Student choices: First timers face the test with tuition fees
Fees for higher education are here. Lucy Hodges looks at why changes were made and their likely effects
Thursday 02 April 1998
For Mr and Ms Joe Public, all this may have come as something of a shock. But the changes have been fermenting quietly in higher education circles for some years - and they should not, if they work as designed, cause any hardship to parents. They stem from a crisis in university funding which began to bite seriously in 1995.
Fed up with constant financial squeezes, and aware that universities elsewhere in the world charged students for tuition, university bosses decided to press for fees. In the United Kingdom students didn't pay for their education, simply for their living costs. Former Conservative Education Secretary Gillian Shepherd said no. Aware an election was in the offing, she knew it wouldn't benefit her party to seem to be making life tougher for aspiring families.
But she did the next best thing. She secured joint-party agreement for an inquiry. A committee under Sir Ron, now Lord, Dearing was set up and last summer, after deliberating for more than a year, it decided that a flat rate fee of 25 per cent of the full cost of higher education (pounds 1,000) should be brought in, together with a loan scheme based on the Australian model. But it did not recommend the maintenance grant be abolished. Grants to cover living costs should be kept, the committee thought, in the interests of social justice.
The Department of Education, now under the stewardship of Labour's David Blunkett, accepted the tuition fee and loan proposal, but not the recommendation on grants. Tuition fees would be introduced in autumn 1998, they said in an announcement three hours after publication of the Dearing report. Grants would be abolished and replaced by a loan which would be repaid by graduates once they were earning a regular income.
Confusion reigned over the summer. Students taking a gap year had been forgotten. They were putting off university for a year so they could do good works or become older and wiser human beings. Were they now to be penalised by being forced to pay fees in 1998? The government backed down. Gap students would be treated as if they were starting university in 1997.
The law setting up the new financial arrangements is certain to reach the statute books this summer despite the best efforts of the Lords, the National Union of Students and others to change it. University bosses have kept quiet because they are in favour of fees and don't want to antagonise ministers. But there has been deep concern in the university world about the logistics of collecting fees and whether the money would be used as a boost for higher education or simply be gobbled up by the Treasury.
Blunkett has promised the money will be kept in further and higher education. But individual universities won't see an extra penny - though they will have to collect the money (an expensive undertaking) and chase defaulters. If parents don't pay, students may find themselves chucked out of their course. Be warned.
But parents probably won't have to pay the whole annual fee in one go. It is up to universities to decide when to ask parents for the fee but the Government is encouraging them to use flexible payment arrangements to ease the pain. Some universities have set up schemes for monthly direct debits. Local education authorities will assess how much parents have to pay; universities collect the money.
Some of the critics' worst fears have so far proved unfounded, notably the idea that fees would deter university applicants. That has not happened. Latest figures - as of February 13 - show that total student applications are down by only 2.9 per cent, with mature applicants being put off more than 18-year-olds, and applications from the under 21s up slightly year on year.
Experience in other countries shows that fees do not, on the whole, deter people from applying to university. In Australia, where fees were introduced in 1989, students have been flocking to sign up. In recent years, however, the Australian system has been radically changed. Higher charges are now being made for some subjects - law, medicine and dentistry cost the most, then science degrees, then arts and social sciences. This has pushed up the average charge for tuition. Students now contribute 37 per cent of the cost of higher education instead of the original 25 per cent.
In another move, the Australian government decided to cap the number of students eligible to attend university under its higher education contributions scheme. And it allowed institutions to recruit thick, rich students on full fees. Those changes may have an effect on student recruitment.
The likelihood is that Britain will adapt to fees as other countries have done. In a few years we will probably wonder what all the fuss was about. The Government is adamant no one will end up worse off, and insists its plans are fair. Only those who are able to afford it will pay the pounds 1000 tuition fee. The rest will pay on a sliding scale related to income, or nothing at all.
Moreover, the new, improved loan scheme provides money up front to fund students through university. It is better than the current scheme, which is not related to ability to pay. Graduates will only pay when their salary reaches pounds 10,000 a year; their repayment will be deducted from their pay and closely related to income.
l For more information, read Financial Support for Students, a guide to grants, loans and fees in higher education 1998/99. DFEE, free. Ring freephone 0800 731 9133 or e-mail email@example.com.
How much will families have to pay?
The Thomas family has a total joint income of less than pounds 23,000 between them. Their residual income, after deductions, is estimated at pounds 15,000. Therefore, they don't have to pay anything towards tuition for their son Bob, who goes to university in Manchester this autumn. Bob will be eligible for a grant of pounds 810. And he will be able to borrow pounds 2,735 to help with living costs.
The Hurds earn between pounds 25,000 and pounds 30,000 between them. Their residual income is calculated to be pounds 20,000. They are required to contribute pounds 280 towards the tuition fee of their daughter Elizabeth who starts at university outside London this October. But she will still be entitled to a grant of pounds 810 and will be able to borrow up to pounds 2,735 as well.
Mr and Mrs Perkin-Warbeck have a joint income of more than pounds 40,000 a year but less than pounds 47,000. The local education authority assesses their residual income as pounds 35,000. They have to pay the full pounds 1,000 fee for their son Sebastian and contribute pounds 934 towards his living costs. He is not entitled to a grant, though he is able to take out a loan like other students.
New charges at a glance
n The full pounds 1,000 tuition fee will not be paid by everyone. In fact it will only be paid by around one-third. That's because how much you pay depends on parental income. Around one-third of families will pay something towards tuition and roughly another third, the poorest, will pay nothing at all.
n Parents will have to start making payments towards fees when their residual income (after subtracting allowances for mortgage interest payments and so on) is more than pounds 16,945. On average that means they have to start contributing when their total income is around pounds 23,000 a year.
n Grants are still available this year but they are being reduced. They will be phased out completely in 1999. This autumn, loans of at least pounds 1,000 more for living costs will be on offer to ensure no student or family has to pay more than they would now.
n From this autumn a new student loans scheme is being introduced. It is designed to be fairer than the current scheme. The levels of students' repayments will be related to their income after graduation, collected by employers and deducted directly from pay. No money will have to be repaid until graduates start earning pounds 10,000 a year. If a graduate's income falls below that level, their repayments will be suspended.
n The amount graduates repay each year is being set at nine per cent of earnings on salary over pounds 10,000. That means someone earning pounds 11,000 a year will pay back a loan at the rate of pounds 90 annually. Someone earning pounds 20,000 will make an annual repayment of pounds 900.
n Gap students who received a firm offer of a place by August 1, 1997, but put off starting university until this autumn, will be treated as existing students as far as grants and loans are concerned.
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