Ever since the notorious tuition fee hike by the Coalition government in 2012, the popular argument espoused by many students has been that high tuition fees breed inequality and prevent students from poorer backgrounds from attending university. This argument is a political one. But the economic viewpoint suggests that scrapping tuition fees would actually prevent higher education institutions and the government from tapping into the much needed money of middle-class and better-off students in order to improve access for those who would really be prevented from attending under a different system. Lowering tuition fees could lead to more socioeconomic inequality in universities, and could even bar a greater number of poorer student from attending.

Just across Hadrian’s Wall, there is the real-life economic experiment in zero tuition fees. In 2007, the Scottish National Party came to power with a promise to “dump the debt”. The SNP scrapped the £2,289 fee that all students paid after they graduated. Although the lack of tuition fees means that Scottish institutions receive less teaching funding per student than universities in England (which can charge fees of up to £9,000 per year), Scottish universities are nevertheless in good financial health. Assessments, which determine the amount of research funding institutions receive, found that the average Scottish university was in just as good a financial position as a comparable English institution. Over the course of recent years, Scotland has substantially improved its position in world university rankings.

However, the abolition of fees has achieved surprisingly little in broadening access to higher education to students from poorer backgrounds. Since 2011 the proportion of students from state schools entering Scotland’s highest-ranked universities has decreased. Whilst the proportion of university students from non-professional families has increased by a mere 0.2 per cent, to 26.8 per cent, in England it has risen from 30.9 per cent to 33.1 per cent.

The poorest Scottish students are guaranteed an annual income of £7,625, but crucially, most of this comes as a loan rather than a grant. The level of support which does not need to be paid back has actually decreased sharply. Grants offered to poorer students in Scotland are now worth only about half the value of those offered to students in England. According to The Economist, the net effects of the SNP’s no-fee, low-grant policy constitutes a £20 million wealth transfer from poorer students to their richer classmates every year.

Scottish students tend to be particularly debt-averse. One-third of the poorest students make ends meet without a government loan, often relying on help from their families and paid term-time work, which could lead to an extra burden on their families and detract from academic achievement. The lack of money coming from students paying tuition fees means that the government is having to decrease spending in other areas. Further-education colleges, which make up one-fifth of higher education institutions and tend to attract students from less affluent backgrounds, have experienced a funding cut of 20 percent in real terms since 2010. Between 2010 and 2013, primary and secondary school spending fell by 5 percent in real terms.

University tuition fees have always been a contentious political issue across Europe and the US. Nick Clegg's failure to keep his campaign promise not to raise tuition fees seems to have cost the Liberal Democrats almost all support among student voters, surely contributing to the party’s disappointing performance in May 2015. In America, Bernie Sanders, one of the Democrat hopefuls for the 2016 Presidential election, is running on a socialist platform and promises to abolishes college tuition fees altogether. As popular as those arguments sound, the economic reality might turn out to be uglier than expected for those most disadvantaged.

The UK system is complex and contentious, but progressive: it redistributes from rich students to poor students. According to the Guardian, the lowest-earning graduates will pay back less under the 2012 system than under the pre-2012 one, while higher-earning graduates will pay back substantially more. Students in England can borrow from the government to pay for fees and living costs, but only have to repay 9 per cent of their earnings over £21,000 annually. In 2012, the government increased the repayment threshold from £15,000 to £21,000, bringing down graduates’ monthly repayments. The change was costly in the long term for the average students and even more so for the affluent, but also made the system much more redistributive and friendlier to poorer graduates. Debts are written off after 30 years, so graduates with lower salaries after graduation not only benefit from lower monthly payments but will also most probably not pay back the full figure of their debt. As a result, the true cost of university depends more on lifetime earnings than on tuition fees, which explains why even some less well-known universities set their prices high. With lower fees, only the successful would benefit: low earners would merely see a reduction in the debt figure they need to pay back but never will be forced to. By one estimate, lowering the tuition fees from £9,000 to £6,000 will benefit only those with a starting salary of at least £35,000, which is usually reserved for high-paying city jobs.

Without loans or financial support for those from poorer backgrounds, which the present Conservative government seems unwilling to provide, a rise in fees would almost certainly have led to fewer going to university. Tuition fees, however, are almost never paid upfront. Instead, the government offers loans to students going to university for their first degree. Although tuition fees add up to a hefty sum by the end of a three-year degree, repayment is delayed until graduates begin earning a reasonable amount (as of now, but since the Conservatives fixed this amount for five years, it will become less and less reasonable as inflation picks up). The end result has been that the lowest earning one-third of graduates pay less under the 2012 system, and that those who earn more, pay more.

One possible explanation as to why higher tuition fees correlate with greater access for disadvantaged students is that the universities which charged more than £6,000 a year for tuition fees under the previous system had to sign “access agreements” in which they pledged to increase the number of students from under-represented groups. However, this is a shaky explanation, as studies found that potential students showed no tendency to favour the universities that offered more generous support. A more plausible explanation is that English students were already used to the idea that fees do not have to be paid immediately, and therefore postponed worrying about the debt until after graduation. With the UK average lifetime salary for university graduates only at £35,000, those “great expectations” might be contributing to an overoptimistic assessment of the cost of university by students.

On the other hand, government savings from the 2012 system of higher fees have not been very significant, as forecasts for debt write-offs keep rising. Costs to the Treasury were initially expected to be around 32p for every £1 which they lend out to students. That figure became 45p in 2014. Repayments depend on wages twenty to thirty years in the future, which is always a risky and complex forecast to make. According to the current best guess, the 2012 system will only be 5 per cheaper than the pre-2012 one, although universities will be 25 per cent better funded.

Lower tuition fees would undoubtedly leave universities with less funding, unless they were compensated with an increase in the direct grants they receive from the Treasury. An increase in those grants will likely not happen at least until 2020: unlike debt write-offs, increased grants boost the budget deficit, which is political anathema under the Conservative government. That means that any party which is proposing lowering fees, were they to come to power in 2020, must find a way to pay for it. Fearing for their budgets, university chancellors have criticised such proposals. Labour is expected to find the cash by reducing tax relief on saving for retirement, which will constitute an intergenerational transfer from the older generation to millennials. Economics says such an intergenerational transfer is possible; whether it is politically expedient is a question to be decided by voters.

The conclusion is clear: the £9,000 tuition fees favour that one-third of graduates who are going to earn the least over their careers. It is thus beneficial for those socioeconomic groups who are likely to experience persistent income disadvantages. The £9,000 tuition fee exacts a heavy toll on the richest graduates, safe in the knowledge that they can comfortably afford it. High fees support a generous repayment and grant system which allows many students from poor backgrounds to obtain the necessary non-repayable funding through a non-usurious, government-backed loan. Those who really will remain squeezed out by the 2012 system are the middle earners, those with salaries high enough to qualify for regular and full repayment, but low enough to prevent them from paying back comfortably. Cutting tuition fees will actually hold back the poorest students by making universities and the government less able to provide for their needs, and give an unfair free ride to the richest. Middle earners will also be better off under a cut, but the coveted Holy Grail of university equity, access for everyone and anyone, including those from the poorest families, will only be made more difficult.