combined amounts to the relatively small sum of £100m, whilst the net increase in
contribution from the taxpayer amounts to around £1.1bn. This suggests that while the
university sector as a whole is growing, the biggest net increase on aggregate is from
the public not the private sector. However, if we consider tuition alone, it is certainly
the case that the share of private contributions will be rising. This is illustrated in
Figure . Prior to the introduction of top-up fees in 2006-07, the private contribution to
tuition costs, of around £5,000 per student per year, is 8%.30 With the new system in
place, funding could increase to around £6,000, or by 24%31 on average in real terms
per head, if all universities charge the full fee. The private fee contribution will
amount to around 33% of the total, though this will be substantially subsidised by the
taxpayer in the form of loan subsidies, arising from the zero real interest rate on the
new fee loans and the provision for debt write-off after 25 years. Taking into account
the loan subsidy element of the fees, the private contribution will be around 23%.
Figure . The balance between public and private costs of tuition
8%
68%
9%
23%
92%
Note: Public funding excluding loan subsidies is reduced between 2005-06 and 2008-09 due to removal of fee
exemptions. The public money currently spent on fee exemptions will of course partly pay for additional loan
subsidies shown on this figure.
Source: Authors’ calculations based on Department for Education and Skills Departmental Report, 2005 Table 12.7
http://www.dfes.gov.uk/publications/deptreport2005/docs/2005deptrep.pdf, and National Statistics First Release
SLC SFR 01/2004 Table 2C http://www.slc.co.uk/pdf/slcsfr012004.pdf. All figures up-rated to 2006-07 prices
using GDP deflator.
The analysis in this section also suggests that some of the most important effects of
the reforms will be distributional effects within the private sector, both over time (for
example where there are shifts in costs from students to graduates), and, as we have
30 Based on HEFCE recurrent grant for teaching in England (which covers undergraduate and post-
graduate teaching), plus public and private contributions to the basic fee, divided by the number of FTE
equivalent undergraduate and post-graduate students. Note that these funding per head figures are
calculated on a different basis to those produced by the DfES and presented in its yearly departmental
reports.
31 Based on DfES public expenditure estimates, projecting in total £2.25 billion in fee revenues each
year in steady-state. This figure assumes that 91% of universities charge the full fee, and excludes only
the minimum mandated bursary amount of £300 for the poorest students on courses where the full fee
is charged. The Office for Fair Access has estimated around 91 per cent of HEIs and FECs are planning
to charge the full tuition fee of £3,000, and that a “typical” bursary would be considerably more than
the minimum, at around £1,000. See Press Release from 17 March 2005
(www.offa.org.uk/news/2005/acc agr.asp).
30