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Is higher education funding in England sustainable
Is higher education funding in England sustainable? A look at past, present and future options Chris Belfield
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Recent changes to the HE system
System in 2011 Fees capped at £3,300 Teaching grants paid to universities depending on costs of course Income-contingent loans for tuition fees and living costs Maintenance grants for students from low income background Changes in 2012 Tuition fee cap increased to £9,000; changes to terms of loans Cuts to teaching grants Changes in 2016 Maintenance grants abolished and replaced with larger loans Changes in 2017 Changes to the repayment threshold on loans IFS Higher Education research © Institute for Fiscal Studies
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Who pays for Higher Education?
61% Note: Excludes spending by students who do not take out loans IFS Higher Education research © Institute for Fiscal Studies
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Who pays for Higher Education?
Total upfront spending on HE £14.9bn 39% 61% Note: Excludes spending by students who do not take out loans IFS Higher Education research © Institute for Fiscal Studies
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Who pays for Higher Education?
Total upfront spending on HE £14.9bn £17.0bn 39% 65% 61% 35% Note: Excludes spending by students who do not take out loans IFS Higher Education research © Institute for Fiscal Studies
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Who pays for Higher Education?
Total upfront spending on HE £14.9bn £17.0bn £16.7bn 39% 65% 53% 61% 35% 47% Note: Excludes spending by students who do not take out loans IFS Higher Education research © Institute for Fiscal Studies
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Who pays for Higher Education?
Total upfront spending on HE £14.9bn £17.0bn £16.7bn 39% 65% 53% £9.0bn £7.9bn 61% 35% £5.9bn 47% Note: Excludes spending by students who do not take out loans IFS Higher Education research © Institute for Fiscal Studies
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Who pays for Higher Education?
Note: Excludes spending by students who do not take out loans IFS Higher Education research © Institute for Fiscal Studies
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Who pays for Higher Education?
£6.4bn £0.7bn £0.7bn Note: Excludes spending by students who do not take out loans IFS Higher Education research © Institute for Fiscal Studies
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Students from the poorest backgrounds graduate with the highest debts
IFS Higher Education research © Institute for Fiscal Studies
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High earning graduates pick up the cost
IFS Higher Education research © Institute for Fiscal Studies
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High earning graduates pick up the cost
IFS Higher Education research © Institute for Fiscal Studies
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High earning graduates pick up the cost
IFS Higher Education research © Institute for Fiscal Studies
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Who pays for Higher Education?
39% 65% 53% 61% 35% 47% Note: Excludes spending by students who do not take out loans IFS Higher Education research © Institute for Fiscal Studies
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Who pays for Higher Education?
Note: Excludes spending by students who do not take out loans IFS Higher Education research © Institute for Fiscal Studies
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University resources increased significantly during the 2012 reforms
This does not include maintenance loan subsidy IFS Higher Education research © Institute for Fiscal Studies
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Resources for low cost subject increased most since 2011
IFS Higher Education research
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Summary Government The long-run cost is around £8 billion - lower than in 2011 But there is greater uncertainty Students Average debt levels on graduation have doubled since 2011 But lowest earning 40% of graduates have lower lifetime repayments Universities The 2012 reform increased resources by 25% But nominal freeze in fees raises questions about funding going forward Parties' spending policies © Institute for Fiscal Studies
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Where do we go from here? Adjust parameters of the current system
Reintroduce maintenance grants Reduce the interest rate Increase repayment rate Increase repayment period Overhaul the current system Scrap tuition fees Introduce graduate tax Additional regulation of universities Introduction of the Teaching Excellence Framework Student numbers controls IFS Higher Education research © Institute for Fiscal Studies
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Thanks for listening Higher Education Policy
© Institute for Fiscal Studies
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University resources increased significantly during the 2012 reforms
This does not include maintenance loan subsidy Public economics: Higher education © Institute for Fiscal Studies
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Where do we go from here? Labour – Scrap fees
Adds around £11bn to the deficit or around £5bn to the long-run cost Benefits highest earning graduates the most Creates concerns over future university funding levels Reintroduce maintenance grants Reduces debt levels of students from low income backgrounds Only reduces repayments of those who go on to have high earnings Reduce the interest rate Reduces debt levels of all graduates – biggest impact on high earners Only reduces in repayments of high earning graduates Parties' spending policies © Institute for Fiscal Studies
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Where do we go from here? Increasing the repayment rate or period
Reduces the long-run cost to government Increases the repayments of low and middle earning graduates the most Graduate tax? Has the potential to increase the contribution of highest earners Potentially has impacts on behaviour of high earners Due to accounting rules would increase the government deficit Additional regulation of universities Recent reforms have created market based HE system It is unclear whether this system creates the desired incentives for universities IFS Higher Education research © Institute for Fiscal Studies
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