The UK’s public sector financial crisis is putting university tuition fee deregulation on the political agenda there in a way that it is not here. The Browne review of higher education funding, set up by the previous Labour government, is widely expected to recommend at least some deregulation of tuition fees.
This has of course set off the usual worries about affordability and access. In this context a survey of how much existing students are willing to pay by the Opinionpanel organisation is particularly interesting. It asks two questions, one about what price the student would think so cheap that they would doubt the course’s quality, and another about what price would be so expensive that they would not consider paying it at all. They respond by dragging a marker on their computer screen in £100 increments.
It finds that low SES students (variously defined) are more price sensitive than other students, though only slightly so. They are similar up to about £4,000, but then low SES price resistance rises more steeply. (It should be noted that this survey is of actual students, so if there are unusually large numbers of particularly price-sensitive low SES student they are not in the sample). It is not clear whether the differents response is a ‘rational’ assessment of likely variations in earning trajectories, or higher SES students are just less put off by prices that sound high.
All the ways Opinionpanel cut their data – ability level, uni prestige, course, gender – shows differences in price sensitivity in the expected direction. More able students will pay more, students at high-prestige institutions will pay more, students in courses leading to high-income professions will pay more, and males will pay more. These correspond to known differences in actual earning potential (though I am not sure about uni prestige – I don’t recall seeing British research on this). However I thought some of the gaps would be wider than they are.
Arguments for fee deregulation are usually framed as being about university finances (because broke VCs have often been their main advocates) or fairness (governments looking for a justification for shifting the burden from taxpayers in general to richer-than-average students).
Surveys like this one highlight the microeconomic argument for fee deregulation. Students differ in their willingness and capacity to earn a return on their education, but government price control always sets maximum investment levels below optimal levels for those who believe they can earn high returns. It woud be very difficult for goverments to know who warrants higher levels of investment, and it would be politically impossible to make some of the distinctions even they did have a reasonable idea. By letting fee levels be set in the market, with individual students picking courses around their desired level of investment, we are likely to get more efficient human capital investment than occurs currently in the UK or Australia.