Has the introduction of tuition fees reduced the demand for higher education - Essay Example

In Australia, where income contingent loans have been introduced to cover tuition fees and maintenance support, up until 1995 there had been no fall in demand either as a result of reduced entry or increased drop-out rates. Higher education has proven to be an attractive investment for individuals, generating a return of 5-15% in OECD countries. In addition to the benefits derived by the individual, society also benefits largely when the population is well educated. In many OECD countries, the burden of higher education has gradually shifted from the government or the taxpayer to the students and their parents.

Australia reintroduced the tuition fees for higher education in 1989 through the Higher Education Contribution Scheme (HECS).In the Netherlands, tuition fees for full-time students are determined by the Minister of Education and are uniform for all subjects in higher education programs. Tuition fee as a percentage of the total direct cost of higher education has remained stable at 20% for the past few years. A change in funding pattern is likely to influence the student community in various ways.

While an immediate reaction to discontinuation of State sponsorship for higher education might be one of disappointment, it might also lead students and their parents to appreciate the of value higher education better if they are to be made to pay for it from their own pockets. This way, only students serious about research in that particular field would take up higher studies. However, without primary research or econometric testing of behaviour, it very difficult to assess the net effect of changes to the funding structure and cost of higher education to students.

The theory of human capital explains the economic approach to students demand for higher education as an investment. Human capital theory suggests that