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This paper investigates how the abolishment of a ban on tuition fees affects the quality of higher education with centralized and decentralized decision making. It is shown that a marginal introduction of tuition fees fully crowds out public funds under centralization, whereas educational quality improves under decentralization. However, if the government has full discretion about the tuition fee level, centralization leads to the efficient quality, fully extracting the income gains from the graduates, while decentralization typically induces inefficiently low spending levels.

An article in The Guardian in 2006 claimed that: 'some bright students have found an answer to the fees nightmare: in Europe'. It went on to argue that the introduction of variable fees in the UK in 2006 had encouraged some UK students to consider moving overseas for their degrees and, in particular, to European countries such as Sweden and the Netherlands, which charged low fees or no fees at all. While there have been a small number of further press reports which have indicated that changes to the funding of higher education in the UK have encouraged more young people to consider seriously the possibility of studying abroad, we still know relatively little about the impact of financial factors on a decision to pursue a degree overseas. Although many researchers have explored the economic rewards which often accrue in the medium- or long-term as a result of overseas study, the academic literature has much less to say about both the impact of fee differentials on young people's decision-making, and the resources upon which they draw to fund a period of study overseas. In an attempt to redress this gap, this paper draws on data from a qualitative study of young UK citizens who had either completed a degree abroad, or were seriously considering moving overseas for this purpose, to explore the impact of short-term economic calculations on their decisions, and the sources of funding upon which they drew. In doing so, we argue, firstly, that there are important differences between mobile students: those who moved abroad for an undergraduate degree tended to be from more privileged backgrounds than those who moved for postgraduate studies and, as a result, considerably less sensitive to price differentials. Secondly, we suggest that, despite important differences in economic capital, both undergraduates and postgraduates were able to draw on significant cultural resources. This raises questions about the extent to which overseas opportunities can be opened up more widely, to include a greater cross-section of young people.

This is proposed legislation concerning the determination of rates of tuition and fees for colleges.