I am really sorry but a 12-page executive summary is just too much!!
You can read the whole of the BIS research paper number 115 here (PDF 400pp)
Showing posts with label student_finance. Show all posts
Showing posts with label student_finance. Show all posts
Thursday, 4 July 2013
Wednesday, 22 May 2013
Student loan reform, interest subsidies and costly technicalities: lessons from the UK experience
Alison Johnston (Oregon State University, Corvallis, USA) and Nicholas Barr (London School of Economics and Political Science, UK) published in Journal of Higher Education Policy and Management Volume 35 Issue 2 (April 2013)
Abstract
In this paper, we consider lessons for other countries about the design of student loans with income-contingent repayments (i.e. repayments calculated as x per cent of each borrower’s subsequent income).
Using a dataset of 20,000 simulated lifetime graduate earnings paths, we estimate the cost and distributional effects of reforms in England in 2012. Introducing a real interest rate produces significant savings, mostly from graduates in the middle and upper earnings deciles. But those gains are offset by an increase in the income threshold at which loan repayments start.
We conclude with discussion of policy changes to offset the increased cost of student loans (roughly £4,400 per graduate) within the current austerity climate, namely significant reductions in the higher education block teaching grant and a cap on the number of students.
Abstract
In this paper, we consider lessons for other countries about the design of student loans with income-contingent repayments (i.e. repayments calculated as x per cent of each borrower’s subsequent income).
Using a dataset of 20,000 simulated lifetime graduate earnings paths, we estimate the cost and distributional effects of reforms in England in 2012. Introducing a real interest rate produces significant savings, mostly from graduates in the middle and upper earnings deciles. But those gains are offset by an increase in the income threshold at which loan repayments start.
We conclude with discussion of policy changes to offset the increased cost of student loans (roughly £4,400 per graduate) within the current austerity climate, namely significant reductions in the higher education block teaching grant and a cap on the number of students.
Tuesday, 25 September 2012
Student awareness of the costs and benefits of higher education
an article (CEPCP376) by Martin McGuigan, Sandra McNally and Gill Wyness published in CentrePiece - The Magazine for Economic Performance (September 2012)
What impact did media reporting of the near trebling of tuition fees have on school students’ understanding of the costs and benefits of university?
A CEP experiment run by Sandra McNally and colleagues sheds light on this question as well as on broader issues about the importance of clear information about the value of higher education.
Full article (PDF 7pp)
This article summarises Student Awareness of Costs and Benefits of Educational Decisions: Effects of an Information Campaign (PDF 57pp) by Martin McGuigan, Sandra McNally and Gill Wyness, Centre for the Economics of Education Discussion Paper No.139, August 2012
What impact did media reporting of the near trebling of tuition fees have on school students’ understanding of the costs and benefits of university?
A CEP experiment run by Sandra McNally and colleagues sheds light on this question as well as on broader issues about the importance of clear information about the value of higher education.
Full article (PDF 7pp)
This article summarises Student Awareness of Costs and Benefits of Educational Decisions: Effects of an Information Campaign (PDF 57pp) by Martin McGuigan, Sandra McNally and Gill Wyness, Centre for the Economics of Education Discussion Paper No.139, August 2012
Wednesday, 12 September 2012
Student Awareness of Costs and Benefits of Educational Decisions: Effects of an Information Campaign
a paper (CEE DP 139) by Martin McGuigan (Queen’s Management School, Belfast), Sandra McNally (University of Surrey, London School of Economics and Centre for the Economics of Education) and Gill Wyness (Centre for the Economics of Education and CentreForum) published by Centre for the Economics of Education (August 2012)
Executive Summary
The economic benefits of staying on in education have been well established.
But do students know this? One of the reasons why students might drop out of education too soon is because they are not well informed about the costs and benefits of staying on in education at an appropriate time of their educational career. Indeed, the fact that university fees have trebled in recent times (in England) have led to fears that many young people may be put off from participating in further and higher education – especially those from low income backgrounds. This could exacerbate inequalities that are already very stark.
