Why it’s right to lift the cap on university tuition fees

University of Birmingham degree congregations, Flickr, University of Birmingham

Beginning in the 2017-18 academic year, British universities will be allowed to raise their fees in line with inflation provided they offer high quality teaching. Queue controversy. Other than the practical need for fees to keep up with inflation – £9000 in 2016 is equivalent to £8200 in 2012 terms, stretching faculty budgets ever thinner – there is an economic rationale behind this policy.

the government is introducing a system to properly monitor teaching quality, and it’s offering universities the carrot of higher fees in order to make it happen.

First, the government’s stated aim: to improve teaching quality. The bill will introduce a new Teaching Excellence Framework (TEF); a higher TEF score permits higher fees. The fact that fee increases will now depend on teaching standards introduces, for the first time, a financial incentive for universities to raise the quality of the education their students receive. At last, the government is introducing a system to properly monitor teaching quality, and it’s offering universities the carrot of higher fees in order to make it happen.

The other motive behind lifting the cap on fees is that in an efficient market prices must reflect value. How is it justifiable that a degree from the University of Cambridge, and the substantial lifetime earnings premium it brings, costs the same as one accredited by a less prestigious, and therefore less lucrative, institution? It’s the equivalent of being able to buy a Lamborghini for the same price as a Ford Mondeo. In the current situation, graduates who went to universities at the top of the league table enjoy a windfall which is arbitrary and simply indefensible.

The last change to higher education fees in 2012, where universities were allowed to charge £9000 provided they increase the number of grants given to students from disadvantaged backgrounds, has proved to be a good one. With low-income applicants twice as likely to apply to university today as a decade ago, it has widened access to higher education. Moreover, it has increased the number of students able to go to university, with every year since 2013 seeing record numbers of UCAS applications. The previous policy change has enabled more students to experience a university education; hopefully this one will enable them to experience a better one.

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