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UK Tuition Hikes to Depress Future Enrolment

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As students return to class for the 2015/2016 school year across Europe and North America, university-bound students in Britain are still trying to understand the ramifications of the Summer Budget announced in July that will raise tuition and eliminate student grants in favour of loans. At this early stage, questions remain about what this might mean for student levels going forwards, with some analysts contending that this will make the UK system less fair and result in fewer part-time students. To determine what result this policy will have in the near term, it’s instructive to examine how previous increases in higher education tuition rates affected student levels.

Though historically free, the British university system introduced tuition fees in 1998 with a cap at £1,000 per year. After Scottish devolution, tuition fees were abolished there in 2000. The rest of the UK increased rates in 2004 to a maximum of £3,000 per year, with the rate slowly rising until the 2012/2013 school year, when fees almost tripled to a maximum £9,000 a year. Each phase of tuition increases were justified as a necessary fix to persistent funding shortfalls and a way for UK universities to better compete on the global stage.

The current Summer Budget does away with the previous £9,000 tuition cap starting in the 2017-2018 school year and allows institutions with high teaching quality to increase tuition in pace with inflation (it remains to be seen how the government will identify these institutions). Starting in the 2016-2017 school year, it also drops student grants that were taken by half a million students for student loans that will start being repaid after the graduate makes £21,000 a year.

These moves have been met with criticism from students and some administrators who claim that the effects of the policy will overwhelmingly fall on the shoulders of poorer students already sensitive to the cost of higher education when deciding whether to attend university. Though the effects of this policy won't be known for a few years, it's exceedingly likely that it will stifle enrolment, especially among part-time and lower income students. There is good precedent for this: it is exactly what occurred after the 2012 tuition increases.

Lessons from 2012: Expect Sustained Declines in Enrolment

An examination of enrolment after the tripling of tuition during the 2012/2013 school year shows a decline in both part-time and full-time programmes across the UK. That school year, student enrolment (undergraduate and postgraduate) declined by 6% on the back of a 15% collapse of enrolment to part-time programmes attractive to mid-low income students. Full-time enrolment dropped by 2%, the only year-on-year decline since 2001. Declines were heaviest in England where the budget went into effect fully; total enrolment dropped there by 7% with part-time enrolment falling by 18%. In Wales and Northern Ireland, which both offered subsidies to residents to lessen the blow, the effect of the new tuition was more muted, while Scotland registered the smallest decline given that Scottish universities still did not impose tuition costs on its residents.

These declines persisted in the 2013/2014 calendar year, especially among part-time students, who continued to keep away, as UK-wide enrolment in these programmes declined by 9% year-on-year. In two academic years, part-time programmes lost fully 22% of the enrolment before the tuition hike (25% in England). Conversely, full-time programmes rebounded slightly, but not enough to counterbalance the drop in part-time programmes.

A similar effect should come to pass in the most recent round of tuition hikes. After the announcement of the new budget in July, a survey by the student-based community site, the Student Room, found that a fifth of student respondents said that university is now too expensive to consider, with 19% "seriously worried" about the cost of higher education.

Conversely, early returns after the budget announcement on full-time matriculations for the 2015/2016 school year point to an historically large class, as many students are forgoing a gap year to take advantage of the grant system that will be phased out starting in 2016.

As a result, expect enrolment over the forecast period to be on the whole smaller (as more price-sensitive students decide against pursuing a university education) and wealthier (as more full-time enrollees sign up at accelerated rates). This will continue a trend started in 2012 that shows little potential of slowing as UK universities move farther towards a US-style tuition system.


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