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September 20, 2018

Tuition Fees: Is means-testing the answer?

Tuition Fees: Is means-testing the answer?

Poorer students should receive free university education or subsidized tuition fees, a report finds.

The Higher Education Policy Institute (HEPI), a think tank, has called for the reintroduction of lower fees, or no fees, for young people from disadvantaged backgrounds in the UK.

The policy was scrapped in England in 2006, whilst targeted free tuition has since become popular in Canada, Chile, Italy, Japan, South Africa, and the US. 

The report estimates that 40–45% of student loan debt in the UK will never be repaid, and they claim that the expenditure on student loans could instead be reclassified as public spending.

HEPI say “there is far more value for money in reducing or eliminating net tuition for low income students.”

Poorer students are no longer offered free maintenance grants either, they now receive these in the form of loans, which ultimately leaves the poorest students with the highest debts. 

Student loans start being paid off once the payee begins earning more than £25,000 a year, or the debt is completely wiped after 30 years. 
HEPI say that it would be more straightforward to avoid tuition fees from poorer families, suggesting that the government pay their tuition directly to the university instead of through loans. 

This would be cost effective for the government because it focuses help on those least likely to repay all their student debt. As well as preventing higher debts from falling into the hands of poorer people. 

According to the report, targeted free tuition would keep universities well-funded whilst smoothing the path to university for disadvantaged students. 

In his IZA World of Labor article, Douglas Webber recognizes that while “education remains the most certain path to financial stability,” the benefits do not outweigh the costs for everyone “in light of high tuition costs and different rates of return.” 

Webber provides an alternative idea on how tuition fees should be priced, saying that “understanding how the returns differ is key to efficient pricing of tuition.” He believes that instead of subsidizing degrees for poorer people as the report suggests, that “charging more for degrees with higher rates of return” may be the answer. 

Nevertheless, the report concludes that “targeted tuition can provide an answer to the dual challenge of needing sufficient resources for high-quality teaching in mass higher education systems and persuading potential students from the poorest families that higher education is for them.” 

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