Money matters

Low fees, generous bursaries, laptops, bikes and travelcards: students entering higher education from 2006 will be able to choose from a range of inducements. But will all universities survive the harsher financial climate? Lucy Hodges reports

Roll up for the great university fees and bursaries bonanza! Apply to Leeds Met, where you will pay only £2,000 a year, or Manchester, where the fees are £3,000 but the bursaries are as high as £5,000, or the Arts Institute at Bournemouth, where you could receive vouchers for a bike and qualify for reduced rent in hall.

Roll up for the great university fees and bursaries bonanza! Apply to Leeds Met, where you will pay only £2,000 a year, or Manchester, where the fees are £3,000 but the bursaries are as high as £5,000, or the Arts Institute at Bournemouth, where you could receive vouchers for a bike and qualify for reduced rent in hall.

With last week's announcement by the Government's access regulator of how much universities are going to charge with the introduction of top-up fees, we are finally seeing the beginnings of a US-style marketplace in higher education. From 2006 students will be able to shop around not only for the course that takes their fancy, but also for the best financial deals. For the poorest students from the most disadvantaged backgrounds, things have never looked so bright, particularly if they are smart and have good qualifications.

The Office for Fair Access announcement shows that all universities and colleges, except for eight (see box) are planning to charge the full top-up fee of £3,000 approved by Parliament. That means the market is in bursaries rather than in fees, with universities and colleges of higher education competing to attract the most talented. Britain's science and technology power house, Imperial College London, is offering £4,000 a year to the poorest students who achieve at least three grade As at A-level and are on the Government's new full maintenance grant of £2,700 a year. As a substantial number of Imperial's students do four-year degrees, the college will have given them up to £16,000 by the time they graduate.

The bursaries, says Imperial, will open up opportunities for the poorest undergraduates by helping to cover living costs. "If you are from a poor family and few, if any, of your relations go to university, you might think a degree is too expensive for you," says Sir Richard Sykes, Imperial's rector. "We want the best students to study at Imperial, and with our bursary scheme we are making sure we don't let talent go to waste because of financial concerns."

Other universities have followed Imperial's lead. Not to be outdone, Queen Mary, University of London, is also offering the smartest students £4,000 a year so long as they have achieved three A grades in one A-level sitting and are receiving the maximum state support. But it is not only the research-intensive universities that are targeting the brightest. Teesside University in Middlesbrough is offering more than 250 scholarships of £1,000 a year to high-achieving students. That is on top of the bursary of £1,300 that it is giving to the poorest undergraduates. Another new university, Plymouth, is introducing a raft of scholarships for high-achievers.

Sir Martin Harris, OFFA's director, says students from low-income backgrounds could on average expect to receive around £11,000 in government grants and university bursaries over the course of their degrees. That's up to three times as much "free money" in a student's pocket as they are getting now. Particularly well-qualified candidates could receive up to £20,000.

The big question is what will happen now. Will many more disadvantaged but ambitious students apply to Oxford and Cambridge? The two universities will be giving annual bursaries of £3,000 to the poorest students (at Oxford it will be £4,000 in the first year). Many people believe it will have a ripple effect through the system as Oxbridge take more high-achieving students from the Russell Group universities in the tier below, displacing some of those independent-school candidates that the ancient universities now admit.

But with the pressure on the whole of the Russell Group to take more students from disadvantaged backgrounds, they will, in turn, be looking to replace the candidates they are losing to Oxbridge from other universities. And so the ripple will spread, possibly threatening the existence of some universities that linger at the bottom of the league tables. "I predict turbulence," says Professor Michael Sterling, vice-chancellor of Birmingham University and chairman of the Russell Group of research-intensive universities. "It might happen in the first round of applications in the top-up regime, or it might take longer."

There are thought to be 10 universities that are so vulnerable that they are having to report their finances each month to the Higher Education Funding Council. Could one or more of these institutions go to the wall in the brisker higher-education climate? The management of universities is certainly going to have to be sharper and quicker, says Professor Sterling.

It is for this reason that eight institutions have decided to take the controversial step of not charging the full £3,000 top-up fee. The others rejected that route on the grounds that it would make them look cheap. Roger Brown, director of Southampton Institute, which hopes shortly to become a university, says: "All our surveys show that students overwhelmingly think that any institution that charges less than £3,000 is in the second division. We don't want to send out that message."

The boldest of the eight rebels, Leeds Met, denies that its decision is based on weakness in the marketplace. "We want to compete on price as well as quality," says Professor Simon Lee, the vice-chancellor, who is charging £2,000 a year. Young people aged 13 to 18 who were surveyed said that they were more likely to choose the university as a result.

Baroness Blackstone, vice-chancellor of Greenwich University and a former Labour higher education minister, decided that she would charge £2,500. A survey undertaken by her university showed that students were more concerned to have reductions in the fees they would have to repay later than to receive money in bursaries. "We absolutely must recruit the students we need," she says. "This is a big university with more than 20,000 students and we must not be in a position where we are under-recruiting."

In addition, Greenwich takes a large number of students from low- and middle-income families, and it needs to be careful that it does not deter them from going to university entirely, she says. Many of her alumni go to work in the public sector on modest salaries and could be put off by the thought of having to pay back too much of the new top-up fees when they are earning £15,000 a year. Finally, Blackstone says, Greenwich is in the middle of real higher-education "cold spots", areas that have low proportions of people going to university, so it needs to encourage aspiration. That is why it is offering £500 bursaries to mature students on low incomes.

University College Northampton also carried out market research, as a result of which it decided to charge a fee of £2,500. Ann Tate, its rector, gave much the same reasons as Blackstone for opting for a lower fee - the need to recruit people who might otherwise go into work and who would not be earning large sums when they finally did hit the employment market. Everyone on low incomes or with a local postcode will receive a £500 bursary.

At last week's announcement Sir Martin Harris, the access tsar, was at pains to say that university autonomy had not been infringed. All institutions had come up with their plans willingly, though he admitted that discussions had taken place and figures had moved. According to Professor Sterling, universities were encouraged to spend more on bursaries. "The discussions were focused on how much we were spending, rather than on the establishment of bursaries," he said. "The idea that this was a hands-off operation is misleading." Is that why universities are putting £350m a year into helping students in need, almost twice the £200m that Sir Martin anticipated?

TOP-UP FEES: THE NEW SYSTEM IN A NUTSHELL

What are top-up fees?

They are the controversial new tuition fees to start in 2006 to replace the upfront flat-rate fee. Almost all universities are charging £3,000 a year. Eight are charging less. The big attraction is that in future students won't have to pay any tuition money before or during the course. Instead they will pay back once they are earning £15,000 a year.

Why the new bursaries?

The top-up fees legislation was so fraught that the Government introduced the idea of an Office for Fair Access (Offa) to placate Labour backbenchers who thought fees would deter poorer families from higher education. Offa's job is to make sure that universities charging the full £3,000 fee have in place arrangements such as bursaries.

Will the bursaries put more money in the pockets of poorer students?

Yes, so long as they are able to navigate their way around the complicated system.

l.hodges@independent.co.uk