Project 2.2

HE choices and post-HE destinations to age 25: parental background and effects of higher education funding reform in the UK

The aim of this project is to explore the detailed drivers of the socio-economic gap in HE participation, and to also investigate recent policy changes in HE finance affecting disadvantaged groups.

Project team

Background

In the first part of the project we investigate the impact of the recent change to financial aid policy carried out by the UK government in September 2016, which particularly affected disadvantaged students.

Prior to that time, financial aid packages to low income students consisted of non-repayable means-tested grants of up to £3,387 per year, as well as income contingent loans of up to £4,047 per year (£7,434 in total per year). After the policy change, the entire grants portion of the package for low-income students was removed, and loans were extended to make up the shortfall. This effectively resulted in a 100 per cent increase in the loan eligibility of low income students.

This change in the financial aid policy resulted in variation in the total financial aid packages of low-income students. This allows us to generate causal estimates of the effect of the form of financial aid on higher education participation (i.e. the impact of switching from grants to loans), something rarely investigated in the academic literature to date.

We will implement a difference-in-differences estimator to study the impact of this policy change on the probability that low income students will participate in higher education, using students from higher income backgrounds (who were unaffected by the policy change) as a control group. We will also look at heterogeneity in the impacts of the reform, examining its effect by gender, ethnicity and region.

In the second part of the project we make use of ‘Next Steps at age 25’ to explore the detailed drivers of the socio-economic gaps in UK higher education participation, taking into account mature study and university drop out.

While there has been much work in understanding the gaps in higher education participation, this research focuses on the drivers of these gaps, and how these gaps translate into differential rates of success once young people are in university. Furthermore, we explore how the early post-HE destinations of young people vary by parental background, taking into account the university attended and subjects studied.