The Organisation for Economic Cooperation and Development warned that several European countries risked endangering "the quality of the programmes offered" because they were neither increasing spending on higher education nor allowing universities to charge for their courses.
On average, universities in the United States spent 24,370 dollars (17,200 euros) per student per year in 2005, compared with 10,474 dollars across the 19 European Union countries that are also OECD members.
Just seven of those countries spend more than half of average American per-student expenditure on higher education.
Only Switzerland comes close to American spending levels, with the country's public universities dedicating 21,734 dollars to each student per year.
The OECD average for per-student university spending was 11,512 dollars.
According to the grouping of 30 developed countries, the proportion of OECD populations that attended university-level programmes increased to 57 percent from 37 percent between 1995 and 2005.
Faced with such a rapid expansion in higher education, governments have typically reacted in three ways -- Nordic countries have ramped up public expenditure, whereas other countries such as the United States and Japan have increased the up-front costs to students while offering loans and scholarships to the less well-off.
Several European countries have opted for a third policy choice by not increasing public spending on universities while also prohibiting institutions from charging fees.
Budgetary difficulties for universities in the latter group of countries, as a result are increasing, the OECD said, "which may ultimately endanger the quality of the programmes offered."
"While choices between greater public investments and a larger share of private money are difficult to make, doing neither in the face of the rising demand for more and better tertiary education seems no longer an option," it said in its report.