In this paper, we investigate students’ knowledge and their receptiveness to information campaigns about the costs and benefits of staying on in education. We design an “information campaign” that provides some simple facts about economic and financial aspects of educational decisions and test students’ response to this campaign. The fieldwork for our information campaign mainly took place over the first two terms of 2010-2011 - the period in which the trebling of university fees was announced (amid much controversy). This provided us with an opportunity to measure students’ receptiveness to the surrounding publicity in the media.
The material for our information campaign consists of a (password protected) website, materials that can be used by the teacher (a video and presentation) and a one page flyer that can be handed out to students. The materials used in the research are now publicly available at http://www.whats4.me.uk/.
All secondary schools in London were invited to take part in our study. Over 12,000 pupils from 54 schools took part in the main evaluation which took place over the school year 2010-2011. Within each school, all Year 10 students (i.e. 14/15-year-olds) completed a 40-minute survey (under exam conditions). They were then given a very similar survey to complete 8-12 weeks later. In between the two periods, some schools were given information materials whereas other schools were given the materials some time later (after their students had completed the second survey). Schools were randomly assigned into two groups – with “treatment” schools getting the materials between the two surveys and “control schools” getting the materials some time later. The purpose was to test whether students in treatment schools showed any change in knowledge and aspirations 8-12 weeks later compared to students in the control schools. We also looked at the relationship between the number of media reports on tuition fees (on the BBC website) and students’ knowledge and aspirations at the time of each survey. One crucial difference between our information campaign and the media reporting is that the latter emphasised the huge rise in university fees, without always giving emphasis to the favourable terms of loans and the availability of grants.
We chose Year 10 because these students do their GCSE exams one year later (Year 11), as well as make important decisions on what to do subsequently. The participating schools were above average in terms of GCSE performance and were relatively less deprived (in terms of percentage of students eligible to receive free school meals). The results indicate that students in participating schools have significant gaps in their basic knowledge about the costs and benefits of staying in education and going to university. However, the information experiment and media reporting worked in the same direction for knowledge of when fees are paid, increasing the probability of correctly understanding the basics of when fees are paid by 5.8 and 9 percentage points respectively (from a baseline of 46% of students, who knew the right answer in the first survey). Moreover, our information experiment increased the probability of agreeing that “student loans are a cheaper/better way to borrow money than other types of borrowing” by 7.6 percentage points (from a baseline of 48.6%) while media reporting had no effect.
For the perceived importance of financial constraints on staying in education, the information experiment and media reporting had opposite effects. Our information campaign led students to think that staying in education would be affordable (loan conditions and grants were carefully explained) whereas media reporting led students to think that going to university would be “too expensive”. For example, the proportion of students put off by financial aspects of university fell by 5 percentage points.
Media reporting, on the other hand, increased the negative perceptions of affordability in all cases, with, for example, the proportion of students put off by financial aspects of university increasing by 6.5 percentage points. This is a sizeable impact when put alongside the baseline levels of agreement of 25.7%.
On knowledge about the benefits of staying in education, media reporting had no effect that is statistically different from zero. But the information experiment increased the probability that students perceive that they have a better chance of getting a job if they stay in education to the age of 18 or if they go to university. At the same time, the information experiment reduced the probability of agreeing with (incorrect) statements about choice of subject and university.
Finally, the information experiment had an impact on whether students plan to stay in education - but no impact on university intentions. But the effect of media reporting was to reduce the probability of stating &ldquoit is very likely I will ever apply to university to do a degree” by four percentage points.
Our results indicate that media reporting and a fairly ‘light-touch’ information campaign have quite sizeable effects on student attitudes – at least in the short-term. Of course, this does not necessarily translate into behaviour. But there is certainly a strong correlation between students’ attitudes and their subsequent behaviour (as we show using the Longitudinal Survey of Young People in England). If there is a chain of causation between student beliefs about the affordability of higher education and how hard they work to ensure they can access opportunities, then informing students properly might also be a way of improving performance at GCSE.
All the indications are that the hike in fees in late 2010 (and specifically, media reporting of the changes) increased the perception of going to university as ‘too expensive’. This perception was significantly higher in comprehensive schools (compared with independent and selective state schools) and among children eligible for free school meals. If these perceptions influence effort at school or behaviour post-16, this will increase socio-economic inequality in the future.
