Most feel that the real reason is to reduce public expenditure, although it does provide universities with a higher net income and this allows them to spend more on their students education.
The problem is that the higher fees put people off from applying to university. They don't understand the full benefits higher education will give them and so see the expenditure as greater than the benefit. This occurs because education is an imperfect information good.
Education is also referred to as a merit good. The market will provide education, but less than the socially optimal amount.
The BBC reports the decline in UCAS applications for the second year running. You can search the blog to find earlier posts on this issue.
In theory, the governments idea seems sound. To share some of the costs of the students education with them - we will be the ones to benefit from the further education so why not. But in reality, as the article says, this idea has quite likely backfired on them. If you relate this situation to one of the basic economic principles, the law of demand then it becomes quite simple. The higher the prices, the lower the demand and vice versa. The government can't have not seen this coming, that the higher tuition fees would deter more people from going to university? Unless their motive was indeed to lower public expenditure. Surely though, if they had kept the tuition fees as low as they were before or perhaps even lowered them,then there would be more university graduates, resulting in a more educated workforce,which in turn would help the economy greatly.It's just a question of what they rank to be of higher importance, lower public expenditure or a higher educated workforce.
ReplyDeletePerfectly put
ReplyDeleteI agree that the government seems to be prioritising the wrong thing; however choosing simply not to go to university to avoid paying the fees seems illogical. The fees only need to be paid back if you earn over a certain amount of money, if you cannot afford to pay it back then it does get written off after a certain period of time.
ReplyDeleteAlso the facts given to us in the article are vague. It tells us the number of applicants but not as a percentage. It could be that there is a smaller population that age. Alternatively more people are looking for alternatives to university. Studying abroad for example, or taking apprenticeships to gain their qualifications that way
Georgina Davis
Although going to university will cause you to leave yourself with a large debt of tuition fees, as Georgina says you only need to pay these back once earning a good amount. The education and skills you learn whilst at university will most likely help you to earn a good wage to enable you to pay this money back now. Whilst avoiding university would eliminate these debts, in an economic period where young people are struggling to find work as it is, university will give you a very good platform to come out and find work straight away. The article also shows that the number of applicants, although are down slightly on last year, are up much more than they were in 2009. The articl3e also says that fewer than half of prospective students will have submitted their applications by this point.
ReplyDeleteSascha Haigh.
Personaly I beleive the government should be encouraging able students to take up the opurtunity of further education that everyone has in this country. The government are pricing quite a large amount of peoplpe out of gaining a university education, these people are being deprived from earning higher salaries and having a better standard of living in the future, this only increases the amount of economic inequality in this country which the government must surely see as a bad thing. The UK also has a shortage of highly skilled labourers, people that are essential to economic growth, and a decrease in these highly skilled labourers,like engineers, will mean jobs in this sector will move to other countries and growth will slow. This is something the government should have surely taken into account before introducing the rise in tution fees.
ReplyDeleteDavid Harrison-Fisher.
For a start, I agree that this article is slightly premature as they make a big deal over figures which will not be complete until the UCAS deadline closes. Furthermore, the article stresses that part of the reason the whole fee rise is so potentially catastrophic is because many potential applicants do not see the whole picture about financial support and are not aware of the help they could receive. People who are intelligent will still attend university as they see the long term investment that it will bring, giving them a potentially higher income and a better standard of living. However I do agree that the fee’s rising so drastically can only have a negative effect on the number of applicants as many of the top university’s apparently struggle to fill their numbers with people of the correct standard, and surely this tripling of fees is unnecessary as a smaller rise would still spread cost more fairly without pushing people to accumulate large debts and deterring others from applying at all.
ReplyDeleteLara Hogan
I certainly agree with this comment, as the money the universities earn from the higher fees can be quite important. In this occasion this will also provide a lot of advantages for universities which normally have lower fees as they might need the money to provide themselves with teachers and better education in general. Another advantage would be the new access to new equipment, as some of these can be quite expensive like new microscopes or even educational books.
ReplyDeleteBut raising the fees can also cause a lot of disadvantages, where people, who could need this education are not able to afford it any more, resulting in a loss in the economy.
This certainly is an interesting article where it is really difficult to make decisions about raising fees in universities.
