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Thursday, 11 July, 2002, 05:11 GMT 06:11 UK
Richer students 'should pay more'
student access scheme
MPs want more done to attract students
Student loans in the UK should better reflect the reality of living costs and those who can afford to, should pay higher rates of interest for them, a group of influential MPs has said.

The government should look at increasing tuition fees - with perhaps a premium for attending the best universities.

Main proposals
More 'realistic' student loans
Higher interest rates for the better off
Possible higher tuition fees
Possible 'top-up' fees
'All-through' grants from 16
The report on student funding from the Commons education select committee also notes that the existing system has failed to get more working class students into higher education.

It says the government should think about having a new system that would run all the way from age 16 to at least the end of the first year of higher education.

This might use, as a model, the education maintenance allowances which have been piloted in a number of areas, which pay poorer students to stay on in education or training after the age of 16.

These EMAs are favoured by the Chancellor, Gordon Brown - who has always planned to pay for them by ending universal child benefit for the over-16s who are still in education.

Students' concerns

Duff advice

But the Labour-dominated select committee says there will not be much "social inclusion" unless the government does a much better job of explaining the practical effects of its policies to students and their families.

"Critically, the information for current and prospective students must convey the notion that while a good quality education may require financial sacrifices, it is an investment that is usually worth making."

Studies repeatedly show that - although students typically graduate more than 10,000 in debt - having a degree pays big dividends in higher salaries over a working life.

Yet the fear of debt tends to deter most precisely those students ministers most want to attract, as part of their drive to have half of all young people experiencing higher education by 2010.

Tuition fees

These are the people from "non-traditional" backgrounds. That is, those with no family history of going to university - typically the less well off.

One of the committee's findings is that the 10% "postcode premium" universities get in extra funding for taking students from disadvantaged areas is not enough.

But fees and loans are the MPs' main focus.

They recommend keeping means-tested contributions to the cost of tuition - currently up to 1,075 a year for the better off, with about 42% of all students paying nothing.

The report's recommendations typify its approach of making the better off pay more to subsidise the poorer.

It says the government should review the maximum level of the fees - and the income threshold at which students start to pay them.

Top-up fees and loans

The MPs say there has been "much heat and little light" shed on the debate about so-called top-up fees - letting universities charge more for some courses, perhaps the most highly regarded or over-subscribed.

They say simply that there is a serious debate to be had and the government should not shrink from evaluating the idea.

Their report says the maximum student loan should be "set at a level that reflects the realistic costs of pursuing a full-time course of study".

This needs to sidestep "sensationalising" debates about whether the taxpayer should subsidise "allegedly extravagant spending".

But members of the committee say they have become convinced that the subsidy on loans - with an interest rate meeting only the cost of inflation - benefits those who do not need it as well as those who do.

So there is "considerable scope" for adjustable interest rates - which might be tweaked to suit economic conditions or policy towards particular groups of students or subject areas.

The committee says the government should "make careful appraisals" of the Welsh and Scottish use of grants for poorer students - with, in Scotland, no fees and instead a tax on graduates' earnings.

Yet it does not recommend the adoption of either approach for England.

The BBC's Mike Baker
"These proposals would particularly hit the students from middle-class homes"

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Analysis: Mike Baker

Different approaches



Tuition fees
Should the rich pay more?
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11 Jul 02 | Education
11 Jul 02 | Education
10 Jul 02 | Education
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