Call on fees for stay-home students

The Commission on the Future of Higher Education’s final report next month will include a series of cost saving moves aimed at protecting the sector from damaging funding cuts over the next parliament. The plans includes creating a fee-only degree of £5,000-a-year for students living at home or working part-time who would not qualify for a maintenance grant.

The commission said moving to this system from the current one, where students are charged up to £9,000-a-year, would save the state £10,000 for every undergraduate.

The report will say that the university teaching grant should also be held at the same cash level rather than increasing it in line with inflation up until 2017/18.

The commission, which has been set up by the IPPR think tank, will publish a final report in June.

IPPR’s projections suggest that on current Government plans, the higher education budget could be cut by around £1.2bn over the next Parliament, a cut of almost a third.

The commission’s final report argues that the immediate challenge is to navigate this period of deep spending cuts in a way that does not “do lasting damage to one of the nation’s most precious assets”.

The chairman of the commission and vice chancellor of Warwick University Nigel Thrift, said: “Higher education has to play its part and find its fair share of deficit reduction but we should not let the work universities and colleges do in driving economic prosperity be swept away by an avalanche of austerity.

“We are going to need to make major cost savings in the short-term, as well as grapple with longer-term arguments about the future of fees. The only way we will be able to afford to expand the number of students is if we offer a new type of degree.

“The current funding system privileges full-time residential courses supported by student loans.

“But this is not appropriate for many potential students, who want to study vocational courses in their local area, live at home and combine their studies with paid employment. So universities and colleges should be able to offer a new £5,000 fee degree, focused on vocational learning and offered to local students who would be eligible for fee loans
but not maintenance loans or grants.”

The report will also argue that international students should be removed from the Government’s net migration targets.

It said this will allow universities to raise more of their own funds from overseas student fees.

The report will also suggest a series of alternative long-term reforms of the student funding system but warns that none of these will save money in the short term.

The options it puts forward include raising the top rate of interest on student loans to 4.5 per cent.

The commission says this would bring the estimated non-repayment on student loans down to 33 per cent and reduce the long term cost of the loan system to the state by £679m.

It will also suggest lowering the maximum tuition fee to £6,000, while increasing direct government support for university teaching.

It said this would reduce the long-term risk as more of the cost to the Government would be upfront.

However it warns that it would need £1.67 billion for elsewhere to prevent universities suffering a drop in income.

The commission will also call on the Government to consider funding tuition through a mixture of student loans and means-tested family contributions from more affluent families.

It will also suggest the government could abolish the student loan system, and replace it with a higher rate of tax for anyone who participates in higher education. In order to maintain the current level of funding flowing to universities, this rate of tax for graduates would need to be an extra 1.96 per cent on all taxable income above £10,000 for 40 years.