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The Impact of Tuition Fees and Support on University Participation in the UK

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  • Lorraine Dearden
  • Emla Fitzsimons
  • Gill Wyness

Abstract

Understanding how policy can affect university participation is important for understanding how governments can promote human capital accumulation. In this paper, we estimate the separate impacts of tuition fees and maintenance grants on the decision to enter university in the UK. We use Labour Force Survey data covering 1992-2007, a period of important variation in higher education finance, which saw the introduction of up-front tuition fees and the abolition of maintenance grants in 1998, followed some eight years later by a shift to higher deferred fees and the reinstatement of maintenance grants. We create a pseudo-panel of university participation of cohorts defined by sex, region of residence and family background, and estimate a number of different specifications on these aggregated data. Our findings show that tuition fees have had a significant negative effect on participation, with a £1,000 increase in fees resulting in a decrease in participation of 3.9 percentage points, which equates to an elasticity of -0.14. Non-repayable support in the form of maintenance grants has had a positive effect on participation, with a £1,000 increase in grants resulting in a 2.6 percentage point increase in participation, which equates to an elasticity of 0.18. These findings are comparable to, but of a slightly lower magnitude than, those in the related US literature.

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File URL: http://cee.lse.ac.uk/ceedps/ceedp126.pdf
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Bibliographic Info

Paper provided by Centre for the Economics of Education, LSE in its series CEE Discussion Papers with number 0126.

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Date of creation: Jul 2011
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Handle: RePEc:cep:ceedps:0126

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Web page: http://cee.lse.ac.uk/publications.htm

Related research

Keywords: university participation; higher education funding policies; tuition fees; maintenance grants; pseudo-panel;

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References

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  1. Haroon Chowdry & Claire Crawford & Lorraine Dearden & Alissa Goodman & Anna Vignoles, 2013. "Widening participation in higher education: analysis using linked administrative data," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 176(2), pages 431-457, 02.
  2. Susan Dynarski, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," NBER Working Papers 7756, National Bureau of Economic Research, Inc.
  3. Thomas J. Kane, 1995. "Rising Public College Tuition and College Entry: How Well Do Public Subsidies Promote Access to College?," NBER Working Papers 5164, National Bureau of Economic Research, Inc.
  4. Neil S. Seftor & NSarah E. Turner, 2002. "Back to School: Federal Student Aid Policy and Adult College Enrollment," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 336-352.
  5. Hemelt, Steven W. & Marcotte, Dave E., 2008. "Rising Tuition and Enrollment in Public Higher Education," IZA Discussion Papers 3827, Institute for the Study of Labor (IZA).
  6. Verbeek, M.J.C.M. & Vella, F., 2002. "Estimating dynamic models from repeated cross-sections," Econometric Institute Research Papers EI 2002-05, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  7. James Heckman & Pedro Carneiro, 2003. "Human Capital Policy," NBER Working Papers 9495, National Bureau of Economic Research, Inc.
  8. Jo Blanden & Stephen Machin, 2013. "Educational Inequality and The Expansion of UK Higher Education," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(5), pages 578-596, November.
  9. Jo Blanden & Paul Gregg & Stephen Machin, 2003. "Changes in Educational Inequality," The Centre for Market and Public Organisation 03/079, Department of Economics, University of Bristol, UK.
  10. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
  11. Susan M. Dynarski, 2003. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," American Economic Review, American Economic Association, vol. 93(1), pages 279-288, March.
  12. Lorraine Dearden & Emla Fitzsimons & Alissa Goodman & Greg Kaplan, 2007. "Higher education funding reforms in England: the distributional effects and the shifting balance of costs," IFS Working Papers W07/18, Institute for Fiscal Studies.
  13. Dynarski, Susan, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 629-62, September.
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Cited by:
  1. Matt Dickson, 2013. "The Causal Effect of Education on Wages Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(4), pages 477-498, 08.

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