University challenge – the new reality

What do you need to know about the fee rises and cuts to higher education funding, and what do they mean for tomorrow's students?

Universities and colleges will undergo a radical shake-up as a result of government reforms. The students of tomorrow will find themselves in a very different higher education world from that of today. So here's an easy as ABC guide to what every parent and pupil should know to help them navigate that world.

With all the anger and opposition generated by this week's student demonstrations, are fee rises for students still inevitable?

If you were a betting man, I would advise you to put money on it. The Commons arithmetic means all the coalition government needs to get its package through is for Conservative MPs and Liberal Democrat ministers to vote in favour of them. Even if all the Lib Dem backbenchers stuck to their election manifesto pledge to oppose all fee rises they would not defeat the proposals. Of course, there is the small matter of the outrage the plans have provoked among students but so far there are no signs of any wavering in government circles.

So how much will they end up paying and when?

The rises will come into force from September 2012, so those youngsters currently in the first year of their sixth-form courses will be the first to face them. The Government talks of a "low threshold" of £6,000, with universities allowed to charge up to £9,000 in "exceptional circumstances".

What does "exceptional" mean?

In reality, the phrase is meaningless. According to the Higher Education Policy Institute, one of the most respected higher education think-tanks, almost every university will move towards charging the maximum £9,000 a year within a couple of years. Not to do so would mean sending out a signal to potential students that you are a "low-quality" university, it argues, and nothing could be more likely to put off potential student recruits.

Universities UK, the body that represents vice-chancellors, reckons any university would have to charge between £7,000 and £8,000 just to offset the impact of the cuts announced in the Comprehensive Spending Review. The universities budget was slashed by £2.9bn a year, with resources for teaching taking an 80 per cent cut. What, I think, we can be sure of, is that no university will charge less than the £6,000-a-year figure.

I've heard people such as Nick Clegg and Vince Cable describe this package as "progressive". What do they mean?

They argue the benefit from the new system is that no one will have to start paying back their loan until they are earning at least £21,000 a year – compared with £15,000 a year at present. There will also be an increase in maintenance grants to hard-up students from £2,700 to £3,250 a year. However, under the present system the grant, plus a compulsory bursary for the less well-off, meant the £3,290-a-year fee was covered; that will not now be the case. The package is a good deal for part-timers. For the first time ever, they will be eligible for loans as well.

Nick Clegg has also said that when he gave his pledge to oppose fee rises he hadn't realised how bad the books were and that it would be impossible to sustain such a commitment. Is that right?

It is really a policy decision to raise the fees by as much as the coalition government plans. After all, the 80 per cent cut to the teaching budget is one of the most severe to be faced by any public service. To me, it seems disingenuous to pass this off as all the fault of the Labour government. In reality, coalition policy priorities for funding are behind such a large hike in fees.

Ever since Tony Blair uttered those immortal words "education, education, education" ministers have been trying to talk up the number of youngsters going on to higher education. Originally, there was a target of getting 50 per cent into higher education by... well, now. What will happen in future? Will there be fewer youngsters going on into higher education, and is that a good thing?

That target became an aspiration and when a target becomes an aspiration you know it's not going to be met. Ironically, it could have been met this year if 200,000 applicants had not been turned away from universities because there were not enough places – partly due to cuts in the university budgets announced under Labour. As to what will happen in the future, that is anybody's guess at the moment. Lord Browne, the former BP boss who produced the government inquiry into student finance last month, recommended that ministers should lift the cap on student numbers that currently applies to all universities. In other words, those that wanted to expand to meet demand should be free to do so. Ministers have not yet decided what to do about that. A White Paper in the new year will make the picture clearer. I doubt whether there will be fewer people involved in some kind of education or training. They could be spread around different kinds of training and learning and – if that helps to equip the UK with more of the skills needed to compete in the 21st century – that could be a good thing.

But surely you can't expect the same number of youngsters to apply to university if they're going to have debts of £27,000 to pay off once they graduate?

It's true that headteachers are already reporting some of their sixth-formers who are promising university candidates quitting their courses even if they are offered a fairly mundane job. They cite fear of future unemployment.

What will happen, though, is an increasing range of options being offered to tomorrow's teenagers. For instance, the number of apprenticeships is to be increased by the Government, more youngsters will study with institutions such as the Open University, so that they can hold down a job at the same time as they study, others will go to further education colleges and study with elite universities online there.

The Universities Secretary, David Willetts, is also floating the idea of more two-year university courses – where you can cram three years' study into two and possibly pay a reduced price, that is, £7,500 a year for two years rather than £6,000 a year for three. It may be that the 50 per cent target of youngsters involved in some kind of post-school learning will be met – although fewer will be opting for the traditional three-year residential experience of a university course.

You said this think-tank thought all universities would be charging £9,000 a year within a couple of years. I hesitate to name them, but aren't there some universities whose qualifications aren't worth paying £9,000 a year for?

The Browne review made it clear it could foresee the prospect of universities closing or, more likely, merging because they would face financial difficulties under the new regime. Ministers would be nervous of closures because of the bad publicity that would attract – especially if students were thrown out mid-course, so mergers are likely to be the order of the day. They don't always work, though.

Will the £9,000 ceiling be enough to guarantee better standards for students?

There is a problem which David Willetts highlighted during the review and that is that if you rely on students repaying loans to provide you with the finance to sustain the system you have to pay them the loans in the first place. For a time, therefore, the lack of income from repayments may mean the Government having to fork out more up front. However, at the same time, ministers will be slashing funding for teaching so that only maths, science, engineering, technology and some modern languages teaching will be funded by the Exchequer. Art and humanities courses will not be. The answer is that a £9,000 fee should eventually ensure more contact time with lecturers and a better deal for students but – with the cuts – anything less is unlikely to.

Is there any alternative to this package?

According to Labour, a graduate tax would be better. You could abolish fees and then just charge people extra when they start paying under the general taxation system. Vince Cable, an early sympathiser with this idea, has turned cold on it – saying it would have to kick in at the current minimum salary for taxation of just under £7,000 a year – far less than the figure for repayments under the proposed system. He added that it would also encourage people to take jobs abroad thereby escaping paying the tax. Supporters of the graduate tax point out you can bring in a different minimum figure which would trigger payments. Also, what is to stop people going abroad to escape repayments under the proposed system?

So, if the proposed system is here to stay, will it still be worth soldiering on and getting a degree in future?

The evidence suggests that the average graduate earns around £100,000 extra during the course of their working life so – on that basis – the answer would have to be yes. Against that, there is the prospect of 490,000 public service jobs and a similar number in the private sector going over the next few years. That could make it harder to reap these benefits. Also, the argument in favour of the Government's package seems to be based on the assumption that you go to university to earn more money rather than to expand your horizons and learning. Gosh, was that a bit of 1960s philosophy trying to creep in?

Why don't we all move to Scotland? They don't pay any fees!

Well, it's a bit more complicated than that. Scottish students studying in Scotland don't pay fees, but students from England have to find £1,820 a year (£2,895 for medicine), and Lord Browne's proposals have increased pressure for this figure to go up. And now there is a head of steam behind the idea that Scottish students should pay towards their education after they graduate – as they did until two years ago – driven partly by the worry that Scottish universities will be left behind by their soon-to-be-wealthier southern counterparts.

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