On the positive side, a fairly light-touch information campaign in schools can reverse some of these negative effects. It can give a more rounded view of the reforms – stressing the availability of grants and how loans can be repaid – rather than focusing on the increase in fees per se. An information campaign like the one used in this project can be effective at a low cost. However, we should not assume that information gets conveyed in the right way – or at all – to students. Policy attention should focus on the incentives that schools have to invest time and effort in providing careers information (which is not regulated and does not influence ‘league tables’) as well as available resources to ensure that information is conveyed in an appropriate way.
Full text (PDF 57pp)
Executive Summary
The economic benefits of staying on in education have been well established.
But do students know this? One of the reasons why students might drop out of education too soon is because they are not well informed about the costs and benefits of staying on in education at an appropriate time of their educational career. Indeed, the fact that university fees have trebled in recent times (in England) have led to fears that many young people may be put off from participating in further and higher education – especially those from low income backgrounds. This could exacerbate inequalities that are already very stark.
In this paper, we investigate students’ knowledge and their receptiveness to information campaigns about the costs and benefits of staying on in education. We design an “information campaign” that provides some simple facts about economic and financial aspects of educational decisions and test students’ response to this campaign. The fieldwork for our information campaign mainly took place over the first two terms of 2010-2011 - the period in which the trebling of university fees was announced (amid much controversy). This provided us with an opportunity to measure students’ receptiveness to the surrounding publicity in the media.
The material for our information campaign consists of a (password protected) website, materials that can be used by the teacher (a video and presentation) and a one page flyer that can be handed out to students. The materials used in the research are now publicly available at http://www.whats4.me.uk/.
All secondary schools in London were invited to take part in our study. Over 12,000 pupils from 54 schools took part in the main evaluation which took place over the school year 2010-2011. Within each school, all Year 10 students (i.e. 14/15-year-olds) completed a 40-minute survey (under exam conditions). They were then given a very similar survey to complete 8-12 weeks later. In between the two periods, some schools were given information materials whereas other schools were given the materials some time later (after their students had completed the second survey). Schools were randomly assigned into two groups – with “treatment” schools getting the materials between the two surveys and “control schools” getting the materials some time later. The purpose was to test whether students in treatment schools showed any change in knowledge and aspirations 8-12 weeks later compared to students in the control schools. We also looked at the relationship between the number of media reports on tuition fees (on the BBC website) and students’ knowledge and aspirations at the time of each survey. One crucial difference between our information campaign and the media reporting is that the latter emphasised the huge rise in university fees, without always giving emphasis to the favourable terms of loans and the availability of grants.
We chose Year 10 because these students do their GCSE exams one year later (Year 11), as well as make important decisions on what to do subsequently. The participating schools were above average in terms of GCSE performance and were relatively less deprived (in terms of percentage of students eligible to receive free school meals). The results indicate that students in participating schools have significant gaps in their basic knowledge about the costs and benefits of staying in education and going to university. However, the information experiment and media reporting worked in the same direction for knowledge of when fees are paid, increasing the probability of correctly understanding the basics of when fees are paid by 5.8 and 9 percentage points respectively (from a baseline of 46% of students, who knew the right answer in the first survey). Moreover, our information experiment increased the probability of agreeing that “student loans are a cheaper/better way to borrow money than other types of borrowing” by 7.6 percentage points (from a baseline of 48.6%) while media reporting had no effect.
For the perceived importance of financial constraints on staying in education, the information experiment and media reporting had opposite effects. Our information campaign led students to think that staying in education would be affordable (loan conditions and grants were carefully explained) whereas media reporting led students to think that going to university would be “too expensive”. For example, the proportion of students put off by financial aspects of university fell by 5 percentage points.
Media reporting, on the other hand, increased the negative perceptions of affordability in all cases, with, for example, the proportion of students put off by financial aspects of university increasing by 6.5 percentage points. This is a sizeable impact when put alongside the baseline levels of agreement of 25.7%.
On knowledge about the benefits of staying in education, media reporting had no effect that is statistically different from zero. But the information experiment increased the probability that students perceive that they have a better chance of getting a job if they stay in education to the age of 18 or if they go to university. At the same time, the information experiment reduced the probability of agreeing with (incorrect) statements about choice of subject and university.
