A time to be poor and bright

Today, the fees and bursaries to be charged by universities in 2006 are announced. Jim Kelly looks at some of the generous packages on offer and considers what will happen as the market develops

Lord Patten, now the chancellor of Oxford University, has been pictured doing many silly things in an illustrious career. He was, after all, a politician. Last week he could be glimpsed pedalling a tricycle, somewhat gingerly, over the cobblestones outside the university's Radcliffe Camera, towing behind him an advertising billboard. The stunt was proof that higher education is now a market, and open for business. But it is not the market that anyone would have predicted when Labour first hinted it might let universities charge top-up fees. Lord Patten's advert did not trumpet Oxford's prices, it laid out how it plans to offer cash support to the students who will have to pay them.

Lord Patten, now the chancellor of Oxford University, has been pictured doing many silly things in an illustrious career. He was, after all, a politician. Last week he could be glimpsed pedalling a tricycle, somewhat gingerly, over the cobblestones outside the university's Radcliffe Camera, towing behind him an advertising billboard. The stunt was proof that higher education is now a market, and open for business. But it is not the market that anyone would have predicted when Labour first hinted it might let universities charge top-up fees. Lord Patten's advert did not trumpet Oxford's prices, it laid out how it plans to offer cash support to the students who will have to pay them.

Today Offa, the fair access regulator, publishes the fee and bursary levels agreed with English universities for 2006, when the new system begins. Most vice-chancellors (VCs) told the Government that setting a cap of £3,000 on fees would kill any chance of a real price-led market. The figures show they were right: 91 per cent of institutions have opted for the maximum £3,000. Those who have dipped under the cap are special cases. Leeds Metropolitan has gone for £2,000 - enough, says its VC, Professor Simon Lee, to provide "values for money". Leeds Met can utilise huge economies of scale - it has 41,000 students - to try to establish a "low charging high impact" market position. "I don't believe that everyone will charge £9,000 if it goes to that - so we wanted to set out a position now we believe in, and can stick to," said Professor Lee. Two other universities are charging less than £3,000: Greenwich, which is charging £2,500 and Thames Valley University, which is charging £2,700. Otherwise students face the maximum fee.

Where the needy will have to shop around is on bursaries, where a real market will exist, from the statutory minimum of £300 a year offered at somewhere like the University of Central England (which already has an extensive support system for the less well-off), to Oxford's thumping maximum of £10,000 over three years, and Imperial's even larger £12,000.

Averages are misleading, but Brighton is typical, offering bursaries from £500 to £1,000 a year. "I'm really delighted at the variety of ways - the sheer innovation - universities have shown in student support," says Sir Martin Harris, the director of Offa. There are differences, for example, in the way universities have judged who should get cash, in terms of the financial support available from their families. All offer help to those whose families can muster £15,000 a year, eight out of 10 go up to £21,000, and two out of three up to £33,000, with a handful going further than that. One in 10 universities are offering subject-specific bursaries. There are other innovative deals around. Gloucestershire has a range of schemes for local students, and University College Winchester a £2,000 one-off bursary for those who have been in care. About one-third are offering scholarships, from £500 to £5,000, and, while most are based on merit, some include an element of need. The flaw in the new market is stark. The most generous new support schemes are available at the wealthy universities. "There has never been a better time to be poor and bright," said one former VC, who preferred not to be named.

The problem is that the poor but not-so-gifted will find their universities strapped for cash and short on support. What will happen as the market develops ?"That's hard to predict," says Professor Alasdair Smith, the VC at Sussex. "There are a lot of unknowns - for example the extent to which universities will compete by offering bursaries during Clearing. "

One thing is certain: pressure will build to lift the £3,000 cap. Offa has squeezed £300m out of universities for student support - with many diverting 20 to 30 per cent of their fee-income back to students. That means many universities are struggling to plan ahead. "We calculated that the new system would bring universities back to the position they were in in the early 1990s. That did not take into account the reverse flow to the students," says Bahram Bekhradnia, the director of the Higher Education Policy Institute. Come the planned review of top-up fees in 2009, the Government will be under huge pressure from top universities to let them raise fees. Meanwhile struggling universities will be after extra national funding to support their needy students. Cash-strapped ministers may find the former a lot easier to grant than the latter.