LEADING ARTICLE : Why graduates should pay more

For a bunch of academics, the university vice-chancellors are becoming rather good at politics. They meet today in London to discuss their proposal to make every university student pay a pounds 300 registration fee. Oxford and Cambridge are considering even higher charges. They have provoked exactly the reaction they wanted - suddenly everyone is talking about a university cash crisis.

The vice-chancellors have a point. It is a great achievement that the number of graduates from higher education has risen from 98,600 in 1985 to 227,000 last year. At the same time, the funds available per student have fallen by 28 per cent, and last year capital expenditure plans were cut back by 47 per cent. Meanwhile, efforts to maintain quality are soaking up thousands of teaching hours.

Academics are not known for their high productivity. Yet in the past few years there have been impressive improvements in efficiency in higher education. Further productivity gains will be more difficult to generate without endangering quality. So the vice-chancellors realise that they have to find fresh funds. The question is, from whom?

Graduates should contribute to the cost of their education. Most of them earn considerably more than their degree-free contemporaries, thanks in part to the pounds 12,000-pounds 15,000 each in tuition fees invested in their education by the taxpayers. Part of that investment benefits society as a whole, but a fair share goes to the students. They should pay some of it back.

The trick is finding a fair way for students to pay while maintaining open and equal access to university. The vice-chancellor's proposed registration fee is not the right answer. Parents would end up having to fork out, placing children from poorer families at a disadvantage.

A loan scheme could partly solve the problem. Students can borrow on favourable terms and defer the repayment until they are earning. The existing Student Loans Company could be extended so that students can borrow to cover their fees as well as their living costs. Another option would be to follow the Australian model and collect the repayments through the tax system.

Yet all loan-based systems have a flaw. Do we really want our 18-year- olds to start adult life with a daunting debt, the size of which might put them off higher education altogether? Fixed limits on loans are not fair: some people get far bigger financial rewards from their education than others. An Oxbridge education is more likely to smooth your way into a highly paid job than a stint at the University of Luton. A loans system does not reflect these differing returns to educational investment: graduates of Oxford and Luton would pay back the same sum.

The fairest way to reflect these differences would be through a graduate tax, for instance, an extra 1 per cent on income tax for all graduates earning more than pounds 15,000 for the first 10 years after graduation. Those who used their education to earn more would pay more back to the taxpayers who funded it. The vice-chancellors are wrong to propose a registration fee. The Government is wrong to deny that funding of higher education does not need radical overhaul. It should get its head out of the sand and start just such a review to create a new graduate tax-based funding system.