Tuition fees: Why the LSE leads the pack

A big gap has opened up in the fees charged for Masters courses. Harriet Swain explains why

There are three issues to consider these days if you want to study for a Masters degree. Given that your first degree is good enough, they are: what do you want to study? Where you want to study? And how deep are your pockets?

Students have long had to pay differing amounts for different subjects at postgraduate level, and international students have been charged more, but a gap has now developed in the cost of similar Masters courses at different institutions.

Say you have developed an interest in international relations. You may consider studying for an MA in international studies at Leeds University at £3,200 a year full-time, or an MA in European and global politics at Nottingham University, costing £3,250 next year. An MA in international politics and Europe at Warwick University, however, will set you back around £6,800 next year, while an MSc in international relations at Bristol will cost you £5,500. A student keen to study in London would pay £4,500 to study for an MA in international relations at King's but nearly three times that amount - £12,936 - for an MSc in global politics at the London School of Economics.

Nicholas Barr, professor of public economics at the LSE, says the range of costs reflect differing demand and variations in what is on offer, rather than whether one course is necessarily better than another. But Susan Bassnett, professor in the centre for translation and comparative cultural studies at the University of Warwick, says research rankings are having an impact on student choice, and high prices seem to have little effect on application numbers. "For some people it is seen as a mark of quality. It's a bit like some people being perfectly happy to buy all their T-shirts at Primark while others insist on Dolce & Gabbana."

The Dolce & Gabbana of this market is the LSE, where the minimum cost of a full-time postgraduate degree is £8,790, rising to £16,686 for courses such as accounting and finance.

James Caspell, postgraduate students officer at the LSE's Students' Union, says he chose to study a Masters in political sociology there because he had already studied as an undergraduate at the school and the course options matched those he wanted to study. He is also aware that the LSE looks good on a CV and was lucky to be able to afford it because he had a well-paid part-time job. But he fears that many other well-qualified candidates will have been deterred.

"The LSE is profiteering from demand and as long as there are people willing to pay that amount of money they will carry on doing that," he says. "At the moment they are geared to maximising profit rather than getting the best students or responding to issues of widening participation."

Paul Johnson, deputy director of the LSE, says the school offers a premium product, and a significant proportion of the school's fee income goes towards scholarships. "Students are queuing up to study at the LSE because they recognise that it delivers high-quality teaching delivered by world-class faculty," he says. The highly international nature of the student and academic bodies and the cosmopolitan surroundings of London are added attractions. "It gives them both intellectual and market advantage as they go on to develop their future careers," he says.

Whether this advantage is worth paying more for is up to students to decide. A recent survey by the Times Higher Education Supplement found that the typical postgraduate fee at Imperial, University College London, Sheffield, Oxford, Manchester, Cardiff, Nottingham and Leeds universities was just above £3,000, while Edinburgh, Birmingham, Westminster and Middlesex universities charged around £4,000 a year, and Warwick and City universities about £5,000.

Johnson says the LSE has set a fee level that reflects the cost of delivering teaching in the middle of London without making a loss. "We are amazed at some universities that offer Masters programmes at £3,000. Some are offering Masters programmes at below the real price," he says.

Malcolm McCrae, chair of the UK Council for Graduate Education and a former chair of Warwick University's graduate school, says five years ago Warwick calculated what it cost to deliver a Masters programme and as a result increased its charges by 15 to 20 per cent because of concern that they were being subsidised by undergraduates. "Many institutions said, 'Your thinking is absolutely right. You dive in and we will be right behind you,'" he says. "We dived in but nobody else followed."

This now looks likely to change. Helen Clapham, head of recruitment at Leeds, agrees that the LSE and Warwick are offering students a different proposition because of their international standing, but says that Leeds is in the process of reviewing its fees.

Other issues are forcing institutions to review fees. First, the growing popularity of postgraduate study. As the undergraduate population expands, students and employers see a further degree as a way to stand out. Second, as fees for undergraduate courses increase, institutions are being forced to look more closely at real teaching costs and price courses accordingly. The third aspect is the Bologna process, by which universities across the European Union are being encouraged to harmonise what they deliver. This will probably force students to take a Masters level course before embarking on a PhD and will put UK institutions in competition with those in the rest of Europe.

While none of these influences is likely to force the higher-charging institutions to drop fees, the current price gap is predicted to narrow as lower-charging institutions increase theirs to reflect real costs.

The result could have an interesting effect on the aspirations of future postgraduates. Johnson says LSE students tend to be highly motivated as a result of the hurdles they have had to jump, and have usually made careful calculations about their investment based on their future job prospects. Of the school's 8,000 students last year, more than 1,000 applied for a job at Goldman Sachs.