Graduates who pay off their loans early may face penalty

Plans to allow universities to set their own fees will see the country's most selective universities raising them to as much as £12,000 a year – with weak institutions going to the wall, it emerged last night.

The proposals were given the blessing of the Business Secretary Vince Cable in the Commons yesterday despite all 57 Liberal Democrat MPs signing a petition during the election to vote against fee rises. He told MPs the package was "fair and affordable" and his earlier opposition to rises "no longer feasible". He also promised to close a loophole allowing high-earning graduates to see their debts off quickly, which would have resulted in them paying less than their poorer counterparts, who would have to spread their repayments over 30 years. He is considering charging a fee for paying off loan debts early.

The long-awaited committee of inquiry into student finance by the former BP boss Lord Browne also recommended scrapping the current £3,290 cap on student fees. Instead, universities will be free to charge what they like – although they will have to pay a levy to the Government if they exceed £6,000 a year.

The proposals provoked an outcry last night, with warnings that students could land themselves with debts of more than £100,000 after graduating from their five-year courses.

The British Medical Association warned: "Graduates are currently leaving medical school with an estimated £37,000 worth of debt under the present £3,290 annual fee. There is the potential that some students could incur debts up to and beyond £100,0000 if fees are set at £10,000 or above by medical schools."

Most universities are expected to charge between £6,000 and £7,000 a year, vice-chancellors indicated. That will mean the average students leaving university after three years with debts of £30,000 to repay an £6,000 a year fees loan and £3,750 maintenance loan (up from £2,960 at present) to cover living costs.

The highest fees are likely to be levied by Oxford, Cambridge, Imperial College London and University College London – which could vary fees according to subjects. Those wanting to study sought-after courses such as law are likely to be the ones facing maximum charges. A report by the education charity the Sutton Trust has predicted that fees could eventually rise to as much as £15,000 a year.

However, institutions such as the University of East London (UEL) – which attracts a large number of ethnic-minority students from disadvantaged backgrounds and other inner-city former polytechnics are facing what they describe as a "nightmare dilemma" of having to raise fees to offset cuts in government funding and risk losing hundreds of students.

Professor Patrick McGhee, vice-principal of UEL, said its work in recruiting students "could be undone overnight". Lord Browne's report bluntly warns: "In a more competitive environment, some institutions will be more successful at attracting students than others. This means that some institutions may be at risk of failing."

Higher-education watchdogs will, as a result, be given powers to explore mergers or even insist that failing institutions are taken over. Speaking to The Independent about university closures, Lord Browne said: "We have to take into account the possibility. If an institution is going to fail there will be early warning signs."

He acknowledged there were some "weak" institutions which could face difficulties. On fee levels, he said he was "confident there would be a range of charges". "It won't all be upwards [of £6,000]," he added. "There will be some downwards movement, too."

Last night Sally Hunt, the general secretary of the University and College Union, condemned the proposals, saying: "Lord Browne's recommendations... represent the final nail in the coffin for affordable higher education. His proposals will make our public degrees the most expensive in the world and price the next generation out of education."

Aaron Porter, the president of the National Union of Students, said that graduates would be shouldered with "crippling" debts and universities faced with "devastation". Lord Browne responded by saying that the 20 per cent of lowest earning graduates would actually be paying less under his proposal – with the threshold to trigger repayments being raised to £21,000 a year.

However, an analysis by the Social Market Foundation said students able to pay up front and avoid a loan could pay as much as £12,000 less than a middle-income graduate. It was this that prompted Mr Cable's pledge to consider a charge for early repayment.

Lord Browne's report was backed by Dr Wendy Piatt, the director general of the Russell Group, which represents 20 of the leading UK research institutions including Oxford and Cambridge. "Unless we ask graduates to make a bigger contribution, they – as well as society as a whole – will be short-changed," she said. "This is the stark choice the country has to wrestle with."

Lord Browne's recommendations

* The £3,290 a year cap on student fees should be scrapped – and universities should be free to charge what they like.

* If they charge more than £6,000 a year, they should pay a levy to the Government to meet the cost of loans. They would keep a diminishing proportion of the fee (94 per cent for £7,000, 89 per cent for £8,000 and so on).

* A maintenance grant of up to £3,250 should be made available for students whose family earnings are less than £60,000 a year (currently £2,906).

* A maintenance loan of £3,750 should be available to students who want one.

* State funding should be retained at its present level to subsidise courses in science, technology, medicine, nursing and languages.

* Graduates should start repaying loans once they earn £21,000 (instead of £15,000).

* Any outstanding debt should be written off after 30 years instead of 25.

* Interest rates should be charged on loans in line with the cost of borrowing to the Government.

* Part-time students should be eligible for loans for the first time.

* Universities charging more than £7,000 should face increased scrutiny to ensure they do not discriminate against poorer students.

* The number of university places should be increased by 10 per cent in three years.

* Teaching grants to universities should rise by 80 per cent.

News
The slice of Prince Charles and Princess Diana's wedding cake and the original box from 29 July 1981
newsPiece of Charles and Diana's wedding cake sold at auction in US
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
Winchester College Football (universally known as Winkies) is designed to make athletic skill all but irrelevant
Life...arcane public school games explained
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
News
i100(and it's got nothing to do with the Great British Bake Off)
News
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
News
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
News
news It's not just the world that's a mess at the moment...
Sport
footballPremiership preview: All the talking points ahead of this weekend's matches
News
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
people
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Education

Year 5 Teacher

Negotiable: Randstad Education Plymouth: Year 5 Primary Teaching positionRands...

Nursery Room Leader

Negotiable: Randstad Education Plymouth: JOB DESCRIPTION - NURSERY ROOM LEADER...

Nursery Room Leader

Negotiable: Randstad Education Plymouth: JOB DESCRIPTION - NURSERY ROOM LEADER...

Foundation Teacher

Negotiable: Randstad Education Plymouth: Early Years and Foundation stage Prim...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone