The Labour Party in the UK, like the Democrats in the US, hopes to be elected on a policy of abolishing student fees. Roger Smyth draws on the experience of New Zealand to challenge the rationale for such a strategy.
Political parties seeking power will often promise to abolish tuition fees in higher education. We saw that in the 2017 UK general election campaign, where the Labour Party’s pledge may have contributed to its doing far better than any poll was predicting. The issue may again have an impact in the current election. In the US, too, leading Democrat presidential hopefuls have committed themselves to eliminating student fees.

But what is the reality behind the rhetoric of this eye-catching policy? In order to answer that question, we can look back to another 2017 election, when the New Zealand Labour Party came into government with a flagship promise guaranteeing all citizens three years of fees-free post-secondary education.

The party’s policy, announced 18 months before the election, promised to phase this in over a six-year period, complementing heavily subsidised early childhood education and 13 years of free schooling. Labour positioned it as a means of addressing persistent skill shortages in the New Zealand labour market. The new government argued that, by removing fees, they would be reducing barriers to study, meaning enrolments would grow and so the skills available to employers. More domestic students would also make up for the forecast drop-off in international student numbers that would result from planned changes in visas. In the lead-up to the election, Labour told institutions not to worry about the loss of international student revenue as they could expect a 15 per cent increase in domestic enrolments in response to the fees-free policy. That was quite a claim.
The relationship between fee levels and tertiary participation
The elasticity of demand for tertiary education is very low – meaning that fee changes don’t affect demand very much. One reason, in the New Zealand context, is that virtually all domestic tertiary students qualify for interest-free income-contingent loans when they enter tertiary education. This means that the cash cost to a student of enrolling in tertiary education is close to zero.

We see a similar phenomenon in nearly all developed countries: fees don’t necessarily deter participation. OECD data reveal how fee levels line up with participation levels. The majority of zero-fee countries in the OECD have a lower rate of participation in tertiary education than New Zealand (or England).

Read more : Roger Smyth : Times Higher Education : 28 November 2019