Funding post-compulsory education

This chapter starts from economic theory and works outwards to policy design. It establishes three core objectives: quality (high), access (wide) and size (large enough), and argues that a general strategy for achieving them has three elements: universities financed from a mix of tuition fees and taxpayer support; a well-designed loan system with income-contingent repayments to address credit constraints; and policies earlier in the education system, by addressing prior constraints, as the primary vehicle to widen participation. Section 1 sets out the objectives and section 2 a series of principles. Section 3 outlines some common analytical errors, including mispricing risk and using the wrong policy instrument. Section 4 discusses the implications for policy design, including economic theory and a brief summary of international experience. Section 5 considers future theoretical and policy developments, including loan design that support international mobility.