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Volume 44 Issue 3 (July 1990), Pages 191-290

The Funding of Higher Education in the UK: a Contribution to the Debate (pages 230-244)


In this paper we review arguments that have been well rehearsed in the economic literature in the past twenty years and which are relevant to the present debate over student loans and the funding of the higher education sector.

The body of the paper assesses four finding proposals: (1) The Government's mortgage‐type loan scheme, (2) The Barr, National Insurance repayment scheme, (3) The Graduate Tax and (4) A Loan scheme based on the individual higher education institution.

Each proposal is assessed in terms of its efficiency impact in six dimensions, (i) set up costs and flexibility, (ii) administrative costs (iii) incentives (iv) information (v) the balance of public and private involvement, and (vi) equity.

We conclude that, overall, we would not recommend any of the alternatives as unambiguously superior on all counts. Insofar as a radical approach is to be implemented we argue that a scheme based on the individual higher education institution, with repayment via the National Insurance system, is probably the best option.

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