"Education is a right! Stop the debt sentence!" These were the slogans emblazoned on placards, held by students rallying against the University of Auckland’s 2015 fee hikes.

Any increase in university fees is guaranteed to incite ferocious student protests, and the costs of tuition in New Zealand have changed dramatically over the past three decades.

During the mid-1980s, tertiary fees were largely trivial for students. But university education was the preserve of a small number of elite students, who were subsidised at a much higher rate. Rapidly increasing student numbers have since rendered this situation fiscally untenable. Tuition at any of New Zealand’s major universities currently sits at around $5,500 per year, with annual increases subject to centrally-mandated tuition caps.

Yet, as Steven Schwartz reveals in a recent IPA publication, protests against increased tuition are often little more than hot air. In spite of fee hikes, students do not seem to be particularly deterred by higher prices.

The presence of a government-backed, income-contingent student loan scheme buffers the effect of fee increases. Students can defer the costs of a tertiary education to a future point where repayments are affordable.

And sharing in the costs of higher education through tuition fees necessarily reflects the private benefits that accrue to students.

Proclamations against the gross injustice of fees and fee increases ignore the considerable benefits that students derive from tertiary education. Like higher future earnings and increased job security.  And tuition is already heavily taxpayer-subsidised. Calls for greater public subsidies require either diverting funds from other activities, or imposing higher taxes, even on those who have never benefitted from a university degree.

But universities commonly suffer the same cost-disease as other labour-intensive industries –  barring changes to online platform delivery, like, for example, Khan Academy. The increasing price of labour potentially increases the costs of running a university faster than inflation. In real terms, universities have to deliver the same services each year, constrained against price ceilings and rising fixed costs.

Tuition caps can also prevent quality differentiation between universities, by limiting the ability of universities to invest in better, but more expensive labour and equipment that might improve the quality of their services.

Fee hikes are not necessarily a bad thing. But ensuring that students receive a high quality education commensurate with the sums they, taxpayers and donors pay, is essential.