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The essay surveys Hungarian higher educational reform in a historical perspective Higher education is a special branch of public administration, where investment to human capital is of corollary importance even if the educational, research and fiscal autonomy of the given institutions is fully respected. The author investigates the legal aspects of how government oversight and supervision (as envisaged in the communist model) has been dismantled over the past 25 years in Hungary. There is no doubt: with the development of institutional autonomy, state subsidies decline and higher educational institutions need to make an increasing effort to simultaneously maintain financial stability, meet market demands and reverse the current trend of deterioration regarding the quality of education. It is for this reason that the negotiations between higher educational institutions and the state must remain within the legal frameworks so that government supervision will not transform into total neglection.

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