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



Table . The change in net financial position due to moving to the new funding
regime by parental income. £ p.a.

Family income

<£22,500

£25,000

£45,000

>£60,000

Old system

Costs of attending:
Fees

1200

1200

1200

1200

Payments for attending:
Fee Remissions

1200

943

0

0

Maintenance loan subsidy

905

905

678

678

Net position

905

648

-522

-522

New system

Costs of attending:
Fees

3000

3000

3000

3000

Payments for attending:
Grant

2700

2700

755

0

Bursary

300

300

0

0

Maintenance loan subsidy

676

676

773

767

Fee loan subsidy

990

990

990

990

Net position

1667

1667

-482

-1243

Overall gain from switching systems
(£p.a.)

£762

£1019

£40

-£722

Figure . Change in net financial position in moving to the new funding regime, by
parental income.

Note illustration is for student in first or second year living away from home outside
of London. The spike in the figure between £22,500 and £25,000 reflects the new
entitlement to the full grant
and the removal of partial upfront fees (see also Table 2).
Source: Goodman (2005). Author’s calculations, updated using DfES, LOAN,
GRANT AND FEE RATES FOR ACADEMIC YEAR 2006/07 MEMORANDUM 1:
SUPPORT AVAILABLE UNDER THE STUDENT SUPPORT REGULATIONS and
DIUS Press Release
Increased Support for Students in Higher Education, July 2007.
See Table 2 for selected calculations by family income.

4. Distributional effects of the reforms: by graduate lifetime earnings

5.

In this section, we consider how the new reforms affect different individuals,
depending on where they end up in the lifetime earnings distribution as graduates. We



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