It will put pressure on the inquiry into student finance, headed by Lord Browne, to recommend a substantial increase in the present cap on tuition fees of £3,240 a year.
This is unlikely to be a major financial threat to students from the poorest backgrounds. Even those who advocate lifting the cap completely and allowing universities to charge what they want – such as the chancellor of Oxford University, Lord Patten, and the Association of Graduate Recruiters, which represents 750 of the biggest employers of graduates – are adamant that this must be accompanied by safeguards which ensure full-cost scholarships or bursaries for the worst off.
The biggest worry for this group, who are often the first representatives of their families to attend university, is the fear that their support may be axed. The biggest threat is likely to be to those from lower middle-class families, whose income may be just too high to qualify for cash support.
If the Browne review fails to provide substantial extra finance from students, and the cuts continue, universities will have to look elsewhere for their funding. The overseas market is likely to be coveted, as these students can be charged real-cost fees. With record numbers of UK school-leavers applying to universities, a situation could soon arise in which more and more local young people are turned away while their places are filled by those from abroad.
An alternative would be to step up efforts to secure endowments from businesses and former alumni. The amount of money UK institutions receive from this area is next to nothing compared to universities in the United States, but any attempts to go down this road are likely to be met with the harsh reality of donors who are reluctant to come forward given the current economic situation.
Today's settlement will increase the divide between the elite universities in the UK and the rest. For a start, what funding there is for research is being concentrated upon fewer and fewer universities.
HEFCE is rewarding institutions whose researchers won a four-star rating or above in a national assessment of their work. This has meant that the top five research institutions – Oxford, Cambridge, University College London, Imperial College London and Manchester – are receiving the lion's share of funding (33 per cent of all the cash allocated).
Funding is also being concentrated on those areas the Government sees as vital to the future of the economy – science, technology, engineering and maths in particular (although modern foreign languages are also seen as an area in need of support).
Evidence of this can already be seen from today's figures. Two of the biggest losers are the London Business School, which suffered almost a 12 per cent cut in its government funding, and the London School of Economics and Political Science, which experienced a 6 per cent cut. Neither of these concentrate on the targeted subject areas. If cuts are to be made in the number of admissions, it will become more competitive for people to gain a place on an arts or humanities course beginning this autumn.
Asked about this yesterday, Sir Alan Langlands, chief executive of HEFCE – a scientist by training – insisted that science was just as creative as the arts.
So what will become of the "student experience"? The past few years, with the introduction of top-up fees, has seen students demanding more value for money from their lecturers and more one-on-one sessions to help them through their courses. An increase in tuition fees is likely to add to this pressure from students keen to get value for money.
However, the cuts in funding are also likely to lead to a reduction in lecturers' jobs, making it more difficult to find the time for increased engagement. It seems likely, in this world of rapidly advancing technology, that more and more interaction between students and lecturers will take place online. It's a university education, Jim, but not as we know it.
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