Large but variable increases in tuition fees may have a limited impact on overall student numbers, but are likely to restrict the range of institutions applicants consider, with knock-on effects on the prestige of degrees and graduates' longer-term job prospects, research has found.
The findings of a study on the impact of fee increases were presented to the Royal Economic Society's annual conference, held at Royal Holloway, University of London last week. The research was carried out by Arnaud Chevalier, senior lecturer in economics at Royal Holloway, and Gauthier Lanot, professor of economics at Keele University.
The study says that although the 2004 Higher Education Act upped tuition fees from ?1,200 a year to ?3,000, this led to a decrease of only about 2 per cent overall in applications to university.
But since modifications to the fees regime were accompanied by changes to maintenance loans and means-tested grants, it is hard to isolate the impact of these earlier fee increases and predict what further rises might mean, it adds.
The situation in Wales, however, generated more revealing data, the researchers report. Since 2004, Welsh students opting to study in their own country have qualified for a ?1,800 grant, cancelling out the rise in fees and giving them a direct financial incentive to stay in Wales.
As a result, say Dr Chevalier and Professor Lanot, Welsh applicants became 10 percentage points more likely to accept offers in Wales, even if this meant opting for marginally lower-ranked subjects and institutions.
The reforms, in effect, "reduced the set of potential institutions for Welsh applicants", they add.
Given that the 2004 Act "mostly compensated the increase in tuition fees with generous, interest-free loans", allied to the fact that England is about to witness a far more significant intensification of the financial burden many students will shoulder, it is hard to extrapolate to the situation today, they say.
The question of whether there will be a more significant reduction in the total pool of applicants as a result of fee rises is particularly hard to judge.
Nonetheless, Dr Chevalier and Professor Lanot conclude, the Welsh experience provides evidence that "students react to change in the relative price (of) higher education" and to some extent trade university rankings for tuition fees.
As such, "any reform creating a market for higher education may lead to a large change in the distribution of applicants between institutions".
matthew.reisz@tsleducation.com.
Economic Growth: Science park stakes and kidney costs
The subjects explored at the Royal Economic Society's annual conference continue to range ever wider - often far beyond what is normally counted as economics.
This year the event featured papers on everything from the impact of banning ultra-thin fashion models to shortages in volunteer firefighters and the impact of looks on recruitment.
A number looked at issues at least partly pertinent to higher education.
John Haisken-DeNew and Thu-Van Nguyen, researchers at Ruhr University Bochum in Germany, studied the willingness of students to buy or sell human kidneys.
In a survey of more than 600 students, they found that more than half would be willing to buy a kidney for €20,000 (?17,500) if they needed a transplant, and that the average price they would sell one of their own for was €21,681. The researchers concluded that if it were made legal, a market for kidneys could exist in Germany, saving thousands of lives.
In other research presented at the conference, Christian Helmers, assistant professor of management at Carlos III University of Madrid, examined what makes science parks successful.
There is evidence, he said, that high-tech firms situated in clusters are more productive.
Science parks have been created to exploit this factor. In 2010, Professor Helmers identified 85 operating in the UK, with 72 linked to universities or research institutes.
He also considered whether science parks were more effective in generating patents if they brought together a variety of firms or focused on linked industries.
After analysing the adjacent Cambridge Science Park and St John's Innovation Centre, Professor Helmers concluded that grouping firms that work in similar fields was the best approach.