Finally, the information experiment had an impact on whether students plan to stay in education - but no impact on university intentions. But the effect of media reporting was to reduce the probability of stating &ldquoit is very likely I will ever apply to university to do a degree” by four percentage points.
Our results indicate that media reporting and a fairly ‘light-touch’ information campaign have quite sizeable effects on student attitudes – at least in the short-term. Of course, this does not necessarily translate into behaviour. But there is certainly a strong correlation between students’ attitudes and their subsequent behaviour (as we show using the Longitudinal Survey of Young People in England). If there is a chain of causation between student beliefs about the affordability of higher education and how hard they work to ensure they can access opportunities, then informing students properly might also be a way of improving performance at GCSE.
All the indications are that the hike in fees in late 2010 (and specifically, media reporting of the changes) increased the perception of going to university as ‘too expensive’. This perception was significantly higher in comprehensive schools (compared with independent and selective state schools) and among children eligible for free school meals. If these perceptions influence effort at school or behaviour post-16, this will increase socio-economic inequality in the future.
On the positive side, a fairly light-touch information campaign in schools can reverse some of these negative effects. It can give a more rounded view of the reforms – stressing the availability of grants and how loans can be repaid – rather than focusing on the increase in fees per se. An information campaign like the one used in this project can be effective at a low cost. However, we should not assume that information gets conveyed in the right way – or at all – to students. Policy attention should focus on the incentives that schools have to invest time and effort in providing careers information (which is not regulated and does not influence ‘league tables’) as well as available resources to ensure that information is conveyed in an appropriate way.
Full text (PDF 57pp)
Wednesday, 4 July 2012
Evaluating the effects of university grants by using regression discontinuity designs
an article by Fabrizia Mealli and Carla Rampichini (Università di Firenze, Italy) published in Journal of the Royal Statistical Society: Series A (Statistics in Society) Volume 175 Issue 3 (July 2012)
Summary
The paper evaluates the effects of Italian university grants on student dropout. Eligible applicants receive a grant if their family economic indicator is below a specified threshold, so the grant assignment rule appeals to a regression discontinuity design.
After a brief introduction to regression discontinuity designs, the particular setting that is considered in the paper is formalized.
Difference-in-difference type assumptions are introduced to identify and estimate the effect away from the threshold. Empirical results show that, at the threshold, the grant is an effective tool to prevent students from low income families from dropping out of higher education.
However, there is some evidence that the effect of the grant becomes smaller and not significant for poorer students who are further from the threshold.
Hazel’s comment:
I’m sorry that my ability with statistics gets less and less with the passing of the years – a clear case of use it or lose it – or I would be able to understand the workings of this research.
However, I do understand the words well enough to realise that the retention effect of a grant gets less the poorer the student’s family is.
Summary
The paper evaluates the effects of Italian university grants on student dropout. Eligible applicants receive a grant if their family economic indicator is below a specified threshold, so the grant assignment rule appeals to a regression discontinuity design.
After a brief introduction to regression discontinuity designs, the particular setting that is considered in the paper is formalized.
Difference-in-difference type assumptions are introduced to identify and estimate the effect away from the threshold. Empirical results show that, at the threshold, the grant is an effective tool to prevent students from low income families from dropping out of higher education.
However, there is some evidence that the effect of the grant becomes smaller and not significant for poorer students who are further from the threshold.
Hazel’s comment:
I’m sorry that my ability with statistics gets less and less with the passing of the years – a clear case of use it or lose it – or I would be able to understand the workings of this research.
However, I do understand the words well enough to realise that the retention effect of a grant gets less the poorer the student’s family is.
Friday, 22 July 2011
Fees and loathing: …
the impact of higher education finance on university participation
The cap on tuition fees will rise to £9,000 in 2012.
In the third of the Centre for Economic Policy’s series on policies of the coalition government, Gill Wyness describes evidence on the impact of past fee increases on young people’s decisions to go to university.
Full article (PDF 4pp) published in CentrePiece (Summer 2011)
The cap on tuition fees will rise to £9,000 in 2012.
