The study showed that since 2008, per-student spending in Germany has dropped by ten percent, as the state struggles to keep up with a surge in demand for university-level education.
Germany did increase its spending on higher education between 2008 and 2013 by 16 percent, the report showed, but this failed to keep up with the 28 percent increase in the number of young people choosing further education.
A large part of the reason for this comparative under-funding is the lack of student fees, the report shows. While on average in OECD countries 30 percent of a student's education is funded by private sources, namely fees, in Germany only 14 percent of funding is private.
On the other hand, pre-school education in Germany is funded well above the OECD average by private means, a fact which the OECD says reinforces social inequality.
The children of well-educated families are allowed to study for free, rather than being given loans which they can pay back dependent on income, while kindergarten fees constrain less-well off parents of young children, OECD education expert Andreas Schleicher said in Berlin on Thursday.
Figures published by the Federal Statistical Office last week showed that the educational level of a child's parents still plays an important role in its educational advancement.
Just 14 percent of kids whose parents do not have university degrees go down the path towards university themselves, the figures showed.
But the OECD report also shows that 94 percent of three-year-olds attend kindergarten in Germany, well above the OECD average of 71 percent.
Nonetheless the report, Education at a Glance 2016, did generally place Germany well in comparison with other OECD countries.
It particularly praised Germany for the fact that its vocational training system meant that the country has a very low unemployment rate.
Only 8.4 percent of Germans between the ages of 15 and 29 are either not in employment or not in full-time education - that is the lowest in the OECD except for Iceland, the Netherlands, Switzerland and Luxembourg.
It is also a considerable improvement on a decade ago when 15 percent of young people were neither employed nor in education.
According to Schleicher, this is "the outstanding strength of the German education system."
The report also points out that German teachers are some of the best paid in the OECD, and that salaries are equivalent to those in other highly qualified professions.
At the same time, the German education system expects teachers to perform too many teaching hours, the report argued.