The government’s plans to place a levy on early student loan repayments will change little and add an unnecessary layer of complexity to the system

The government’s changes to how undergraduate education is financed means that those who earn more will pay a higher rate of interest repayments. Concerned that the most affluent will simply repay their fees early to avoid paying this higher interest, the government is considering introducing a levy on early repayments. Gill Wyness argues that this policy is unnecessary. There is very little evidence that higher earning graduates are repaying their loans early to escape interest payments, and the proposals will only add complexity and actually undermine the progressive nature of the system

Fees and loathing: higher education finance and university participation

With the UK's cap on tuition fees due to rise to £9,000, Gill Wyness looks at the impact of past fee increases on young people's decisions to go to university.wage differentials, returns to education

Paying for higher education

University financing has again emerged as a key battleground issue. Should fees be regulated lower and if so, how will the cost be financed? Gill Wyness explores these questions

The impact of higher education finance on university participation in the UK (BIS research paper no.11)

In this paper we estimate the separate impacts of upfront fees, grants and maintenance loans on UK higher education participation. We use the panel data element of Labour Force Survey data on the university participation decisions of 18 year olds, covering the period 1992-2007, which saw great variation in HE finance, most importantly the introduction of up-front tuition fees and the abolition of student maintenance grants in 1998 and major reforms of 2004 in which maintenance grants were re-instated and up-front fees were replaced with deferred fees of £3000. To test the robustness of the results, and to help deal with potential measurement error, we create a pseudo-panel of participation by UK region over time and test a number of specifications. Our findings show that the impact of upfront tuition fees in 1998 had a small negative impact on participation among high income groups, while the package of reforms introduced in 2006 had no impact on participation, largely because tuition fees were accompanied by large increases in loans and grants

The Impact of Tuition Fees and Support on University

Understanding how policy can affect university participation is important for understanding how governments can promote human capital accumulation. In this paper, we estimate the separate impacts of tuition fees and maintenance grants on the decision to enter university in the UK. We use Labour Force Survey data covering 1992-2007, a period of important variation in higher education finance, which saw the introduction of up-front tuition fees and the abolition of maintenance grants in 1998, followed some eight years later by a shift to higher deferred fees and the reinstatement of maintenance grants. We create a pseudo-panel of university participation of cohorts defined by sex, region of residence and family background, and estimate a number of different specifications on these aggregated data. Our findings show that tuition fees have had a significant negative effect on participation, with a £1,000 increase in fees resulting in a decrease in participation of 3.9 percentage points, which equates to an elasticity of -0.14. Non-repayable support in the form of maintenance grants has had a positive effect on participation, with a £1,000 increase in grants resulting in a 2.6 percentage point increase in participation, which equates to an elasticity of 0.18. These findings are comparable to, but of a slightly lower magnitude than, those in the related US literature.university participation, higher education funding policies, tuition fees, maintenance grants, pseudo-panel

Testing means-tested aid

Billions of pounds per year is spent on aid for poor students in HE systems around the world, yet there remains limited evidence on the causal effect of these payments, particularly on the intensive margin. This is an empirical challenge since student aid is correlated with characteristics which influence both college enrolment and achievement. We overcome these challenges by studying a unique form of non-linear means tested financial aid which is unadvertised, varies substantially across institutions, and is subject to shifts in generosity across cohorts. Using student-level administrative data collected from 10 English universities, we study the effects of aid receipt on college completion rates, annual course scores, and degree class, using fixed effects and instrumental variables methods. Our findings suggest that each £1,000 of financial aid awarded increases the chances of gaining a good degree by around 3 percentage points, driven by completion of the final year and course scores

Student awareness of costs and benefits of educational decisions: effects of an information campaign

Many students appear to leave full-time education too soon, despite the possibility of high returns from further investment in their education. One contributory factor may be insufficient information about the potential consequences of their choices. We investigate students’ receptiveness to an information campaign about the costs and benefits of pursuing postcompulsory education. Our results show that students with higher expected net benefits from accessing information are more likely to avail themselves of the opportunity presented by our experiment. Their intention to stay on in post-16 education is strongly affected by the experiment, though not their intention to apply to university. Effects are heterogeneous by family background and gender

Money for nothing: estimating the impact of student aid on participation in higher education

Understanding how higher education (HE) finance policy can affect HE decisions is important for understanding how governments can promote human capital accumulation. Yet there is a severe lack of evidence on the effectiveness of student aid in encouraging HE participation outside of the US, and none at all for the UK. This paper exploits a reform that took place in the UK in 2004, when maintenance grants were introduced for students from low income families, having been abolished since 1999. This reform occurred in isolation of any other policy changes, and did not affect students from relatively better off families, making them a potential control group. We use a difference-in-difference framework to estimate the effect of the reform on HE undergraduate participation. We find a positive impact of maintenance grants, with a £1000 increase in grants leading to a 3.95 percentage point increase in participation