Page last updated at 18:07 GMT, Monday, 9 November 2009

What are the fees review choices?

By Sean Coughlan
BBC News education reporter

Graduates
Who will pay for the next generation of graduates?

The university fees review - the Independent Review of Higher Education Funding And Student Finance - has been launched.

But what are the options?

Student fees have been an uncomfortable faultline for Labour for more than a decade - and the Conservatives have switched position and now accept the inevitability of charging fees.

So neither will be unhappy to see the prospect of raising fees parked until after the general election.

There is a record-level of interest in applying to university, making it increasingly difficult for politicians to perform the balancing act of satisfying this demand and paying for the rising cost of higher education.

Universities are demanding more funding, would-be students and their families are demanding more places, industry needs more employees with the right skills - but neither students, the taxpayer nor industry will want to shoulder more of the cost.

Much of the political controversy will focus on tuition fees - the headline figure which students have to pay each year, currently £3,225 in England.

'Bargain basement'

Many universities, particularly when talking in private, would like to see this figure increased, lifting the upper limit and allowing them to charge perhaps £5,000 or £7,000 per year.

They argue that higher education needs extra funding and it should come from those who benefit most - those people leaving university with a degree that enhances their earning power.

There have been calls from some universities for the limit to be high enough to create a range of prices between different courses and different competitions.

But there have also been warnings against this - not least from students - who fear that the creation of such a market will mean the most affluent students filling most prestigious courses at the most famous universities.

There have been complaints that at the other end of the scale there would be devalued "bargain basement" degrees.

However there have been opposing arguments that the barriers to encouraging university applications are not financial.

The sharp increase in fees in 2006 did not lead to a cut in applications, instead there has been a continued increase in people seeking places.

The National Union of Students warned ahead of the review that it should not be a "stitch up" and that it should not be a foregone conclusion that fees will be increased.

And the review will look at a wider range of funding options - looking beyond fees to the wider issue of student support.

Cost of loans

At present, student loans are heavily subsidised - and both the CBI and the 1994 Group of universities have called for students to be charged at a more commercial rate.

Apart from when they are not paid on time, student loans have remained much less politically-sensitive than fees. Increasing their cost to students could be seen as a more slow-burning and less confrontational way of saving taxpayers' money.

Also under the microscope will be the labyrinth of bursaries and grants. The system of means-tested funding has not been as headline-grabbing as tuition fees - not least because it is so complicated - but the costs and benefits will need to be scrutinised.

How much should be universally available? How much should be targeted at the most needy?

The review body has also been instructed to simplify student funding to make the current system - the product of elaborate political compromise - more easily understood.

There might also be an end to the idea of a one-size-fits-all view of student funding.

The current funding arrangement is still broadly targeted at the idea of a full-time undergraduate student, likely to be a school leaver financially-dependent on their parents.

This might have been the battleground for the previous increase in tuition fees - but this next review will have to address a much-changed landscape in higher education.

Changing students

Business Secretary Lord Mandelson acknowledged this in his speech at Birkbeck, where he set out the territory that the review would need to consider.

"There is clearly a place for the conventional, campus-based, full time, away-from-home model of study leading to a final degree - to state the obvious.

"But we need to keep encouraging the alternatives that are springing up: two-year honours degrees, part time modular degrees, modular programmes that don't have to lead to a full degree," said Lord Mandelson.

Only one in three students are now in the 18 to 22 age range - and more than a third are part-time, pushing the funding debate into a very different scenario.

Rather than paying towards the cost of away-from-home teenagers, student finance must also find a way of supporting adults who are working and studying part-time, living at home with children of their own.

The idea of a more varied support and repayment system is clearly going to be sought after - but the challenge will be to find a way that is sufficiently flexible, without becoming incoherently complicated.

There have also been calls that there should be some creative thinking about sharing the burden of increased costs.

Employers who benefit from graduates might come under scrutiny as possible co-funders - raising the prospect of the funding system being used to encourage the subjects that the government sees as economic priorities.

There are also some chasm-sized question marks lying in the path of creating a funding blueprint.

The general election and a change of government could mean a new set of political priorities, shifting the goals before the review has fired off its conclusions.

And any plans for public spending will have to contend with the uncertainties ahead for the public finances.



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