Analysis: Tinkering with funding policy deters savers

October 11, 2002

Academic salaries must rise and fees will have to go up to keep universities competitive, two major studies conclude this week. The THES reports

Research comparing patterns of saving around the world will warn the government that constant tinkering with the funding of higher education will discourage people from saving to meet the cost of their study.

The research, carried out by the Learning and Skills Development Agency, looks at why some countries have a culture of saving for learning while others do not. Clarity of government policy is said to be a key factor.

In New Zealand, for example, where policies determining tuition-fee levels have changed at least three times since 1990, families have been unable to anticipate the true cost of university and, as a result, are deterred from saving for it. New Zealanders have not yet adjusted to the policy changes and the UK looks set to follow a similar path, the report warns.

In Japan, by contrast, a culture of saving for learning is deeply embedded and about 9 per cent of all saving is directly related to higher education.

"Government policy on funding education must remain constant for a significant time as savings behaviour is slow to adjust," the report says. "In Japan and the US, the state has always played a lesser role in financing tertiary education, thus, over successive generations, the costs of study have become well understood and likely spending can be anticipated."

For many families in this country, the cost of paying for higher education is already beginning to bite. Another report out this week says some 20 per cent of parents are cashing in savings to pay for their children's degree study.

Research commissioned by investment firm AXA found that a further 14 per cent of parents were working overtime, 5 per cent had taken second jobs and 3 per cent were selling their homes to pay for university education.

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