Now that the Conservatives have abandoned their opposition to tuition fees, the Liberal Democrats stand alone in promising to fund higher education exclusively from the public purse.  The policy reflects the party’s commitment to expanding educational opportunities for all, and its fear that charges will harm access.

But is this concern well founded?

The evidence, from those countries where fees were introduced earlier than in the UK, suggests not. Australia, New Zealand and the United States, each of which charges significantly more for higher education than the UK, have higher overall participation rates, and, more tellingly, higher participation rates among low income groups. 

There are several reasons for this.  First, fees are not paid by poor students.  They are paid by students from more affluent families and then recycled in the form of scholarships and bursaries for those from less advantaged backgrounds.  With the new system of variable fees coming into place later this year, we are already seeing this theory turn into reality.  More than £300 million of the additional £900 million that variable fees will bring into the system is already earmarked for student support – four times more than is required by law. 

Second, going to university still pays in the long run.  £9,000 may sound like a lot of money for a three year course, but it is still dwarfed by the hundreds of thousands of pounds in increased earnings that a degree bestows on a typical graduate over the course of his working life. Until such a time as the costs of going to university outweigh the financial benefits, enrolments are unlikely to fall.  With the graduate job market buoyant and graduate salaries still rising, it seems we are still some way short of that point in the UK.

Third, because tuition fees are covered by heavily subsidised, income contingent loans, an investment in higher education is not only highly profitable, it is also virtually risk free.  Student loans carry a 0 per cent interest rate and repayments are linked to earnings.  This means that those with no, or very low, incomes pay nothing, while everyone else pays only 9 per cent of earnings above the £15,000 threshold each month, much like income tax.  

Finally, and most importantly, fees are unlikely to restrict access to higher education because cost is not what is keeping the majority of bright but poor children out of the system.  The real reason why disadvantaged children are not going to university in far greater numbers is because they are much less likely than more privileged children to get the exam results needed to apply.  This has little or nothing to do with ability.  Recent research has shown that in the UK today, a clever child from a poor home will be overtaken by less bright children from well-off homes by the age of six.  It is this, rather than the introduction of tuition fees, that represents the real barrier to participation in higher education.

That is why, if the expansion of ‘life chances’ is the priority, the more radical approach would be to shift the balance of public spending away from the higher education system and towards the under fives instead.  One way of initiating this shift, would be to replace the blanket interest subsidy on student loans with a subsidy targeted only on graduates with low incomes, and to spend the £1.5 billion plus annual saving on pre-school provision instead. For it is in the early years, rather than at the age of 18, that the battle for social justice and social mobility will ultimately be won or lost.    

This piece first appeared in The Guardian - 9th May 2006

Full Text available here.