Education, education, too much education?

Is paying poorer students to stay on at school and university money well spent? asks John Mace

Chancellor Gordon Brown has announced that 16 to 19-year-old students from poorer backgrounds will receive £30 a week, up to £1,400 a year, for remaining in colleges or schools. This munificence is to encourage them to stay in full-time education and, hopefully, to go on from there to more academic or vocational education or training. It is now being confidently predicted that Education Maintenance Allowances will be extended to university students from 2004, with up to 500,000 students receiving a similar amount, again subject to a means test.

One reason for this policy is to attempt to achieve the government's target of 50 per cent of under 30-year-olds in education by 2010. Ignoring the question of whether this target makes any economic, social or educational sense, two major questions about EMAs remain.

First, is price a major determinant of the decision to stay in education? Second, what other factors affect such a decision? Evaluation of the pilot projects for EMAs, which began in 1999, give an average gain in participation rates of some 5 per cent, with a much greater impact in rural areas among young men than in urban areas and among women. The range is from 3 to 11 per cent, and it appears that the provision of allowances has a significantly greater impact among young people eligible for the full allowance because their parents' income is below £13,000. Applications from the £13,000 to £30,000 band, in which payments taper down to a minimum of £5 a week, tail off sharply. But that impact is small, and it is arguable that the money could have been spent differently to greater effect.

It also seems that the payments have been more successful at encouraging people to remain at school rather than recruiting students back into education - the allowances were more successful at confirming students' intention to remain at school rather than convincing those who had already decided to leave to think again.

A recent study by the National Foundation for Educational Research shows how the "price" of education deters students from staying on. Many 16 to 18-year-old students do not stay in education because of the need for money now and an unwillingness to incur the debts and forgone earnings that attending university entails. Different socioeconomic classes will have different perceptions of costs and react differently to those perceptions. Middle-class families may well see going on to higher education as an investment in which they forgo the current potential earnings of their teenage children in order to secure the future higher earnings that their better-qualified children will enjoy. But this policy is targeted at poorer families, as middle-class parents already tend to send their children into higher education. The pilot projects have demonstrated that EMAs have a measurable effect on participation in the immediate post-compulsory age group. That, inevitably, will be reflected in numbers in higher education as a proportion of the additional students in 16 to 19 education considers a university course.

But whether extending the principle to higher education will have a greater impact than encouraging more young people to remain at school or college depends on other factors, such as peer-group influence, and local employment opportunities.

Critically, lower-income families may not see the returns from investing in education in the same way as higher-income families. This may be partly because they need income now and have shorter time horizons than middle-class families. But it may also be because they realistically see that the returns their children will receive from this investment will not be the same as those enjoyed by middle-class children. There are two good reasons for taking this view. The first is that better educated people enjoy higher incomes not necessarily as a result of their education, but because more education is a signal to employers that they come from a class that shares a common culture and set of values.

A second reason for lower-income parents' greater caution is that as more people get more education, the "graduate" jobs will be filled. The "new" graduates, often from less prestigious institutions, will merely be filling jobs that they could have got with A levels, or their equivalent.

It is conceivable that the government has carefully weighed the opportunity costs of pursuing this policy, such as forgone spending on health. But contradictions in education policy, for example university fees, the repayment of loans for higher education students and the introduction of EMAs, together with the planned huge expansion of student numbers, suggest otherwise.

John Mace is senior lecturer in the school of educational foundations and policy studies at the Institute of Education, University of London.