The impact of higher education finance in the UK

The subject of how to finance Higher Education (HE) has been on the agenda of successive UK governments since the 1960s. The UK has moved from a situation where the taxpayer footed the entire bill for HE, to a system where students themselves must contribute part of the cost of their education. This so-called `cost-sharing' has always been a subject of controversy, with fears that it would lower participation, particularly among poorer students. This thesis is a quantitative analysis of the UK's system of HE finance (defined here as maintenance grants and upfront fees) and its impact on individual university participation decisions and Higher Education Institution funding levels. The thesis comprises two main strands. The first is an econometric analysis of the causal relationship between HE finance and university participation. I use individual-level Labour Force Survey data over the period of 1992-2005, during which many major changes in HE finance policy took place, to estimate the impact of upfront fees and maintenance grants on individual participation decisions. I use a variety of econometric techniques exploiting variation in policy by income-group, over time, and by UK constituent country arising from Scottish devolution. I find a positive impact of maintenance grants on participation, and a negative impact of up-front fees. In the second strand of the thesis, I draw on Scotland as a comparison group with the rest of the UK. I use HESA data on university funding and volumes of students, and Higher Education Funding Council of England / Scottish Funding Council funding formulae to analyze the impact of tuition fees in terms of relative funding per FTE in Scottish and English universities. I find English universities to have caught up with Scotland in terms of funding per head as a result of the increased income from fees