Universities should be allowed to set their own level of tuition fees, according to Lord Browne’s review of higher education, which was published this week.
The review, released on Tuesday, has recommended that the current cap of £3,290 per year should be lifted and universities should be free to charge what they like. This could mean the introduction of tuition fees of up to £12,000 a year.
If Browne’s recommended measures are accepted by the government, students could graduate with debts of up to £50,000. These debts would then attract interest at a real rate.
Graduates would not have to start repaying the loans until they were earning £21,000 per year. But after this they would have to make repayments worth 9 percent of their income, regardless of how much it is. Interest would also start accumulating at a rate of inflation plus 2.2 percent.
The student loans system would be simplified, with one government agency placed in charge of handling loans, grants and bursaries.
Browne has also suggested that there should be “a minimum entry standard, based on aptitude”, so that “only those who are qualified to benefit from higher education” would be entitled to a loan.
The proposals, which are designed to save money for the government and help struggling universities, were called “highly progressive” by Browne, on the grounds that “the lowest 20% of earners will pay less than today”.
These proposals immediately attracted criticism about the impact they will have on middle-rate earners. Those students who start earning high salaries straight away will be able to pay their loans off before the interest grows too much.
Those earning less than £21,000 will not have to pay anything – but those in between face decades of repayments and mounting interest. There is also a concern that the high costs will put those from less well-off backgrounds off applying to university.
Universities will be entitled to charge as much as they like in tuition fees. However, those charging more than £6,000 a year will have to give a large percentage of their extra income to the government, to help them pay the upfront costs of students’ fees.
Another recommendation is that the government should be allowed to reduce funding, and that what remains should be focussed on courses “that are important to the wellbeing of our society and to our economy,” such as medicine and engineering.
Oxford’s current budget is £863 million, out of which just eight per cent is received directly from the state, in the form of a teaching grant.
According to predictions this grant might be cut by up to 75 per cent. In this case, it is estimated that Oxford will be paying the government back between £35m and £40m per year in levies, and receive just £17.5m back as a teaching grant.
The government said that it welcomes the report, although it has not yet agreed to implement its recommendations in full.
Despite predictions that it could lead to a rift in the coalition, Deputy Prime Minister Nick Clegg has been urging Liberal Democrat MPs to go back on their promise to voters to oppose tuition fees.
“Like you, I am painfully aware of the pledge we all made to voters on tuition fees ahead of the general election,” he said.
“Departing from that pledge will be one of the most difficult decisions of my political career. It means doing something that no one likes to do in politics – acknowledging that the assumptions we made at election time simply don’t work out in practice.”
Business Secretary Vince Cable has also stated that he plans to “put specific proposals to the House to implement radical and progressive reforms of higher education along the lines of the Browne Report.”
The Institute for Fiscal Studies thinktank described the review as “more progressive than under the current system … in the sense that lower-earning graduates would pay less and higher-earning graduates would pay more.”
However, universities would lose money under the threshold scenario of a £6,000 fee, the IFS said. “While their fee income would nearly double in this case, buried in the detail of the review’s recommendations are proposed cuts to the teaching budget that would see some courses become entirely self-funded.”
Sir Peter Lampl, chair of the Sutton Trust education charity, said there was a danger that higher fees for the most prestigious courses would make them “the preserve of the most privileged”.
“There are some sensible measures in these proposals. But our concern is that the headline figure of the costs of attending more prestigious universities might still deter those from non-privileged backgrounds from applying in the first place.”