Money talks: students receptive to subject premiums

Applicants willing to consider higher fees for better job prospects. Rebecca Attwood writes

January 28, 2010

Students could be charged more to study some degree subjects than others under a system mooted in research for the Government.

The study suggests that students may be more likely to consider paying higher fees to study a particular subject than to attend an "elite" university.

Researchers at the Institute for Employment Studies (IES) tested various hypothetical fee scenarios with a group of 81 university applicants. They found that students from poorer backgrounds were more likely to dismiss the idea of studying at a more expensive university than their wealthier peers.

"It is possible that raised fees could further deter applications to certain prestigious universities that are already struggling to widen their intake," warns the study, The Role of Finance in the Decision-making of Higher Education Applicants and Students.

However, students were more receptive to the idea of paying more to study a subject they were told would lead to better job prospects.

"Applicants were much more willing to contemplate - especially if they were from non-traditional backgrounds - paying a premium for a particular kind of course that they thought led to better outcomes," said Thomas Usher, a research fellow at the IES and one of the study's authors.

The report to the Department for Business, Innovation and Skills recommends that the review of fees, led by Lord Browne of Madingley and due to report after the election, consider different fees for different courses.

However, the idea received a cool reception from Nicholas Barr, professor of public economics at the London School of Economics and one of the architects of student fees in the UK.

He said: "In Australia, fees are set by subject, with higher fees for subjects such as law whose graduates are supposed to earn shedloads of money. This is not a good system.

"In any system where fees are set centrally, funding is closed-ended. If, as fee income goes up, taxpayer support goes down, universities have nowhere to go."

He said that after Australia introduced fees in 1989, university income rose, but then taxpayer support was clawed back. By 2000 the system was back in crisis.

"Put another way, with centrally set fees the Treasury controls the funding envelope. Funding is a zero-sum game, and the universities of Oxford and Poppleton quarrel like ferrets in a sack over the division of the fixed pot."

Wes Streeting, president of the National Union of Students, also raised doubts about the proposals.

"It is clear that earnings profiles for different subjects vary significantly, but it is also clear that they vary significantly within certain subject areas," he said.

The IES report, which is based on a qualitative study, also considers students' knowledge of and attitudes towards existing student-finance arrangements.

Finance appears to be an important element of decisions about where to study - students from poorer backgrounds were more likely to choose local institutions and live at home.

The study identifies a lack of understanding among applicants about bursaries, and says they tend to underestimate the amount of financial support they are entitled to.

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