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

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. •Higher education subsidies impact equity and efficiency across development stages.•A scholarship grant is highly efficient but often regressive.•A means-tested grant scheme is equally good during advanced stages.•A universal grant proves more effective in reducing inequality.•In the later stage, enrollment increases in universal grants but decreases in others.