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The OECD on the role of grants

May 11, 2015

This piece from January by the Director of Education and Skills of the OECD looks mainly at the system used in other parts of the UK (he refers to the UK as a single system, but the comments only make sense applied to the approach in England, and possibly also those in Wales and NI).

The piece includes a brief reference to the role of grant:

But even the best loan system is often not sufficient. There is ample evidence that youth from low income families or from families with poorly educated parents, but also youth who just don’t have good information on the benefits of tertiary education, underestimate the net benefits of tertiary education. That’s why it has paid off for the UK to complement the loan scheme with means-tested grants or tuition waivers for vulnerable groups.

The assertion that students from backgrounds without experience of HE may be reluctant to borrow appears to be borne out in Scotland, where a substantial minority of those low income students taking out a grant  borrow nothing and  limit themselves to the grant, a maximum of £1,750 a year and usually less: see here.

The piece more generally makes an argument for systems in which fees are charged but then met up-front by state-backed loans with income-contingent repayments, arguing that there is no direct relationship between access and the existence or not of fee charges:

 OECD data show absolutely no cross-country relationship between the level of tuition countries charge and the participation of disadvantaged youth in tertiary education. In fact, social mobility is worse in Germany which pays for all university education through the public purse than it is in the UK.

The author concludes that

There is lots the UK can do to further improve its approach to financing universities. For a start, it can do better with aligning course offerings with societal demand. I also worry that the loan repayment parameters mean many middle income workers – such as teachers, health professionals, public sector workers – will end up paying more for their education than better earners such as lawyers and bankers. But among all available approaches, the UK offers still the most scalable and sustainable approach to university finance.


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