A Level results: Funding reform


It’s difficult not to feel sorry for those students receiving their A Level results this Thursday. Last year 3500 applicants who achieved three A grades were denied places while it is estimated that as many as 200,000 applicants may be turned down this year. If we wish to see more of our young people studying at university, we must acknowledge the need to fund a greater number of university places.

However, given the scale of Britain’s budget deficit, few people would be comfortable diverting more public funds to universities. This leaves private funding. While philanthropy is helpful, the size of the problem necessitates that students themselves must pay for any expansion of higher education. Fee increases seem the obvious source of funding. Unlike a graduate tax, fees are collected upfront. The shortage of places is an immediate problem. As such, it requires an immediate solution. An increase in fees can allow the expansion of university places to begin right away.

Furthermore, a fee increase would channel existing resources to those degrees that yield higher graduate premiums (i.e. those that are most valuable). Were fees to double, a three-year degree would cost the student about £21,000 (excluding the other private costs associated with university, such as accommodation). If the expected premium of a degree were less than this, it wouldn’t be worth applying for. Such degrees would thus be decreasingly taken up. Public funding for these degrees would be set free and could instead be spent increasing the number of places on degree courses that offer better returns to the student. Degree programmes that allow higher incomes to be commanded would be made more widely available whilst ‘Mickey Mouse degrees’, which do little good for those studying them, would be scaled back.

Increased tuition fees could do more than close the gap between applications and university places. They could do so in a way that doubly expands the availability of the most worthwhile degrees.