Question: Why are more students going to university, despite the higher costs?

Readers Question: Why are more students going to university, despite the increased costs associated with higher education

Radcliffe Camera, Oxford University, photo Tejvan

The number of students in full time education has dramatically increased in the past few decades. In the 1960s and 1970s, a full time university degree was a minority choice, but it has become increasingly popular. It is true the number of students has risen despite the rapidly increasing costs of studying to gain a degree.

 Number of Students UK

Number of students UK. Source: Ox Univ

From less than 400,000 students in the 1960s, in 1995-6 the number rose to about 1.6 million students undertaking courses of higher education in the UK. 1.1 million were in full time education. the rest in part time.

In 2008, the numbers in education had risen to 1.96 million last year. BBC link
The cost of studying has increased dramatically since the introduction of student fees. Between 2008/09 and 2010/11 the amount of outstanding student loans rose from £25bn to £35bn [source: STUDENT LOANS FOR HIGHER EDUCATION IN ENGLAND, FINANCIAL YEAR 2010-11]

Why increased demand with higher price?

  • Basic economic law suggests a higher price will lead to lower demand.
  • That is still true. A higher price of university education leads to a movement along the demand curve. In other words, the increased cost of university education is putting some people off.
  • If university education was the same price as in 1980s, there would be an even bigger number going to university.
  • I would also guess demand for university education is price inelastic. – A higher price of university only causes a relatively small fall in demand. – There aren’t any close alternatives to getting a degree.

What is happening with University education is that the demand curve is shifting to the right.


The Demand Curve for University Education is shifting to the Right because

  • Change in social attitudes. Going to university is increasingly seen as the ‘thing to do’ Many schools recommend going to university as a matter of course. To look for a job at 18 (or vocational training) is not encouraged by some schools.
  • Increased competition for jobs. There is a perception that a university degree helps get a better-paid job. For example, more companies now require a degree for certain jobs. To give one example, in the 1960s, my father trained to be an accountant despite not getting any A-Levels. These days, accountants would have to not only get A-Levels but a degree as well.
  • Alternative to stagnant Job Market. In a recession, going to university is a good alternative to struggling to get a job. People hope after 3 years of a degree, the job market will offer better prospects.
  • Government Target of 50% in university education. To improve international competitiveness, the Government have a target of 50% of people in higher education and have encouraged the expansion of student numbers.

However, if the cost of university education continues to rise, then the price effect is likely to over-ride the shift in demand. In other words, we could see a fall in student numbers as people decide not to take on the student loans required.

It is a similar principle to the housing market. Despite higher house prices we often see a continued increase in demand. The law of demand still applies. But, the demand curve is shifting to the right. Therefore, even at higher prices, consumers are willing to buy more. (Speculative Demand Housing)


Item added to cart.
0 items - £0.00