Econ
Using the data and your own economic knowledge, assess the case for financing universities mainly through charging fees to their students.
Charging of fees means that payments will be taken from students instead of receiving subsidies from the government. Education is a merit good as it produces positive externalities (i.e. a better educated workforce that can increase productivity of the society) and is under-consumed as a result. Alternatives to charging fees include government funding, gifting money to university and selling research to commercial companies. There is evidently existence of market failure in education. Extract B, line 1 suggests that universities need more income, and they were finance largely through government spending and taxation by providing subsidies and grants to students since 1988. In America, methods such as selling their research to commercial companies and persuading rich individuals and companies to donate have been proved to be successful. According to line 10-14 in Extract C, tuition fees often deter young people, especially those from poorer backgrounds, from going to university. Also, education is a service which markets tend to under-provide, creating market failure. People argued that charging fees to university students provides the best way of financing the growth of high education. The lifetime return is huge compared to tuition fees. According to Extract C, graduates with degrees can earn £160000 more than non-graduates. There is clearly private benefit gained from paying fees to go to university. Students who value long-term benefits will still attend universities in spite of high fees. However, this depends on how much freedom universities are given to increase tuition fees. If fees are too high, it will cause young people to be reluctant to attend, especially those who struggle financially. If less people attend university, social benefit will decrease as less people are highly-educated and more productive. As the
Charging of fees means that payments will be taken from students instead of receiving subsidies from the government. Education is a merit good as it produces positive externalities (i.e. a better educated workforce that can increase productivity of the society) and is under-consumed as a result. Alternatives to charging fees include government funding, gifting money to university and selling research to commercial companies. There is evidently existence of market failure in education. Extract B, line 1 suggests that universities need more income, and they were finance largely through government spending and taxation by providing subsidies and grants to students since 1988. In America, methods such as selling their research to commercial companies and persuading rich individuals and companies to donate have been proved to be successful. According to line 10-14 in Extract C, tuition fees often deter young people, especially those from poorer backgrounds, from going to university. Also, education is a service which markets tend to under-provide, creating market failure. People argued that charging fees to university students provides the best way of financing the growth of high education. The lifetime return is huge compared to tuition fees. According to Extract C, graduates with degrees can earn £160000 more than non-graduates. There is clearly private benefit gained from paying fees to go to university. Students who value long-term benefits will still attend universities in spite of high fees. However, this depends on how much freedom universities are given to increase tuition fees. If fees are too high, it will cause young people to be reluctant to attend, especially those who struggle financially. If less people attend university, social benefit will decrease as less people are highly-educated and more productive. As the