Project 6: Higher Education Funding and Reforms

Contact:

Ms Alissa Goodman, IFS and CEE Associate. Tel: +44(0)20 7291 4800 Email: alissa_g@ifs.org.uk

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There are a number of important dimensions involved in evaluating the likely impact of the 2006 reforms to HE funding. An important concern is what effect the changes are likely to have on HE participation, particularly amongst young people from low income backgrounds. On the one hand, young people will have more money available to them at university as a result of the reforms, alleviating possible credit constraints. But on the other hand, the cost of tuition will rise, and they will therefore have to take on more debt in order to finance their education. In order to shed light on the importance of these concerns the researchers will seek to evaluate the extent of which young people face credit constraints in making educational decisions. In addition, the impact of previous changes in higher education finance policy will be used to evaluate the likely effect of the previous changes.

The participation question is deeply connected with student's potential returns to higher education and to the operation of the loan repayment system. To fully understand how the repayment system will operate, researchers will develop new estimates of lifetime returns to HE for earners at different parts of the graduate earnings distribution. This work will also inform us as to the likely repayment profiles on student loans, and the likely cost of loan subsidies. It will also allow us to simulate the effects of various reforms to the loan repayment system on graduates and on the taxpayer.

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Related Discussion Papers:

The Role of Credit Constraints in Educational Choices: Evidence from NCDS and BCS70
Lorraine Dearden, Leslie McGranahan, Barbara Sianesi,  December 2004
Paper No' CEEDP0048: | Full paper (free)

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