In the third of the Centre for Economic Policy’s series on policies of the coalition government, Gill Wyness describes evidence on the impact of past fee increases on young people’s decisions to go to university.
Full article (PDF 4pp) published in CentrePiece (Summer 2011)
Thursday, 14 July 2011
Consultation on potential early repayment mechanisms for student loans
This consultation opened on 28 June 2011 and will close on 20 September 2011
BIS (Department for Business, Innovation and Skills) is consulting on potential early repayment mechanisms for student loans – similar to those paid by people who pre-pay their mortgages.
BIS is committed to the progressive nature of the repayment mechanism. It is therefore important that those on the highest incomes after graduation are not able unfairly to buy themselves out of this progressive mechanism by paying off their loans early. That is why BIS is consulting on potential early repayment mechanisms – similar to those paid by people who pre-pay their mortgages.
Further information can be found on the Higher Education Reform website.
Input is sought on the following three questions:
See also the Higher Education White Paper (URN 11/944) and related publications URNs 11/1046, 11/1048, 11/1049 and 11/1050
Hazel’s comment:
Please be grateful that I found the links to the related publications!! It was not the easiest task in the world and I gave up after 10 minutes on the “higher education reform website”.
Answers to the problem in the comments, please.
BIS (Department for Business, Innovation and Skills) is consulting on potential early repayment mechanisms for student loans – similar to those paid by people who pre-pay their mortgages.
BIS is committed to the progressive nature of the repayment mechanism. It is therefore important that those on the highest incomes after graduation are not able unfairly to buy themselves out of this progressive mechanism by paying off their loans early. That is why BIS is consulting on potential early repayment mechanisms – similar to those paid by people who pre-pay their mortgages.
Further information can be found on the Higher Education Reform website.
Input is sought on the following three questions:
- Should BIS introduce a more progressive mechanism for early repayment of student loans?
- If BIS should introduce a more progressive mechanism, which model best delivers BIS’ stated aims of ensuring the progressiveness and sustainability of the student finance system?
- How would a more progressive early repayment mechanism affect you or your organisation’s perception of, and relationship with, the student finance system?
See also the Higher Education White Paper (URN 11/944) and related publications URNs 11/1046, 11/1048, 11/1049 and 11/1050
Hazel’s comment:
Please be grateful that I found the links to the related publications!! It was not the easiest task in the world and I gave up after 10 minutes on the “higher education reform website”.
Answers to the problem in the comments, please.
Saturday, 25 June 2011
Fees and loathing: …
higher education finance and university participation
an article by Gill Wyness published in CentrePiece – The Magazine for Economic Performance (CEPCP343. June 2011)
With the UK's cap on tuition fees due to rise to £9,000, Gill Wyness looks at the impact of past fee increases on young people's decisions to go to university.
Full article: http://cep.lse.ac.uk/pubs/download/cp343.pdf
With the UK's cap on tuition fees due to rise to £9,000, Gill Wyness looks at the impact of past fee increases on young people's decisions to go to university.
Full article: http://cep.lse.ac.uk/pubs/download/cp343.pdf
Thursday, 23 June 2011
Fees and loathing: …
higher education finance and university participation
an article by Gill Wyness published in CentrePiece – The Magazine for Economic Performance (CEPCP343. June 2011)
With the UK's cap on tuition fees due to rise to £9,000, Gill Wyness looks at the impact of past fee increases on young people's decisions to go to university.
Full article: http://cep.lse.ac.uk/pubs/download/cp343.pdf
With the UK's cap on tuition fees due to rise to £9,000, Gill Wyness looks at the impact of past fee increases on young people's decisions to go to university.
Full article: http://cep.lse.ac.uk/pubs/download/cp343.pdf
Monday, 28 September 2009
Getting educated about tax
via NDS RSS
Full-time students pay income tax just like everybody else but research from HM Revenue & Customs (HMRC) reveals that more than half of the UK's 2.3 million university students don't realise this.
Read the full press release
Full-time students pay income tax just like everybody else but research from HM Revenue & Customs (HMRC) reveals that more than half of the UK's 2.3 million university students don't realise this.
