (roughly 3.2 billion Euros) in corporate shares, real estate, and cash back to state control.
For the universities, the new government appointed transitional governing boards through open application processes overseen by the Ministry of Education. Their mandate is strictly administrative and restorative. They are conducting comprehensive asset audits, terminating overpriced contracts signed by the previous regime, and preparing the institutions for a return to normative public funding.
European officials responded positively to these financial changes. On September 23, 2026, the European Commission officially advised the Council to lift the 2022 protective measures under the Conditionality Regulation, unlocking 4.2 billion Euros in suspended Cohesion funds and restoring full access to the Erasmus+ student exchange and Horizon Europe research programs for Hungarian universities.
The rapid reversal of the KEKVA system highlights a central problem of Hungary’s educational policy in the years following 2026. While the financial and administrative structures of state capture were dismantled to satisfy Brussels and recover frozen funds, higher education itself has once again been sidelined as a primary arena for broader societal transformation. By reducing the university question to an exercise in asset recovery and legal sanitation, the new administration has secured immediate fiscal stability. However, the spark of a comprehensive, forward-looking vision for academia, pedagogical modernization, or deep educational reform has not yet taken shape.
Hungarian Higher Education Prospects
The departure from the foundation framework opens a transitional phase in which the future trajectory of Hungarian higher education will be defined by the legislative commitments of the new administration. Although public education and child welfare dominate the Ministry’s agenda, policymakers have introduced clear regulatory goals for universities. Minister Judit Lannert announced that the administration will draft a brand-new Higher Education Act designed to guarantee institutional autonomy, and transparent financing. Emphasizing that Hungarian higher education must be brought back into Europe, Lannert pledged an end to the era of unilateral government dictates. State Secretary for Higher Education, Sándor Katz detailed the specific operating parameters of the upcoming system. While the KEKVA structure is being eliminated, the administration intends to retain the multi-year task-funding contracts that offer universities long-term budgetary predictability without traditional budgetary rigidity.
While these legislative and financial promises remain in their early stages of implementation, their broader political resonance is already reflected in the changing attitudes of Hungarian youth. Survey data reveals a dramatic shift in the outlook of young Hungarians aged 16 to 24. Between 2023 and 2026, the proportion of youth who envision living in Hungary ten years from now nearly doubled, rising from 25% to 45%. Those planning to work abroad dropped from 57% to 32%. Furthermore, two-thirds of young respondents expect significant improvement about the country’s future over the next decade.
This surge in youth optimism does not signify the complete transformation of the broader economy or even higher education. Reforms, salary adjustments, and scholarship improvements are still works in progress. Rather, this optimism is rooted in a profound shift in the country’s outlook and the revival of genuine hope. Young Hungarians are no longer planning their futures around exit strategies. They are planning around the belief that their country can finally build a democratic and European future. How long this optimism will last, remains to be seen.