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Financing Higher Education: The Options

Nicholas Barr

in The Welfare State as Piggy Bank: Information, Risk, Uncertainty, and the Role of the State

This chapter draws together economic theory and the experience of different countries, and discusses how higher education might be organized and funded in ways that are efficient and equitable, ... More

This chapter draws together economic theory and the experience of different countries, and discusses how higher education might be organized and funded in ways that are efficient and equitable, taking account of information problems and other technical problems such as externalities. Issues discussed include the role of market forces, who should pay, and the role of the state in a market‐oriented system of higher education. Countries discussed include the UK, USA, the Netherlands, Sweden, Australia, and New Zealand. The chapter also discusses misleading guides to policy design, and concludes by setting out a strategy for financing tertiary education involving tuition fees, income‐contingent student loans, and active measures to promote access.Less

Education Policy, Student Migration, and Brain Gain

Alexander Haupt, Tim Krieger, and Thomas Lange

in The Mobility of Students and the Highly Skilled: Implications for Education Financing and Economic Policy

Presenting a novel channel for brain gain, this chapter expands the coverage of the book. It raises the question whether the countries of origin also benefit from education policies determined by the ... More

Presenting a novel channel for brain gain, this chapter expands the coverage of the book. It raises the question whether the countries of origin also benefit from education policies determined by the host country. How does increasing student migration from a less developed to a developed country alter the education policy in the developed country, and how does this policy changeaffect human capital and welfare in the two countries?It isshown that a higher probability that international students stay in the host country after graduation incentivizes the host country to improve its education quality. That higher education quality in turn raises the human capital of all students, including returning students. As long as the permanent migration probability is not too large, this positive quality effect increases human capital and welfare in both the less developed country (LDC) and the developed country. Thus, a brain gain to the LDC occurs.Less

Tuition Setting in Practice

in Public No More: A New Path to Excellence for America's Public Universities

This chapter analyzes tuition fee settings in public universities in the U.S. It analyzes tuition fee responses needed to offset the decline in state subsidies and discusses the factors that are ... More

This chapter analyzes tuition fee settings in public universities in the U.S. It analyzes tuition fee responses needed to offset the decline in state subsidies and discusses the factors that are needed to be c onsidered in determining tuition fees. The analysis indicates that large percentage increases in tuition fees are necessary to maintain current university budgets in response to decreases in the public subsidy and that gifts and entrepreneurial programs are unlikely to generate sufficient revenue to fill the void created by the loss of subsidies. This chapter explains the role of tuition elasticity in determining the percentage increase in tuition necessary to offset subsidy reductions.Less

The Causes and Consequences of the Growth in International Students in Higher Education

Richard Murphy

in The Mobility of Students and the Highly Skilled: Implications for Education Financing and Economic Policy

Research on immigration has extensively investigatedthe consequences of low-skill labour immigration on native workers. Less attention has been paid to other immigrants. This chapter considers the ... More

Research on immigration has extensively investigatedthe consequences of low-skill labour immigration on native workers. Less attention has been paid to other immigrants. This chapter considers the effects of student immigration on the higher education sector. Though with a focus on England, the study is relevant for any higher education system where there has been a rapid and sizable influx of overseas students. In the UK, the growing international demand for a high quality degree coupled with regulations implies that recruiting more overseas students is the most effective way of increasing university revenues. Institutional features and statistical evidence support that conclusion.Moreover, using population administrative data of the UK higher education system, significant positive correlations between changes in the number of overseas students and in the number of domestic and European students are found.Less

Financing Higher Education When Students and Graduates Are Internationally Mobile

Marcel Gérard and Silke Uebelmesser

in The Mobility of Students and the Highly Skilled: Implications for Education Financing and Economic Policy

With the general premise that cross-border mobility affects the public provision and financing of higher education, this chapter compares an old and a new paradigm. In the old paradigm, students ... More

With the general premise that cross-border mobility affects the public provision and financing of higher education, this chapter compares an old and a new paradigm. In the old paradigm, students remain in their country of birth for education and later career. Public financing of higher education with no or little private contribution is, therefore, like an implicit contingent loan that students repay after graduation. In the new paradigm, cross-border mobility involvesat least three countries: the student’s country of origin for pre-tertiary education, the host country for higher education, and the destination country for post-graduation career. In this context, a host country is not incentivized to provide a socially efficient quantity of higher education when numerous foreign students return home after graduation. For improving efficiency, avenues are explored which provide decentralized devices approximating the efficient centralized one, like substituting the host country principle by the origin country one. This, however, does not resolve all the issues. Making the students financially responsible is the most straight forward approach. There is indeed a growing trend toward increasing student contribution. Tuition fees can, however, be both inefficient and unfair with liquidity constrained individuals. There are better instruments, in particular contingent loans or Bhagwati taxes.Less

