Category Archives: Economics

Lessons from the End of Free College in England

 

By Judith Scott-Clayton, Richard Murphy and Gill Wyness

This blog is based on a full-length article published at https://www.brookings.edu/research/lessons-from-the-end-of-free-college-in-england/

 

Earlier this month, New York became the first US state to offer all but its wealthiest residents free tuition at public four-year institutions in the state. This new ‘Excelsior Scholarship’ doesn’t make college completely free, nor is it without significant restrictions. Still, it demonstrates the growing strength of the free college movement in the United States.

The free college movement in the US is typically associated with liberal and progressive politics, and motivated by concerns about rising inequality and declining investments in public goods like education. Americans are thus sometimes surprised to hear the story of the end of free college in England was built upon very similar motivations.

Until 1998, full-time students in England could attend public universities completely free of charge.  Two decades later, most public universities in England now charge £9,250 – equivalent to about $11,380, or 18% more than the average sticker price of a U.S. public four-year institution.

Has this major restructuring of higher education finance over the last twenty years led the English system backwards or forwards in terms of improving quality, quantity, and equity in higher education?  We find that at a minimum, ending free college in England has not stood in the way of rising enrollments, and institutional resources per student (one measure of quality) have increased substantially since 1998. Moreover, after many years of widening inequality, socioeconomic gaps in college attainment appear to have stabilized or slightly declined.

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US Elections: messing with the small print won’t address the issue of student debt

by Richard Murphy

Higher education finance might be the last thing on America’s minds when they cast their votes on Tuesday. However, the fact that both candidates have set out plans to reform the US’ student loan repayment schemes is perhaps indicative of the importance of this issue in the US. The problem is, both candidates are just messing with the small print, and their plans which will do very little to help graduates struggling with student debt.

Trump intends to push for an income-driven repayment plan that would increase the level of the payments students have to make (by increasing the cap on payments from 10 to 12.5 percent of income) but reduce the repayment period to 15 years from its current period of 20-25 years (depending on the scheme). Meanwhile Clinton has endorsed the current plans, with the caveat that she aims to simplify the number of plans.

But will these proposals help students who are struggling with their loan repayment? The short answer is no.

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Degrees benefit society – even when students don’t get ‘graduate jobs’

by Francis Green and Golo Henseke

Every few weeks, a new report emerges raising concerns about the graduate labour market in Britain.

Only recently in the UK, the Chartered Institute of Personnel and Development (CIPD) came out with a plea for a halt to the expansion drive in higher education. Earlier in the summer, an Institute for Fiscal Studies report, while noting that the graduate earnings premium had been steady (or increasing, even) for many years, warned that the future might not be so bright.

Indeed, there seems to be growing concern that, maybe, higher education has expanded to the limit over the past 20 years and can take no more. So, should governments be worried about the underemployment of graduates – that is, graduates doing supposedly non-graduate jobs?

Our short answer to this question is: “Yes, but…” Let us explain why.

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The myth of over-education

The fear that we are over-educating our population is not a new concept.

Back in 1963, when only 1 in every 100 people went to university full-time, policymakers were already convinced that any expansion of the sector would result in an over-supply of graduates – many of whom were incapable of benefiting from higher education – and the inevitable falling wage premium (Barr, 2014).

Fast forward 50 years, with nearly 40% of young people enrolling in university (BIS, 2014), and here we are, still having the same argument. A report issued today by the CIPD argues that the number of graduates has now “significantly outstripped” the creation of high-skilled jobs, and that over-qualification at “saturation point”. This has led to calls for the government to encourage alternatives to university, and for our young people to think twice about going to university.

But do we really have too many graduates?

Whilst there are many ways to answer this question, simple economics can help us here.

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Paying for higher education – what are the parties proposing?

By Gill Wyness  (UCL Institute of Education, Centre for Economic Performance, London School of Economics, and EconomicsofHE)

The UK has dramatically increased the supply of graduates over the last four decades. The proportion of workers with higher education has risen from only 4.7 per cent in 1979 to 28.5 per cent in 2011. Rather than this enormous increase in supply reducing the value of a degree, the pay of graduates relative to non-graduates has risen over the same period: from 39 per cent to 56 per cent for men and from 52 per cent to 59 per cent for women. This implies a strong and continuing employer demand for education. Continue reading →