A market for higher education?

The inevitable has finally come!

In his Spending Review yesterday, George Osborne announced a 40% cut in the teaching budget for universities. This is part of the coalition’s plan to tackle the UK’s historical deficit. Universities now have no other option than increase tuition fees in order to fill the new gap in funding. This will be possible if Browne plan is implemented. Essentially, the implementation of this proposal will create a free market for higher education in the UK, very similar to what already exists in the US. However, this also signals the end to a great education system that used to be free and available to everyone. So, what do we take from this?

The cost of teaching a degree is estimated to be around £7,000. Under the current system, universities are allowed to charge students up to £3,290, which most of them do. The remaining cost is then subsidised by the government. If the cap on tuition fees is removed, we can expect most elite universities to raise their fees without facing a decrease in demand for places (demand for places at big universities is indeed very inelastic). This will enable them to invest more in researches and compete with big American universities.

However, there is also a downside to this. Firstly, creating a market place for higher education will benefit only a certain group of universities. As in any other competitive market, smaller and less prestigious universities will struggle to compete and shut down eventually. This will increase unemployment level in the public sector (not every lecturer can go and work for a private company), which in turn will have a wider adverse effect on our newly recovered economy. Furthermore, bright students from poor families will no longer be able to go to places like Oxford or Cambridge simply because they cannot afford them.

In the end, higher education is a public good that will always be under provided in a market system. This is why government provision of education is so vital. However, a market for higher education now means it is money that gets you into the best universities, not your real academic potential.

Please comment below to let us know what you think.

2 Responses to “A market for higher education?”

  1. Rebecca Molokwane Says:

    i have to agree with you writer because market for higher education is turning to become more like a private good even though we know that its demand its inelastic but this has a huge impact on those who are very poor but have good academic record. yes there are bursaries out there to fund these people but not all of them can get to receive a bursary in addition if there is an increase in the market,it will mean an increase in government subsidies and these will in turn hurt the the taxpayers.


    Hello I am a 19 year old student from South Africa. I believe education is the key to fight poverty in Africa. Through education people can get qualifications ,better jobs ,solid income which leads to money to feed the family. South African education system has dropped since 1994 which saw an increase in the demand for private education which is very costly .I myself went through private education which lead to the people owing my school get richer -in the process not caring much about our education as long as they get their money .Problem with this private education is that the people who need it the most don’t benefit from it as only the already rich will get richer while the poor stays poor. University is already an expense thing for parents as most have to go through it with bursaries, loans and scholarships -this would increase the expenses even more and have deteriorating number of enrolments because no one would be able to afford it .I fully agree with you as how unemployment would increase because there’s less amount number of people with qualifications to get the jobs .only jobs available for people would be waiting and McDonalds jobs

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