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Higher education funding policy: a guide to the debate

Briefing note
This Election Briefing Note compares Labour's proposed reforms to the system of higher education (HE) finance in England and the alternative proposals outlined by the Conservative Party in September 2004 and the Liberal Democrats in January and March 2005.

At their root, all of the parties' proposals aim to increase the level of funding per university student. But the ways in which this will be achieved are very different. This has implications for how well off students will be and how well off future graduates will be, and will also have implications for universities and the taxpayer. All of these issues are explored in this Note.

The structure of the Note is as follows: Section 2 sets out the key features of the three partiesҍ HE funding policies; Section 3 describes how the numbers behind the different proposals add up, setting out the implications for taxpayers, universities, students and graduates; Section 4 sets out what the figures mean for university funding on a per-student basis, some distributional implications for universities and an international comparison; Section 5 provides an assessment of what the reforms would mean for the living standards of students whilst at university, and what levels of debt students are likely to graduate with under different funding systems; Section 6 gives an in-depth examination of the impact of different HE funding policies on graduates across the entire distribution of likely future graduate earnings paths; and Section 7 concludes.

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