Universities could price poor out

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Lord Browne has released his report outlining the biggest reforms of higher education in half a century, which will lead to a dramatic increase in the cost of a degree.

The report recommends:

  • The abolition of an annual £3,290-a-year fee limit;
  • Universities should be able to charge up to £12,000 a year – keeping all income from the first £6,000 and a share of the remainder;
  • Graduates to repay loans once their income reaches £21,000-a-year, not £15,000 as at present;
  • A new ‘real’ rate of interest charged on loans – inflation plus 2.2 per cent

But analysts claimed the richest graduates would pay back less than middle-income earners, who would end up paying more interest because they will take longer to pay off their loans.

Affluent students could save themselves £12,000 in interest by paying off their loans straight away, while graduates with average lifetime earnings of £27,000 would repay the most, according to the Social Market Foundation.

Meanwhile, direct state funding for most arts and humanities degrees would be scrapped in an overall 80 per cent cut to university teaching budgets, with only essential subjects, including science and engineering, benefiting from government cash.

Sally Hunt, general secretary of the University and College Union, said the proposals represented the ‘final nail in the coffin for affordable higher education’.

She said: "His proposals will make our public degrees the most expensive in the world and price the next generation out of education.

"The Government must not go down this route. Students have already been clobbered with fees and top-up fees and every poll on the subject warns that they, and their families, won't accept another hit."

Martin Shapland, chairman of Liberal Youth, the youth and student wing of the Liberal Democrats, said: "You simply cannot build our future on debt. This move has the potential to cripple students with unprecedented levels of debt which will act as a real deterrent to those from poorer backgrounds seeking a better life through the education system."

However, Richard Lambert, CBI Director-General, said: "The review makes a major contribution to the debate about higher education in England. Its recommendations are radical, and if implemented in full, will help to support a sustainable, high-quality university system open to students from all backgrounds.

"The proposals will also protect the autonomy of universities, and will lead to a more simple and less burdensome system of regulation."

The big winners are going to be the universities, particularly the most prestigious, which can take advantage of the new unlimited fees. It means the most sought-after universities can greatly increase their income from fees.

It could also mean leading universities will price students out of higher education and threaten to irreversibly damage access to Russell Group universities like Oxford and Cambridge.

Lord Browne’s report recommends that:

  • Only students meeting a “minimum entry standard” will qualify for government loans;
  • There will be a 10 per cent rise in places, with popular universities free to expand as they wish and weaker universities contracting or closing;
  • Universities will have to provide “student charters” that will includecommitments on teaching and class sizes. Those charging higher fees will be expected to give stronger commitments;
  • Universities will have to publish figures showing the average salary and employment prospects for graduates;
  • Students will be able to study part-time and receive government funding, allowing those from poorer backgrounds to work and study

Under the proposed system, graduates on the most popular courses at the best universities could leave university with debts approaching £50,000. It is expected that graduates will have to repay their loans at a rate of about nine per cent of earnings each year. The debts will be written off only after 30 years.

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