Tories 'to axe all tuition fees'

To help pay for the plan the party would remove students' access to low-rate loans and charge a commercial rate of interest instead - as much as 8%.

Tory spokesman Tim Collins said most students would be "considerably better off" under the scheme, for England.

But Tony Blair claimed the Tory sums did not add up and poorer families would end up paying more.

Student grants

At present, interest on student loans is fixed at the rate of inflation, currently about 2.6%, according to the measure preferred by the Student Loans Company.

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But if bank rates go up, they could rise to a maximum of 8%.

Mr Collins told BBC Radio Four a higher interest rate would not make students worse off because the abolition of fees meant they would leave university with lower debts.

He said: "Because the amount of debt is reduced quite sharply the average graduate under the government's plans would leave with loan debt of the order of £19,000 - under our plans they leave with about £10,000."

That graduate would finish paying off their interest two years early and pay back £7,000 less overall under the Tories' plan, Mr Collins said.

The Conservatives say they will honour Labour's plans for a new student grant for the least well-off.

"For many people on average and lower incomes the amount they pay under student finance would treble - a typical Tory policy"
Tony Blair

They also say they will allow students to take out bigger loans, helping them to avoid running up even more expensive debts on credit cards.

Abolishing fees will deprive universities of income, but the Conservatives say they will counter this by transferring the so-called Student Loan Book, the debt and interest owed by all students, from the Treasury to the universities to manage.

The Tories calculate this would allow universities to raise some £20bn over the next 20 years and give them an up-front injection of capital.

Their scheme would also claw back the "very large public subsidy" proposed by the government to pay for top-up fee remission for poorer students.

'Gaping hole'

But the plans were criticised by Prime Minister Tony Blair at prime minister's questions, who said they included a £500m "gaping hole", which would have to be "withdrawn from the universities".

The claim was later denied by the Tories, who said their plans were fully costed and "cost-neutral" to the Treasury.

Mr Blair also said the Tories would cut the level of maintenance grant given to the poorest students from £2,700 to £1,500.

But the Tories said this was "completely untrue" as the current grant includes £1,200 tuition fee remission, and as the Tory's plans scrapped tuition fees, the level of support would remain the same.

Mr Blair said charging students commercial rates of interest would mean a much bigger bill for poorer families.

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"Scrapping fees will reduce the direct funding going to universities "
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"For many people on average and lower incomes the amount they pay under student finance would treble - a typical Tory policy," he told MPs.

'No extra cost'

Earlier higher education minister, Alan Johnson said the Tory proposals would "not be based in any way on the ability to pay".

"Those who would be particularly badly hit would be those going into low-paid vocations such as voluntary organisations and the church.

"Women would be viciously penalised by having children and bringing up a family.

"Repayment would not be through the tax system and so would be massively unfair and expensive for the universities to administer.

"And most importantly of all, universities would simply not get the money they need for raising the quality of their courses."

In response, the Tories said there would be no extra cost for universities, as administrative savings would be ploughed back into the system.

The party would continue to offer the use of the Inland Revenue's PAYE system of collection for loan repayments, in order to reduce bad debt levels and maximise the Student Loan Corporation's credit rating.