Higher Education Flashcards
Define Education
An Investment in Human Capital- can lead to greater Economic Growth as it increases Productive Capacity
When did HE Reforms start in UK?
2012
What were the HE Reforms since 2012?
Shift from Up-front Grants to Student Loans
Increased Tuition Fees
Latest Reform- Loan Repayment
What is the Private Investment Decision on Education?
Person Investing in HE does so based on fact that Degree/Studying would give higher wage in future- Private Benefits > Private Costs
What is the Net Present Value (NPV) of the Investment?
Difference between the Cost + Interest- adjusted value of future payment
What is the equation for the NPV?
NPV = -C + [P / (1 + r)^t]
If NPV > 0, you SHOULD Invest in Education
What does the Right Amount of Investment Depend on?
Depends on- Difference between Present Value of Benefits + Present Value of Costs
What is the Opportunity Cost of Studying?
Salary/Wage that could’ve been earned if you were Working instead
What is the Total Economic Cost (P) of Studying?
Tuition Fees + Opportunity Cost
What is the PV of Cost of 3 years Studying?
-C + [C / (1 + r)^1] + [C / (1 + r)^2]
2013- What were the Net Earnings of a Degree for Men + Women?
28% Higher for Men
53% Higher for Women
What are the 2 questions that need to be figured out when looking at Public Decisions on Education?
- Reasons to Support Public Education
2. How much should be spent on Education
Why would the Gov. want to spend on HE?
Educated Population–> Increase Employment–> Decreased Crime + Welfare Costs
- -> Increased Productivity + Tax Rev.–> Increased Human Capital
- -> Increased Stable Employment–> Decreased Negative health impacts–> Reduced Neg. Externalities–> Reduced Burden on Taxpayer from Healthcare cost
If HE is fully Subsidised, which curve would shift?
DEMAND for Education would Shift to Right
What UK HE Reforms were introduced in 1998?
Tuition Fees Introduced- £1000 / year
2006 Reforms?
Increased Fees- £3000 / year
2012 Reforms?
Increased Fee Cap- £3,375–> £9000
Increased Tuition Fee loans to match Fees
Increased Earnings cap for Repayment- £15,000–> £21,000
Positive Real Interest Rate- only reaches 3% at £41k earnings
Increased Loan Write-off Period- 25 yrs–> 30 yrs
Increased Grant + Fee Waivers- encourage poorer students
2016 Reforms?
Maintenance Grants changed to Maintenance Loans
Repayment Threshold frozen in Cash terms for 5 yrs- 2021
2017 Reforms?
Increased Tuition Fees w/ Inflation- £9,250 / year
Teaching Excellence Framework (TEF) introduced- determines who can Increase Fees
What are the Impacts of the Reforms on future Students considering HE?
Increased Debt Levels on Graduation
Expected Lifetime Repayments
Increased amount of Cash students have in their pockets at University
Why was the 2012 System more Progressive than the Previous system?
Reduced Repayments for Grads. in bottom 30% lifetime earnings
Increased Repayments for Highest-earning Grads.
What was the effect of 2012 Increased Fees on Average Debt levels?
2011-2017- Increase over Double in Average Debt
What was the main reason for Increased Average Debt 2012-2017?
Change of Maintenance Grants to Maintenance Loans- especially for Poorer Students
After 2015- Grant Removal– Poorest 40% w/ Largest Debts
People in the 2017 System- What share of Individuals can expect to have some debt written off?
77.4%- over 3/4 of students