Read the full press release
Wednesday, 31 December 2008
Efficient Tuition Fees and Examinations
an article by Robert J Gary-Bobo (Université Paris 1, Paris School of Economics) and Alain Trannoy (EHESS and GREQAM-IDEP) in Journal of The European Economic Association Volume 6 Number 6 (December 2008)
Abstract
We assume that students observe only a private, noisy signal of their ability and that universities can condition admission decisions on the results of noisy tests. If the university observes a private signal of each student's ability, which is soft information, then asymmetries of information are two-sided, and the optimal admission policy involves a mix of pricing and pre-entry selection, based on the university's private information. In contrast, if all test results are public knowledge, then there is no sorting on the basis of test scores: Tuition alone does the job of implementing an optimal degree of student self-selection. These results do not depend on the existence of peer effects. The optimal tuition follows a classic marginal social-cost pricing rule.
© 2008 by the European Economic Association
Abstract
We assume that students observe only a private, noisy signal of their ability and that universities can condition admission decisions on the results of noisy tests. If the university observes a private signal of each student's ability, which is soft information, then asymmetries of information are two-sided, and the optimal admission policy involves a mix of pricing and pre-entry selection, based on the university's private information. In contrast, if all test results are public knowledge, then there is no sorting on the basis of test scores: Tuition alone does the job of implementing an optimal degree of student self-selection. These results do not depend on the existence of peer effects. The optimal tuition follows a classic marginal social-cost pricing rule.
© 2008 by the European Economic Association
Friday, 26 December 2008
Shameless self-promotion
via PSD Blog - The World Bank Group by Ryan Hahn
It may not be 100 percent in line with private sector development, but, hey, what else are blogs for?
The Institute for Higher Education Policy today released a new (and long awaited) report by Ryan Hahn and Derek Price on College-Qualified Students Who Don't Enroll in College. Among its many findings on college-going in the US, I thought I'd highlight one in particular:
It may not be 100 percent in line with private sector development, but, hey, what else are blogs for?
The Institute for Higher Education Policy today released a new (and long awaited) report by Ryan Hahn and Derek Price on College-Qualified Students Who Don't Enroll in College. Among its many findings on college-going in the US, I thought I'd highlight one in particular:
Students may also be wary about taking out loans to finance their education; about one-third of non-college-goers indicated an aversion to borrowing, and 45 percent of counselors stated that an unwillingness to borrow was almost always or frequently important.If so many American students are put off by loans, one has to wonder how much higher aversion to borrowing is in less debt-ridden societies. Yet if countries are to find sufficient resources available to fund higher education, I see little alternative. Reducing the risk of borrowing then becomes crucial to creating a well-funded and equitable system of higher education finance.
Thursday, 14 February 2008
Calling all students
via Motley Fool (the money advice website)
Opinionpanel Research has teamed up with Amazon to offer free gift certificates in return for the completion of short web-surveys. You get £10 in total when you register, and a further £1 to £2 per survey thereafter. Once you've reached £25, you receive your Amazon gift certificates by email. In order to qualify, you must have a valid email address issued by your university (i.e. ending in .ac.uk). The certificates continue to roll-in after you've graduated, as you are automatically transferred to the Graduate Panel when you finish your studies.
Not quite "money for old rope" but certainly worth doing. I'm not sure about "short" as an adjective -- in classification terms this would need to be quantified. A short course is: "anything less than an academic year" to an academic, "no more than a day" to a business manager. So, what's "a short web-survey"? Less than 5 minutes? Less than 10 minutes?
I don't know the answer!
Opinionpanel Research has teamed up with Amazon to offer free gift certificates in return for the completion of short web-surveys. You get £10 in total when you register, and a further £1 to £2 per survey thereafter. Once you've reached £25, you receive your Amazon gift certificates by email. In order to qualify, you must have a valid email address issued by your university (i.e. ending in .ac.uk). The certificates continue to roll-in after you've graduated, as you are automatically transferred to the Graduate Panel when you finish your studies.
Not quite "money for old rope" but certainly worth doing. I'm not sure about "short" as an adjective -- in classification terms this would need to be quantified. A short course is: "anything less than an academic year" to an academic, "no more than a day" to a business manager. So, what's "a short web-survey"? Less than 5 minutes? Less than 10 minutes?
I don't know the answer!
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