Effects of higher education subsidies on equity and efficiency across developmental stages

Abstract

This study investigates the impact of taxes and subsidies for higher education on equity–efficiency trade-offs under various phases of higher education development. A scholarship program emerges as the most effective subsidy for higher education across all developmental stages. During both early and later phases, a universal grant proves more effective than a scholarship grant in reducing inequality. At the later stages of higher education development, the enrollment rate increases for universal grants but decreases for other policies, implying that the recent shift away from universal grant schemes in the UK could lead the enrollment rate to decline.