Higher education

Higher Education (HE) forms an important part of the economy and Britain boasts some of the world's finest universities. Increasing participation rates and international competition means that getting the design of the HE system right is more important than ever. The trebling of tuition fees in 2012 being a controversial policy, and the debate about how much the government should be subsidizing HE very much ongoing.  

IFS research has contributed significantly to the policy debate. In previous work, we estimated the distributional impact of the large scale 2012 reforms, highlighting the unexpected result that lower earning graduates were actually made better off as a result of the reforms, due to the increase in the threshold at which graduates start making loan repayments. We have also shown that funding increased for cheap-to-teach courses the most, and highlighted the variation in earnings by subject and institution, which has helped to inform policy makers and students alike.   

Universities education is important for improving productivity, and also a potential tool for increasing social mobility. Our work has highlighted the large gaps in the share of rich and poor children going to university and completing university with a good degree, and investigated the drivers of those gaps. We have shown, using HMRC tax records, that earnings of graduates from poorer backgrounds are considerably lower, even conditional on studying the same subject at the same university, which highlights that subsidising university education as a means of increasing social mobility is a challenging policy. 

IFS work will continue to influence both the academic literature and the public policy debate. We are currently investigating how student loan design affects choices, what the key determinants of university demand are, and how the supply side responds to reforms. We are at the forefront of exciting developments in linked administrative data. Having already linked Student Loan Company records to HMRC tax data, we are now amongst the first researchers to be using the Department for Education’s Longitudinal Education Outcomes (LEO) dataset to investigate returns to subject and institution choices.