HESA

Higher Education Strategy Associates

U.K. Tuition Fees: Early Results Are In

Unless you’ve been in a cave for the last 18 months, you’ve probably heard that the U.K. government is overhauling policies on student fees and government support in England and Wales (Scotland has its own arrangements). Public support for arts and social science students was eliminated, institutional grants were cut by 41% and, most strikingly, the limit on tuition fees was raised from £3,350/year to £9,000/year.

Since announcing the broad outlines of the policy fifteen months ago, the Cameron government has gone through some fairly bizarre twists and turns on certain details of the funding and tuition policies. At the end of the day, though, the final average tuition for the coming year came to £8,354, or about a 150% increase from last year.

For those of us who watch tuition fees for a living, this was a big experiment. Data from the competitive environment of the United States tends to show that even small changes in tuition fees can have significant effects on institutional enrolment, though usually through shifts from one institution to another rather than on aggregate enrolment. Large across-the-board tuition increases which affect the minimum price for all forms of higher education, on the other hand, presumably have more severe effects. But these are rarer and harder to observe, so this one-time “big-bang” in the UK seems like an ideal opportunity to examine the pure effects of a tuition hike.

Well, final application data was released yesterday.  Among 18 year-olds, this £5,000 (roughly $8,000) tuition increase has lowered applicant levels by just 3.6%, or about 8,000 students. Among older students – who tend to have less time to earn back their investments in higher education – the effect was significantly larger (on the order of 11%). Now, even a single student turned away for financial reasons is too many. But if an $8,000 net tuition increase only generates a net impact of less than 3% on traditional-aged students, and only 7% overall, that strongly suggests that tuition fees are not, on their own, a major deterrent to study.

So the next time someone suggest that the $250 tuition fee increase your institution is planning might have major effects on enrolment, there’s a simple reply. Such an increase would be 1/32nd of what was introduced in England and Wales. Assuming linear effects, a $250 increase might therefore be expected to reduce overall enrolments by between 0.2% and 0.25%. On an incoming class of, say, 3,000 undergraduates, that’s between six and eight students. We’d guess it’s not beyond anyone’s wit to design some student aid to offset that kind of effect.

U.K. tuition policy isn’t something we’d endorse, but clearly it’s not as harmful as some would lead us to believe, either. Real life’s just not that simple.

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3 Responses to U.K. Tuition Fees: Early Results Are In

  1. tim peters says:

    Forgot to say – the reason they do it as a “loan instead of just a straight tax is so that students can’t avoid repaying it by going abroad which they could if it was a tax, because (ulike places like USA) we don’t have to pay tax on our world wide income

  2. Alex Usher says:

    The UK system is not as different from North America as you seem to think.

    Most students here get student loans to pay for their tuition at some point, which is essentially how UK tuition fees are paid for. So that;s not really that different.

    But loans just provide liquidity. They do not make education cheaper in the long run (though subsidies like loan forgiveness do – and we have that, too, though it works a bit differently).

    Also, different tuition fees within a country aren’t unique to the UK, either. In the US, the gap between state fees in the northeast on the one hand and south and west on the other is several thousand dollars; in Canada, the gap between top and bottom is about $4-5000. All US states charge out-of-state fees to people coming in from abroad; in Canada, two provinces do the same.

  3. Pingback: An Update from England | HESA

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