Higher education funding reforms in England: the distributional effects and the shifting balance of costs



that are coming into force at the same time22 as fees are being increased - both a
higher repayment threshold and debt write-off after 25 years.

Related to this point, one could argue that one of the biggest losers of the reforms may
in fact turn out to be private banks, who in the past may have profited from extending
commercial loans to students whose parents had not picked up the full costs of their
HE (though see also footnote 20). As we have just seen, increases in up-front support
from taxpayers will almost certainly reduce the need for recourse to such relatively
expensive types of loan.

c) Possible reforms to the new system

Looking to the future, it is likely that the level and form of taxpayer subsidy inherent
in the loans may come up for review in 2009, when the DfES reports to parliament on
the effects of the reforms. A number of suggestions have been made for reducing
taxpayer costs, including the abolition of the zero real interest element of the subsidy
- see Barr, 2004, and Astle, 2006. The reason given by proponents of this proposal is
that, given the introduction of debt write-off after 25 years in 2006-07, the additional
benefit from the interest subsidy actually goes to those who are
not the lowest earners.

Figure illustrates this by showing how two variants - both of which restrict the value
of the interest subsidy - compare to the new system of income-contingent loans to be
introduced this year. Here we continue to assume a level of debt of £18,340 and
compare the total value of debt repayments, the interest subsidy, and the total years
taken to repay under each of three repayment schemes:

New system: this is the system to be introduced in 2008-09 and described
already above.

Variant 1: 2.5% real interest rate on debt: under this variant, the repayment

22 Though strictly speaking, note that the repayment threshold changed one year before the
introduction of top-up fees, in 2005-06.

23



More intriguing information

1. The name is absent
2. The name is absent
3. APPLYING BIOSOLIDS: ISSUES FOR VIRGINIA AGRICULTURE
4. Pass-through of external shocks along the pricing chain: A panel estimation approach for the euro area
5. Campanile Orchestra
6. Altruism and fairness in a public pension system
7. The role of statin drugs in combating cardiovascular diseases
8. The name is absent
9. Sex differences in the structure and stability of children’s playground social networks and their overlap with friendship relations
10. L'organisation en réseau comme forme « indéterminée »
11. Analyse des verbraucherorientierten Qualitätsurteils mittels assoziativer Verfahren am Beispiel von Schweinefleisch und Kartoffeln
12. The name is absent
13. Banking Supervision in Integrated Financial Markets: Implications for the EU
14. The InnoRegio-program: a new way to promote regional innovation networks - empirical results of the complementary research -
15. Barriers and Limitations in the Development of Industrial Innovation in the Region
16. Political Rents, Promotion Incentives, and Support for a Non-Democratic Regime
17. GENE EXPRESSION AND ITS DISCONTENTS Developmental disorders as dysfunctions of epigenetic cognition
18. On the job rotation problem
19. The name is absent
20. The name is absent