Students, who benefit from higher education, should pay the full costs, according to Professor Edward J. Mishan, formerly of the London School of Economics, writing in Economic Affairs, the journal of the Institute of Economic Affairs. They should, if necessary, borrow at ‘commercially appropriate rates of interest’.

The present system of virtually free provision induces people to undertake higher education even though they derive little benefit from it, argues Mishan. It also encourages the proliferation of ‘bizarre and outlandish’ courses. There may be some ‘spillovers’ from university education which justify an element of subsidy but, if so, it should be paid not to the student but to the supply of the service in question.

Mishan says that his scheme would ‘drastically reduce the student population’, which is now well above the optimum, and under present plans would increase to about 50 per cent of school leavers. It would also ‘reduce the tax burden and …assure the solvency and independence of the universities.’

Read the full paper here.