Tuition fees will rise by thousands

Mr Willetts introduced the government’s response to the Browne Review, which recommended increasing tuition fees, in the House of Commons.

He said the tuition fee cap will be raised to £6,000 by 2012/13, but that institutions will be able to charge higher fees up to £9,000 in “exceptional circumstances”.

“We believe a limit is desirable and are therefore proposing a basic threshold of £6,000 per annum, in exceptional circumstances there would be an absolute limit of £9,000,” Mr Willetts told MPs.

“Our student support system is currently one of the most generous in the world. We will make it more progressive,” he said.

Lord Browne’s review, published last month, called for the cap on student fees to be lifted. It also outlined other reforms, including raising the salary level at which graduates have to start paying back their loans.

The proposals will be brought before Parliament in the next few weeks, to introduce the changes by the start of the 2012/13 academic year.

Mr Willetts said the changes were a “good deal for universities and for students.”

“The Government is committed to the progressive nature of the repayment system.”
Universities Minister David Willetts

Scholarships

He used his statement to also outline plans for a £150m National Scholarships scheme for poorer students, with universities who impose fees above £6,000 would participate in the scheme.

Mr Willetts said that the Coalition wanted universities to offer scholarships to poorer students that pay their first year’s tuition fees. Those institutions charging higher fees will also face new sanctions unless they increase the outreach activities they undertake to attract students from lower-income backgrounds, with those that fail to make progress towards their targets of recruiting poorer students will have a proportion of the income they earn above the £6,000 fee threshold diverted into these activities.

Graduates will start paying back their tuition fees at a rate of 9 per cent of their earnings above £21,000, up from the current threshold of £15,000 earnings. Any outstanding payments will be written off after 30 years. Mr Willetts said these changes would reduce the monthly repayments of all graduates.

‘Progressive’ repayments

Graduates earning between £21,000 and £41,000 will also pay a real interest rate on their fees balance of inflation plus 3 per cent, while those earning above £41,000 will make a “full contribution to the cost of the system but still incurring interest well below normal commercial rates”, Mr Willetts added.

Students looking to repay their loans early will also be hit by a financial penalty. “The Government is committed to the progressive nature of the repayment system,” Mr Willetts told MPs. “It is therefore important that those on the highest incomes post graduation are not able unfairly to buy themselves out of this progressive system by paying off their loans early.

“We will consult on potential early repayment mechanisms – similar to those paid by people who pre-pay their mortgages. These mechanisms would need to ensure that graduates on modest incomes who strive to pay off their loans early through regular payments are not penalised.”

FactCheck: how progressive is Lord Browne's tuition fees system?

“These proposals offer a thriving future for universities, with extra freedoms and less bureaucracy, and they ensure value for money and real choice for learners,” Mr Willetts said.

Proposals in Lord Browne’s review for universities charging over £6,000 a year in fees would be subject to a levy were dismissed by the coalition because a higher-rate cap of £9,000 has been kept in place.

‘Tragedy’

Today’s announcements are a shift in funding for teaching budgets from government money to student fees, as Universities faced swingeing cuts to these budgets in the Spending Review.

Prime Minister David Cameron’s spokesman said: “The Government is very keen to ensure that the package ensures that people from lower-income backgrounds have the chance to go to university.”

But the plans still faces some obstacles and opposition, both from MPs and student representatives.

Former Liberal Democrat leader Charles Kennedy stated his opposition to the policies, having led the party at two previous elections. And Gareth Thomas for Labour called the proposals “a tragedy for a whole generation”.

Mr Willetts said: “From our side the two parties in the coalition have accepted the report’s broad thrust today putting together a single, coherent and progressive policy.

“It will deliver a better deal for our students, for our graduates and for our universities.”

But Mr Thomas, the shadow Universities Minister said: “Isn’t the real truth a tragedy for a whole generation of young people?

“It makes it much more difficult to protect our world-class university system and for the country, puts the very building blocks of our economic future at risk.

“Even though there has been movement…isn’t it the case that our students will now face some of the most expensive and worst-funded degrees of any public university system, with students paying fees that are higher than the average public university in the US.”

Channel 4 News Political Editor Gary Gibbon said there are rumours that one Liberal Democrat MP is considering jumping over the issue. All of the Liberal Democrat MPs pledged before they were elected to vote against any increase in fees.

Compromise deal
The fundamental to remember is that the Government has massively, gigantically scaled back its own cash commitment to universities. They are proposing a way to fill the enormous black hole, writes Channel 4 News Political Editor Gary Gibbon. 

...Many will welcome the compromise deal as the only one in town. Plan B, which has been talked about in private by ministers, is reducing student numbers. They don't want that.

Read more from Gary Gibbon on university funding: tuition fees cap 

Before the statement, Prime Minister David Cameron and Labour Leader Ed Miliband clashed over the changes at Prime Minister’s Questions.

Mr Miliband accused the coalition of “destroying trust in politics” as Liberal Democrat ministers had given “cast iron guarantees” to oppose a tuition fees hike.

“What I would say to everyone who is part of this Government is I think they have all taken, frankly, some courageous and difficult decisions,” Mr Cameron replied.

Aaron Porter, President of the National Union of Students (NUS), said: “The Government has already announced its intentions – wash their hands of responsibility for higher education by removing almost all funding for universities – and it seems they will attempt to continue their vicious attack on those who want a better education by passing all of the cost onto students and asking Vice-Chancellors to take none of the strain.”

Students put off by debt fears

Research conducted by HSBC and the NUS found that nearly eight in 10 young people would be put off university if fees reached £10,000, and seven in 10 would be put off by a rise to £7,000.

University students and lecturers are set to protest over the fees rise next week in London.

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