Reducing Student Grants And Introducing Tuition Fees: Why The Rich And Some Of The Poor Unite To Support Reform Of Higher Education

The field of education policy seems to create situations where traditional left and right wing positions become confused: a Labour government introduces university tuition fees, opposed by the Conservative party and the National Union of Students. The Labour education secretary condemns the system of university students grants as ”regressive”, while a Labour education minister is heckled at the National Union of Teachers conference.

In new research published in the latest issue of the Economic Journal, Gianni De Fraja explains how the ambiguous coalitions that support these policies – the rich ally themselves with some of the poor against the rest of the population – reflect the ambiguous distributional effects of university admissions policies. He shows how a coalition is formed between the rich and some of the poor in support of a reduction in student grants.

De Fraja presents a theoretical analysis that puts the current policy discussion about higher education into context. At the root of the problem is the fact that investment in education benefits most those who are already better off – typically because they are brighter. This is unlike, say, investment in health care, where the sick benefit the most. In university education, some form of government intervention is needed because the market mechanism does not ensure equality of opportunity. Specifically, De Fraja analyses two policies, chosen because of their obvious relevance to the UK:

  • The imposition of ability tests for admission to university.
  • A subsidy to university attendance – a student grant – financed by general taxation.

Both of these policies improve equality of opportunity, as they increase the number of students from socially deprived background, at the expense of students from better off households. The first policy benefits most better off households with bright children, whereas the second policy is most detrimental to better off households and poorer households with not very bright children (who have to pay the tax, but do not benefit from university education). It is therefore in their mutual interests to oppose a system of subsidies to university attendance.

”Education Policies: Equity, Efficiency and Voting Equilibrium” by Gianni De Fraja is published in the May 2001 issue of the Economic Journal. De Fraja is at the University of York.

Gianni De Fraja

01904-433767 | gd4@york.ac.uk