London School of Economics Centre for the Economics of Education LSE
Centre for the Economics of Education  (CEE)

Abstract for:

Paying for Higher Education

Gill  Wyness,  March 2015
Paper No' CEPEA026: | Full paper (pdf)
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Keywords: Higher Education; University fees; government policy; Post Graduate; #ElectionEconomics

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The UK Higher Education sector has changed radically as a result of Coalition Policies – most obviously through the dramatic increase in the tuition fee cap from £3,375 to £9,000 per year. However, the greatest issue arising from the reforms has not been university applications, which have continued to grow, but the sustainability of the system. Recent estimates show that the reforms have generated only a small taxpayer saving because of the high cost of financing tuition fee loans – nearly three quarters of graduates will not clear their government-backed loans before they are written off. For these reasons, the level of tuition fees looks likely to be a pre-election issue. The Conservatives have refused to rule out an increase in the fee cap should they be elected – though by itself this is unlikely to bring in any extra taxpayer revenue since it would merely increase the amount of unpaid loans. The Labour Party, meanwhile, have yet to confirm their much-anticipated policy to reduce the fee cap to £6,000 a year. Such a policy is likely to be bad news for universities – who could see their 2012 funding increase reversed – but good news for would-be students.