Saturday, December 11, 2010
Friday, December 10, 2010
- MPs vote to raise tuition fees to a maximum of £9,000 per year in England, by a majority of 21
- A day-long demonstration in Parliament Square flares into violence
- The Prince of Wales' car is attacked by demonstrators in central London
- England, Wales, Northern Ireland: Max £3,290 pa
- Scotland: Free to Scottish and EU students, £1,820 pa to other UK (£2,895 for medicine)
- Students from elsewhere in the EU pay the same as those locally
- Students from outside the EU pay whatever the university charges
Ministers have voted for plans to allow universities in England to charge tuition fees of up to £9,000 per year, amid major budget cuts to institutions' teaching budgets.
The proposal was the government's response to the independent review of higher education funding by former BP chief Lord Browne, who recommended completely lifting the cap on the tuition fees.
What is the government's policy?
The government has pushed through plans to allow universities to charge up to £9,000 per year, raising the cap from its current level of £3,290. Universities wanting to charge more than £6,000 would have to undertake measures, such as offering bursaries, summer schools and outreach programmes, to encourage students from poorer backgrounds to apply.
The government would continue to loan students the money for fees. The threshold at which graduates have to start paying their loans back would be raised from £15,000 to £21,000. On 8 December, the goverment announced this threshold would rise annually with inflation - not just every five years, as had been planned.
Each month graduates would pay back 9% of their income above that threshold.
The subsidised interest rate at which the repayments are made - currently 1.5% - will be raised. Under a "progressive tapering" system, the interest rate will rise from 0 for incomes of £21,000, to 3% plus inflation (RPI) for incomes above £41,000.
If the debt is not cleared 30 years after graduation, it will be wiped out.
What have MPs been voting on on Thursday?
They have approved plans to allow tution fees in England to rise to an upper limit of £9,000, ordinarily universities would be expected to charge £6,000. A White Paper, due "early next year", will set out further the government's long-term and structural plans for higher education. However, with one exception (the move to a real rate of interest for the highest-earning graduates), it is not thought the government's higher education funding changes will require other primary legislation, so this is MPs' main chance to debate them.
What will universities charging more than £6,000 have to do?
Universities Minister David Willetts has said universities will only be allowed to charge fees of £9,000 in "exceptional circumstances", which he said might mean if they had high teaching costs, or if a university was offering an intensive two-year course.
Universities charging more than £6,000 will have to commit to "access agreements", negotiated with the Office For Fair Access (Offa), to commit them to programmes to recruit students from poorer backgrounds.
If the university fails to make adequate progress towards agreed benchmarks, Offa is able to fine them up to £500,000.
But the National Union of Students says Offa has been "weak and toothless" in the past.
Universities charging more than £6,000 a year would also have to pay the second year's fees for students who have been eligible for free school meals.
What will happen to grants and loans?
Maintenance grants will rise from £2,906 to £3,250 for students from households earning less than £25,000.
But partial grants will only be available to students from households with incomes of £42,000, instead of the current cut-off point of £50,000.
The government has chosen to maintain its current system of means-tested loans, which are biggest for students from middle-income households, who get less help from grants but are offered bigger loans than those from wealthier backgrounds.
While loan amounts have been increased, the threshold for those receiving the most generous ones has been lowered from £50,000 to about £42,000.
What does the plan mean for students?
Students doing three-year courses charged at £6,000 will leave university with about £30,000 of debt - if fees go up to £9,000, debts will be closer to £38,000.
The government says the lowest-earning 25% of graduates will pay less than they currently do. But most others will pay more - the highest earners almost double what they currently pay.
The Institute for Fiscal Studies says that, for about half of gradates, the plan is essentially a 9% graduate tax for 30 years, because they will not finish paying off the debt by the 30-year cut-off point.
Assuming fees of £7,500 for a three year degree, plus maintenance loans, its modelling shows that the top 10% of graduate earners will clear their debts, on average, in about 15 years. But a middle-earning graduate would need to earn, for example, an average of £48,850 a year for 26 years to pay off their debt.
The IFS also says about 10% of graduates will pay back, in total, more than they borrowed.
How are universities currently funded?
In the UK as a whole, income from fees - including fees paid directly by students such as postgraduates and overseas students - makes up about 29% of universities' total funding, which was £25.4bn in 2008/09.
Another 35% comes from government funding bodies, while the rest comes from other sources such as research grants, endowments and investments.
As a very rough guide, universities say the average classroom undergraduate degree costs about £7,000 a year to teach, of which just over £3,000 currently comes from fees and the rest from government funding. Courses such as medicine and sciences cost more.
If much of the teaching budget is withdrawn, vice-chancellors say they would need to raise fees to £7,000 to cover the shortfall.
What about a graduate tax?
Business Secretary Vince Cable, a Liberal Democrat, called in July for a variable graduate contribution or graduate tax.
It is a concept that Labour rejected when in power, although it is now supported by the party's leader, Ed Miliband, as well as the National Union of Students.
Mr Cable later ruled out the idea, which was also rejected by Lord Browne.
In practice, the line between a fees system and a graduate tax is blurred.
The central elements of a fees system are that the student pays a set price for his or her specific degree, and that sum goes to the university.
Under a graduate tax, a graduate would pay a percentage of their income, after graduating, to the Treasury. This would then be allocated back to the university sector in some way - but not necessarily to the institution at which the student studied.
The current and proposed systems are a mix of both principles - there is a set fee and the link between the student and the university is maintained, but the student pays after graduation, through the tax system.
Proponents of a graduate tax argue that it is fairer and more progressive - but critics say it would be difficult to earmark the money for universities, to recoup the money from EU students, and that it would encourage graduates to move overseas.