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Lifting the cap on tuition fees - a question of price elasticity?
11th October 2010
The latest review of university funding has recommended that the cap on tuition fees be lifted giving universities more freedom to raise annual tuition costs well above the current level of £3,290 a year.
To what extent will a rise in the private cost of studying for a degree lead to a substantial fall in market demand from UK-based students? This BBC news feature makes for interesting reading and links in well to the concept of price elasticity of demand - the responsiveness of demand to a change in the market price. There is little doubt that the cost of taking a university education will rise substantially in the years ahead and this raises hugely important questions about the impact on demand and the effect on students from poorer backgrounds who might be priced out of a degree.
It seems that Business Secretary Vince Cable has already come out against introducing a Graduate Tax - one of the main alternatives to raising tuition fees. The issue is debated here in this discussion on the Radio 4 Today programme. There is more background on the university funding issue here.
Further articles on the economics of a graduate tax can be found here. University course fee increases ‘could deter students’ (BBC news)
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.