Challenges Facing Public Research Universities

in Public No More: A New Path to Excellence for America's Public Universities

This chapter describes the evolving external educational environment and the tactical responses to it made by public research universities in the U.S. It considers the perceptions of and reaction to ... More

This chapter describes the evolving external educational environment and the tactical responses to it made by public research universities in the U.S. It considers the perceptions of and reaction to rising tuition fees and university responses to declining state support and discusses the actions necessary to sustain the quality and financial health of these universities. This chapter also suggests that public universities' emphasis on tuition could shift students' attention to private universities that can better respond to their needs and societal priorities.Less

How is University Teaching Funded in England?

Claire Crawford, Lorraine Dearden, John Micklewright, and Anna Vignoles

in Family Background and University Success: Differences in Higher Education Access and Outcomes in England

Chapter 3 lays out, as simply as possible, the essential details of the system of funding university teaching in England, and in particular the major changes that have occurred in the last 10–15 ... More

Chapter 3 lays out, as simply as possible, the essential details of the system of funding university teaching in England, and in particular the major changes that have occurred in the last 10–15 years—notably the new fees and income-contingent loans to cover both fees and living costs. The situation is then compared with that in the rest of the UK and in other rich industrialized countries in Europe and elsewhere, showing England to be unusual. The chapter shows how financial support for students varies for young people with different levels of parental income. It then looks at the financial consequences for graduates of the changes in the system, asking how much, across their working lives, will graduates be paying back in loan repayments? And how does the level of repayments vary—how much will graduates with high lifetime earnings repay and what about graduates who earn much less?Less

At the Point of a Larger Conflict

James Herbert

in Creating the AHRC: An Arts and Humanities Research Council for the United Kingdom in the Twenty-first Century

This chapter discusses the existence of support for the AHRB during its struggle for recognition and acceptance. In January 22, 2003, the White Paper on the Future of Higher Education created uproar. ... More

This chapter discusses the existence of support for the AHRB during its struggle for recognition and acceptance. In January 22, 2003, the White Paper on the Future of Higher Education created uproar. This furore over the White Paper was due to concerns over the government's proposal to allow universities to raise fees and to provide deferred loans by which the students might meet those charges. The uproar was also heightened by the government's declared intention to concentrate on research funding. Amidst the din over the AHRB's establishment and the government's intention of giving research funds to research councils, the AHRB found immense support from various groups. Iain Gray, Scotland's Minister For Enterprise and Lifelong Learning, expressed support for the creation of the AHRB. The same warm response to the White Paper and to the prospect of the creation of the AHRB was also expressed by the RCUK Strategy Group which emphasized the importance of arts and humanities as equal to those of engineering, science, and technology. The same response was also accorded by the House of Commons. In addition to the positive responses to the proposal of creating a humanities research council, UK government and political officials were beginning to include the White Paper recommendations into their debates. By mid-summer, widespread support for the AHRB was garnered and on January 27 2004, a second reading of the Higher Education Bill approved the creation of the Arts and Humanities Research Council.Less

A Framework for Defining, Creating, and Distributing Value

in Public No More: A New Path to Excellence for America's Public Universities

This chapter proposes a framework for creating and distributing value in public universities in the U.S. It suggests that the strategic planning process should emphasize defining value and ... More

This chapter proposes a framework for creating and distributing value in public universities in the U.S. It suggests that the strategic planning process should emphasize defining value and establishing competitive distinctiveness and highlights the importance of determining which program to offer and eliminate. It also discusses the need to develop a university vision and make key decisions about program scope, quality, and tuition fees. This chapter also stresses the need for university leadership to recognize that tough decisions are necessary to maintain the discipline required to adopt a unique positioning strategy.Less

Introduction: Challenges, Solutions, and Themes

in Public No More: A New Path to Excellence for America's Public Universities

This introductory chapter discusses the theme of this volume which is about the solutions to the challenges facing public universities in the U.S. in light of declining state support. It highlights ... More

This introductory chapter discusses the theme of this volume which is about the solutions to the challenges facing public universities in the U.S. in light of declining state support. It highlights the unsustainability of dependence of state subsidies and argues that the recent cuts in public university funding are permanent and that it could significantly affect higher education. This chapter also considers the potential consequences of replacing state subsidies with tuition fees as sources of funding.Less

Why and How do Governments Fund Higher Education?

