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Ministers plan review of student funding

Ben Russell,Nigel Morris
Thursday 02 August 2001 00:00 BST
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Pressure has intensified on the Government to overhaul the student finance system after research published yesterday found it is too unpopular with the voters to be sustained.

Tony Blair has privately promised he will look again at student loans and tuition fees, Now, a study conducted on Britain's university campuses by a Left-leaning think tank has added to the perception in Whitehall that the current loans and fees system is antagonising the electorate.

Ministers are increasingly alarmed that universities are falling far short of recruitment targets. MPs were also taken aback by the hostility to loans during the election campaign, particularly among under-25s.

The Institute for Public Policy Research, in yesterday's research paper, argued that the current system of means-tested fees of up to £1,075 and loans of around £3,500 a year deter working class students from accepting university places because of the fear of running up five-figure debts.

The study recommends introducing a system of "higher education maintenance allowances", echoing the £40-a-week allowances for sixth formers and further education college students, which was introduced as a large-scale pilot study two years ago.

Other proposals include removing fees from the first two years of degree courses to encourage more people to take up courses, but charging students full fees for the third year as an "investment in their own learning, personal development and subsequent enhanced income".

The report criticises the current system of interest-free loans to cover students' living costs, saying they represent a huge subsidy for middle class students who can profitably invest their money elsewhere.

It also recommends allowing leading universities to charge top-up fees, in order to allow the Government to increase state grants to institutions that take on more working class students.

Officials at the Department for Education and Skills (DfES) are examining the discussion paper, which was carried out in conjunction with the pressure group the Council for Industry and Higher Education.

Tony Blair has privately admitted the issue continues to cause problems for Labour but the Government is also braced for more anger to surface at its conference in October. One minister said "It is no coincidence that you can hardly find students who support Labour these days."

The Chancellor, Gordon Brown, is being lobbied by Cabinet colleagues and backbench MPs to release more money in the next spending round to ease the burden on poorer undergraduates. One option would be to increase hardship funds significantly.

Although 90 per cent of sixth-formers with good A-level results go on to take up a place at university, ministers are concerned that as high a proportion as ever are middle class.

So, the Government is considering fresh efforts to promote university education in schools in areas with little tradition of pupils studying after 18.

One of the report's authors, Wendy Piatt, said: "This issue has been given momentum and I think the feedback from the election campaign has made it more of an issue for politicians. There is definitely a sense that something must be done."

Richard Brown, chief executive of the CIHE, said: "Our members, both academics and business leaders, talk about the importance of attracting as many individuals as possible into higher education. We doubt that current funding, either for students or the institutions, achieves that aim."

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