Graduates face £30,000 debts

The long-awaited Browne Review calls for universities to be allowed to set their own fees and a new loan system which means graduates do not start to make repayments until they earn more than 21,000.

Business Secretary Vince Cable faced criticism last night as he told the Commons the Government was now considering a new tuition fee level of around 7,000 per year – more than double the current 3,290.

The plans will sit alongside major cuts to university teaching budgets which will leave the higher education sector more reliant on its income through fees.

Lord Browne's review calls for universities to be left to set their own fees, with the Government fully underwriting charges of up to 6,000 a year.

Any university charging more than 6,000 would be hit with a tapered levy to cover the cost to Government of providing the students with this finance.

Leeds University's vice chancellor Prof Michael Arthur said this levy was designed to penalise universities who introduce big increases in fees.

He indicated that Leeds might charge between 7,000 to 8,000 a year under the new system if the Government withdraws the majority of universities' teaching funding in the Comprehensive Spending Review next week as expected.

However the majority of Yorkshire universities declined to say how much they might charge under the new system.

The new proposals would see the Government meeting the cost of university teaching through loans to students to cover their fees.

Under Lord Browne's new student finance plan, the repayment threshold would be lifted to 21,000 from its current level of 15,000, but graduates would pay back loans at a much higher rate of interest, equal to the Government's cost of borrowing.

However, the debt would be written off after 30 years if the graduate had not paid it off.

The review proposes to simplify the living costs system, so every student is entitled to a flat-rate maintenance loan of 3,750.

It suggests that students taking out tuition fee loans of 6,000 and 3,750 in maintenance loans for three years will owe 30,000 by the time they graduate.

Lord Browne's report also calls for a 10 per cent increase in student numbers over the next three years, with "no restrictions" on how many students institutions can admit.

The recommendations have sparked angry reactions from students and lecturers' unions and could prove divisive for the coalition Government as Liberal Democrats had campaigned for fees to be abolished during the General Election.

Deputy Prime Minister and Sheffield Hallam MP Nick Clegg even signed a pledge to students to oppose a fee increase in this Parliament.

However, yesterday he issued a statement saying the Browne Review was good news for part-time learners who would now be treated the same as their full-time counterparts by paying after they graduate.

Speaking in the House of Commons yesterday, Mr Cable said: "We do believe it is essential that if the graduate contribution is to rise, it should be linked to graduates' ability to pay.

"A 21,000 repayment threshold would mean that 30 per cent of graduates would pay less from their lifetime earnings than they do now.

"The top third of graduate earners would pay more than twice as much as the lowest third – that's fair and it's progressive and the Government broadly endorses this approach and will examine the details of implementation."

However, Shadow Business Secretary John Denham said: "Isn't the truth that the coalition has decided to put the responsibility for reducing the deficit on to the personal banking accounts of this country's most ambitious and able young people?"

He said that a fee increase to 7,000 a year would mean some students leaving university in debt to the tune of 44,000.

If the Government does introduce these changes the fee increases would not apply to existing students and the earliest it could be introduced is September 2012

Tom Craven: Page 13.