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UK Price Competition Within Higher Education

by Jim ONeil on September 13, 2011

in student finance

In December 2010, UK Parliament raised the maximum limit for university to tuition to £9,000 annually. Since that time, many universities in Britain have increased their tuition charges. The Guardian reports that the average fee is now £8,393 per year. Many British universities are now charging tuition of £8,000 to £9,000 for some or all courses.

University enrollment may be drastically affected by such an increase. Fewer than one-third of adults in Britain believe that a UK university education has a £9,000 annual value, according to a recent UK opinion survey. The Center for the Economics of Education at the London School of Economics conducted a study that yielded surprising results. Namely, a £9,000 tuition fee cap could decrease the rate of university entrance by 4.9 percent for women and 7.5 percent for men, compared to the 2008 rate.

Nearly all the universities in the UK are subject to a government-imposed limit on tuition fees. BPP University College, however, is not. As the only for-profit provider of higher education, BPP is poised to gain a competitive advantage over its counterparts. The Times Higher Education reported that the school will charge £6,000 annually for a two-year degree and £5,000 annually for a three-year degree.

BPP offers courses in business, finance, law, and accounting in six locations across England. There are no restrictions on how many students it may recruit for the 2012-13 academic year. To cover tuition costs, BPP students may draw on loans of as much as £6,000 annually in 2012-13, which are backed by taxpayers.

During academic year 2013-14 and later, private providers like BPP will likely face limits on recruiting and caps on loans are not yet established. Even so, public universities in Britain may have trouble competing within the financial model. Price competition should be a positive thing if it contains UK higher education costs over the long-term.

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