Vincent Vogl
Although it may have been the Government’s contention to promote equality though increasing fees it has had the reverse effect. Instead, due to rapidly plummeting levels of interest to go to University, far fewer people are obtaining degrees and the disparities of income throughout society has grown. As a pose to considering the acquired benefits of going to Uni later on in life people only envision irreparable debt to deal with. However perhaps they have weighed up the decision and decided that the remunerations are not worth it. This relates to opportunity cost- would the time be spent better elsewhere? However, the fees only need to be paid back if your wage is above a specific level; suggesting that it shouldn’t result in substantial financial difficulties on a long term basis.
ReplyDeleteOscar Williams PB
One could infer that the major problem behind the fall in UCAS applications is because either people can't afford the tuition fees and are not talented enough to gain scholarships, or simply see the cost of uni greater then the long term benefits that the degree brings forth. It is unfortunate that people who don't get a degree are unable to gain high incomes through career paths such as banking due to the development and increasing competitivness seen in the world today. However, many people are unaware of the benefits that a degree would bring, along with the experience of being a university student, illustrating that it is an imperfect information good. In order to remove this merit good which brings about positive externalities and exemplifies a market failure, the government could advertise more to explicitly highlight the benefits of having a degree. I do believe that at such a young age, the tuition fees are simply too high, and the cost of the university is stumbling the progression of many intelligent and potentially productive employees in future years.
ReplyDeleteHarry Speed
in this age where everything is super fast and everyone is obsessed with the quickest way to achieve their goals, three years minimum of building up debt seems a good reason not to go to university if you are able go straight into work. putting up the price is going to put off the people who weren't sure before. Everyone knows that going to university will set you up better in the future but in this 'now' age increasing numbers are not willing to accept the opportunity cost of university over this potential earning time.
ReplyDeleteHowever with higher tuition fees, the courses can only get better putting the value of going to university even higher and the government has to show the advantages better in order to keep up skilled employment which in some areas the Uk is already starting to see a shortage.
Considering there could be what is considered as a 'fixed supply' of university places it already presents a problem economically. Although there may have been a decline in UCAS applications this year the overall trend is that more people are wanting to go to university. Put this against a higher price and people may want to find the cheaper alternative (say a community college)or just attempt to go off into the workplace thus reducing demand. Although university places have usualy been relatively inelastic the significant price rises could almost be turning them more elastic. This could also increase unemployment as the youth seek jobs and are no longer 'in education.' For many what could be considered the ''opportunity cost'' of going to university simply isn't worth it. Furthermore the article says that a benefit accrued from higher tuition fees is that it 'allows them to spend more on the students education.' It seems to me that this happens while making someone else worse off and is not pareto optimal. Lastly considering that education could make a better future workforce and help economic growth the government may need to reconsider their ideas.
ReplyDeleteChanel Sangster
It seems the significant decrease in UCAS applications is directly affected by the governments choice to increase the university fees, as the high fees lack appeal to the majority who are unable to actually pay them, and even less appeal to carrying a large amount of debt, for what could be numerous years. This obviously has a knock on effect to the amount of people then able to gain a high degree and to then go into a high paying job. Although, arguably those who understand that paying high university fees is an investment into their future, they will pay off their debt and obtain higher earnings. But the government should consider not making such a significant increase, and be conscious that debt from paying for university should only be paid when the individual is in a high enough earning job.
ReplyDeleteClaudia Damerell
Increasing the fees is obviously not the best way to reduce public expenditure. Let's make it simple, in theory, the higher the prices, the lower the quantity demanded and vice versa. So increasing the fees, in other words, is going to put off the people who can't afford the fees. We all know that skilful and well-educated labours is utterly important to economic growth, but the government seems have missed out this point. Increasing the fees signify that fewer people are obtaining degrees and thus more educated workforce will go down. On the other hand, providing universities with a higher net income does not necessarily mean that there will be a significant improvement in quality of education. There are trade-offs between reducing public expenditure and maintaining skilful workforce. The government should make decisions wisely.
ReplyDeleteI think the campaign proposed by the government would be the best way of resolving the issue of imperfect information surrounding higher education. People simply aren't aware of the support available to them and the future employment benefits of going into higher education. Higher education could ultimately lead to a rise in the UK's productive potential as workers are more skilled and so output can be increased per worker.
ReplyDeleteKimberley Okonta