Claire Crawford, Lorraine Dearden, John Micklewright, and Anna Vignoles

in Family Background and University Success: Differences in Higher Education Access and Outcomes in England

Chapter 2 explains why governments fund the teaching function of universities and student living costs and the ways in which funding can be provided. Reasons for government intervention include the ... More

Chapter 2 explains why governments fund the teaching function of universities and student living costs and the ways in which funding can be provided. Reasons for government intervention include the ‘social returns’ to higher education (the benefits to society as a whole), failures in credit markets (the difficulty in getting a loan from a private supplier in the absence of suitable collateral), and concern over equity between people from different family backgrounds. Three approaches to funding are described: (i) ‘free’ university funded by general taxation, (ii) government loans to students to be repaid after graduation, and (iii) a graduate tax—‘free’ university but with higher taxes on graduates. The chapter explains how fees plus loans to cover fees can be part of a policy that also aims to reduce the socio-economic gap in university entry—provided the loan has a particular form known as an ‘income contingent’ loan.Less

Have Recent Funding Reforms Widened the Family Background Gaps?

Claire Crawford, Lorraine Dearden, John Micklewright, and Anna Vignoles

in Family Background and University Success: Differences in Higher Education Access and Outcomes in England

This chapter explains how family background gaps in England in application and entry to university, and in the status of university entered, changed over the 10–15 years spanning the two big funding ... More

This chapter explains how family background gaps in England in application and entry to university, and in the status of university entered, changed over the 10–15 years spanning the two big funding reforms described in Chapter 3. The chapter explains how the increases in tuition fees that occurred in 2006 and 2012 do not appear to have widened the socio-economic gap in university participation—although the analysis is careful to also point out the ‘soft’ nature of the evidence that is so far available. The picture for young people, the book’s focus, in fact altered little. Indeed, the participation rates of those from more disadvantaged backgrounds increased more rapidly than the participation rates of those from more advantaged backgrounds over this period, leading the socio-economic gap in university applications and entry to close a little bit.Less

Family Background and University Success—What are the Issues?

Claire Crawford, Lorraine Dearden, John Micklewright, and Anna Vignoles

in Family Background and University Success: Differences in Higher Education Access and Outcomes in England

This chapter sets the scene for the book. It describes the size of the family background gaps in entry to any university in England and to high status universities, before showing how these gaps have ... More

This chapter sets the scene for the book. It describes the size of the family background gaps in entry to any university in England and to high status universities, before showing how these gaps have changed over time and how they compare with those in other countries. The reasons why these gaps ‘matter’ are discussed. The chapter then summarizes the key features of the book’s approach and contribution—a focus on quantitative and up-to-date evidence—and the contents of each of the other chapters, emphasizing that the book’s analysis goes beyond application and entry to university to consider also the differences by family background in university drop-out, degree class, and subsequent labour market success.Less

Epilogue: Redbrick since 1997

William Whyte

in Redbrick: A social and architectural history of Britain's civic universities

This final section surveys the development of the higher education system since 1997: showing the continued resurgence of Redbrick as the dominant model for Britain’s universities. That this has been ... More

This final section surveys the development of the higher education system since 1997: showing the continued resurgence of Redbrick as the dominant model for Britain’s universities. That this has been the case despite a period of remarkable change illustrates both the resilience of the civic universities but also the surprising conservatism even of governments which claim to be radical. It also highlights the growth of nostalgia for Redbrick, an attitude which ignores the very real problems presented by the civics, not least their debt to a middle-class understanding of the university. If higher education in Britain is to become more socially inclusive, then a critical approach as well as a celebration of Redbrick is surely needed.Less

Epilogue and Conclusion

David Thackeray and Richard Toye

in Age of Promises: Electoral Pledges in Twentieth Century Britain

We explore the ongoing importance of election promises since 1997. Even if the way that promises are disseminated has changed with the growing importance of the internet and social media in ... More

We explore the ongoing importance of election promises since 1997. Even if the way that promises are disseminated has changed with the growing importance of the internet and social media in campaigning, expectations surrounding manifestos remain roughly those that were set during the twentieth century. And yet the Brexit controversy has arguably created an acute crisis in trust in politicians’ promises and uncertainty about the authority of election manifestos. In the aftermath of the Brexit vote, manifestos enjoyed a more central role in the 2017 and 2019 elections than they had achieved at other elections during the early twenty-first century, not least because of the ambiguities of the mandate provided by the referendum.Less