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Higher education funding reforms in England : the distributional effects and the shifting balance of costs

Dearden, Lorraine and Fitzsimons, Emla and Goodman, Alissa and Kaplan, Greg (2008) Higher education funding reforms in England : the distributional effects and the shifting balance of costs. Economic Journal, 118 (526). F100-F125. ISSN 0013-0133

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Abstract

This paper undertakes a quantitative analysis of substantial reforms to the system of higher education (HE) finance first announced in 2004 and then revised again in July 2007. The reforms introduced deferred fees for HE, payable by graduates through the tax system in the form of income-contingent repayments on loans subsidised by the government. Lifetime earnings that have been simulated by the authors using innovative methods, are used to analyse the likely distributional consequences of the reforms for graduates. It is shown that graduates with low lifetime earnings will pay less for their HE than graduates higher up the lifetime earnings distribution compared to the system operating before the reforms. Taxpayers will bear substantial costs due to the interest rate and debt write-off subsidies. The extent to which the reforms are likely to shift the balance of funding for HE between the public and private sector is also analysed, as well as the likely distributional consequences of a number of variations to the system such as removing the interest subsidy from the loans.

Item Type: Article
Additional Information: The Economic Journal is the highest ranking Economics Journal in the UK and this policy piece has been highly influential in the Higher Education Funding debate The definitive version is available at www3.interscience.wiley.com
Divisions: IOE Departments > Departments > Quantitative Social Science
IOE Departments > Departments > Centre for Longitudinal Studies
Depositing User: IOE Repository Editor (2)
Date Deposited: 24 May 2010 14:09
Last Modified: 16 Jan 2014 00:02
URI: http://eprints.ioe.ac.uk/id/eprint/5340

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