University fees should rise - but let's have a market, not government, determine them

Tuition fees are to start rising in line with inflation. This obviously has to happen but we think that there should be more than just this going on:

Universities in England have started telling potential students that their tuition fees will go up across the board from next year, the first rise since fees were nearly trebled to £9,000 in 2012.

Manchester and Durham are among universities already listing annual undergraduate fees as rising to £9,250, following an announcement by higher education minister Jo Johnson that universities meeting expectations under the first year of the new teaching excellence framework (TEF) were able to raise them from September 2017.

This is government fiat stating that prices will, or may, rise and that's not the way to set prices at all. Prices are information, something that tells us all how many people want some thing and how many are willing to provide it at that price or in that quantity.

It is this which leads to the standard finding that the best way to ration something is by price.

Here we also have a further reason to desire market pricing. Currently Physics at Cambridge charges the same price as Gender Studies at an ex-Technical College. The two really are not of the same value, neither to those who undertake such courses nor to society as a whole. We would thus rather like to see some price differentiation here.

And finally, the major beneficiaries of tertiary education are those who receive it. Absent some of those Gender Studies courses graduates enjoy higher lifetime earnings. Thus, given that they are the people who benefit they should be the people bearing the cost.

Please, no, University is not a public good. It is both rivalrous and excludable. It is not even true that having a lot of graduates around is a public good - Adam Smith pointed out that primary education probably does provide that public good of a generally literate and numerate population but this does not apply to tertiary education.

We should thus free the market for university fees and then we can really find out who does benefit, who wishes to partake and who wishes to supply. And we can only do that if we really are using market pricing not whatever it is that the government of the day is willing to countenance.