It's not just the state that now pays for post-school education. Tony Tysome reports.
A national debate should be held on what can be done to help people save for further and higher education in the future, according to a report published this week.
The research highlights a cultural shift in attitudes towards learning in the UK, with parents, students and employers increasingly expected to pay towards post-school education.
But it warns that the ways in which people can save for learning, and government support for such investments, is limited.
The report, commissioned by the Learning and Skills Development Agency, suggests that government initiatives tailored to take advantage of future political and economic conditions could help the UK to build the kind of saving-for-learning culture and behaviour found in other European countries and in the US.
The LSDA Saving for Learning research project has been running for four years but has yet to discover how much people in the UK are putting aside to cover the costs of education.
Mick Fletcher, the research project manager, said that an analysis of that kind would be the next phase of the study. But the report concludes that the prospect of increasing university and college fees is likely to make more people want to save for their own or their children's future education.
Mr Fletcher said: "Where people can see a need to save for a particular purpose then they begin to make sensible provision. We are on the cusp of that happening in the case of saving for learning. But it is very important for the government to signal well in advance why and how much people should be saving. It takes time for people to get their finances in order, and for the financial institutions to develop appropriate savings products."
The report presents three possible scenarios for 2020 in which different policy and economic conditions will affect people's financial priorities and habits, and suggests ways that the government could encourage saving for learning under these circumstances.
In scenario one, the knowledge economy has fuelled growth and the government has increased expenditure on education. Fees have gone up, but so too have fee subsidies. Families and individuals want to invest in education because it brings high status and financial rewards. In this case, the report suggests the government should consider tax breaks on savings for learning and for employers investing in training, and access to pension funds for education expenditure.
Scenario two looks similar to today's situation, but with slightly higher private rates of return on education. Education's total share of public expenditure is unchanged, and individuals are having to save more to pay for pensions and care in old age. As the rate of return on education is not guaranteed, families and employers are less keen to pay for it. Suggested policy levers here include tax incentives for alumni donations to universities and training loans that employees can take with them when they change jobs.
In scenario three, growth in the economy is in the service sector rather than the knowledge economy, and the government is spending proportionately more on pensions and old-age care than on education. Rates of return on education are higher than today but government subsidies are lower.
Under these conditions, the report advocates the introduction of company learning accounts for contributions from employees and employers, and more career development loans.
Some of the savings initiatives suggested by the report could prove controversial. Under conditions similar to scenario three, for instance, it says matched funding schemes such as the former individual learning accounts might work. ILAs were shut down in 2002 after widespread fraud was discovered. But Mr Fletcher said: "The thing to remember is that ILAs were not wrong in principle, they just didn't have enough controls."
Nicholas Barr, professor of public economics at the London School of Economics, said the government would need to be careful not to create "another pro-rich subsidy".
Nigel Brown, the report's author, said employers needed to be involved in the debate but, in the end, it was the prevailing economic conditions that would affect people's attitude to saving for learning.
"A great deal will depend on whether the knowledge economy comes through, and investment in education is shown to really reap rewards," he said.
THE PARENT
David Harrison, father of two teenage children, thinks parents already realise how important it is to save to cover future education costs.
But he said it was very hard for them to know how much to save, and it was often difficult to turn good intentions into an education nest egg with so few savings products designed for this on the market.
He thinks the government should do more to help parents work out the likely costs and should provide more incentives to save, through tax breaks or matched-funding schemes.
He said: "Like most families, we constantly try to save, and I see it as part of our duty to use some of the money for our children's education.
"But it is very hard to know how much to set aside.
"The costings seem to change constantly. As a parent, I have no concept of whether putting my children through university is going to cost £20,000, £30,000 or more."
THE EMPLOYER
The government needs to focus its attention on skills shortages if it wants employers to help build a saving-for-learning culture in the UK, said Sonja Stockton, schemes recruitment and development manager for energy delivery company National Grid Transco plc.
She said: "As an organisation we have to look at where our skills needs are and try to meet those if we are to continue to succeed.
"We are committed to learning and development programmes at both the individual and organisational level, but there needs to be clear focus and clarity about investment in such programmes."
Ms Stockton suggested that employers would welcome more initiatives such as the Earn As You Learn scheme, which gives companies funding to take on trainees at advanced modern apprenticeship level.
THE STUDENT
Helen Thomas, a Warwick University English literature student, believes that saving for learning is a new concept for most young people.
Although she did not save anything for her education, she thinks it is a good idea and that it will encourage potential students to focus more on what course they want to do.
She said: "People are going to have to start saving later in life anyway, so it is probably a good education for them to have to start doing something about it earlier. Also, if you are building up an investment in something, that should mean you really want to do it and when it comes along you will appreciate it more."
"There are many hidden costs that people don't realise. If there was a special savings account for education I think they would be more inclined to think about that and save to cover themselves," she said.