Great returns on your money? 2

November 22, 2002

Tim O'Shea's arguments against greater university reliance on fee income (Soapbox, THES , November 8) need rebutting. O'Shea correctly asserts that public funding annually per gross domestic product in the US exceeds that in the UK.

Much more important is the difference in private expenditure: 1.22 per cent of annual GDP in the US compared with 0.28 per cent in the UK.

This is not all down to fees, however. Philanthropy is a big factor. If the UK has to rely on alumni/corporate participation reaching US levels, we will be waiting for a long time.

On the argument that fees limit access: access is about more than fees. Despite two generations of university admission without fees, the social mix at UK universities has barely altered. Experience in Australia shows that fees do not damage access. No one need pay up front if they do not wish to do so. They can pay later.

O'Shea talks about debt aversion. But the arithmetic is compelling - fees of, say, £5,000 a year result in a (nominal) debt of £15,000 against a lifetime earnings premium of £400,000. The view that low-income families find this harder to understand than those who are better off is more than a little patronising.

It is naive to think that taxpayers will vote £3 billion a year to bridge the estimated higher education funding shortfall. It is not going to happen.

Today's lower-income taxpayers are on average subsidising tomorrow's higher-income taxpayers. The latter should therefore pay more; not the former.

David Greenaway
School of economics
University of Nottingham

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