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Tuition fees 'could be limited to £6,000' | Tuition fees 'could be limited to £6,000' |
(about 17 hours later) | |
Tuition fees in England could be limited to £6,000 per year and remain cost-neutral to universities and the Treasury, a study commissioned by the Million+ group of universities says. | Tuition fees in England could be limited to £6,000 per year and remain cost-neutral to universities and the Treasury, a study commissioned by the Million+ group of universities says. |
The research examines how a change in the level of tuition fees might work. | The research examines how a change in the level of tuition fees might work. |
It suggests a model where universities receive students' fees of £6,000, plus additional funding from government. | It suggests a model where universities receive students' fees of £6,000, plus additional funding from government. |
But the Department for Business, Innovation and Skills says this would leave a £2bn shortfall. | But the Department for Business, Innovation and Skills says this would leave a £2bn shortfall. |
Students beginning university this academic year have been the first to pay higher fees of up to £9,000 per year. | Students beginning university this academic year have been the first to pay higher fees of up to £9,000 per year. |
But the Million+ group, representing new universities, says that although there continue to be calls for a cut in fee levels, there needs to be a more thorough analysis of how this might be put into practice. | |
Pam Tatlow, Million+ chief executive, said it was "vital that any alternative proposals add up". | Pam Tatlow, Million+ chief executive, said it was "vital that any alternative proposals add up". |
Cost of lending | Cost of lending |
Million+ has commissioned a study from London Economics, which argues that fees could be cut for students while retaining the same level of funding for universities. | Million+ has commissioned a study from London Economics, which argues that fees could be cut for students while retaining the same level of funding for universities. |
It suggests a model that is a mixture of the previous funding arrangement and the current system - in which students borrow up to £6,000 to be paid in tuition fees, accompanied by a higher level of university subsidy from the government. | It suggests a model that is a mixture of the previous funding arrangement and the current system - in which students borrow up to £6,000 to be paid in tuition fees, accompanied by a higher level of university subsidy from the government. |
The study argues that limiting the amount that students needed to borrow would reduce the Treasury's lending costs - as not all students will pay back their loans in full - and this saving could be used to fund extra places. | The study argues that limiting the amount that students needed to borrow would reduce the Treasury's lending costs - as not all students will pay back their loans in full - and this saving could be used to fund extra places. |
Students pay their fees with loans that begin to be repaid when they graduate and start earning more than £21,000 per year. | Students pay their fees with loans that begin to be repaid when they graduate and start earning more than £21,000 per year. |
But there have been concerns about the cost of such non-commercial loans being subsidised by the Treasury. | But there have been concerns about the cost of such non-commercial loans being subsidised by the Treasury. |
The Universities Minister David Willetts recently said that the level of loss on loans - the so-called "RAB rate" - is now running at 35%. | The Universities Minister David Willetts recently said that the level of loss on loans - the so-called "RAB rate" - is now running at 35%. |
This has risen because of lower-than-expected salary levels. The less graduates are earning, the more slowly the loans are repaid and the more likely that they will not be repaid in full. | This has risen because of lower-than-expected salary levels. The less graduates are earning, the more slowly the loans are repaid and the more likely that they will not be repaid in full. |
The study for Million+ suggests that lowering the level of fees and borrowing would be a more efficient and cheaper system for the Treasury - as long as the funding gap to universities was filled by direct grants. | The study for Million+ suggests that lowering the level of fees and borrowing would be a more efficient and cheaper system for the Treasury - as long as the funding gap to universities was filled by direct grants. |
However it would also mean a step back from the more market-driven approach where funding for many university courses is dependent on fees of students choosing to take the subject. | However it would also mean a step back from the more market-driven approach where funding for many university courses is dependent on fees of students choosing to take the subject. |
Graduate tax | Graduate tax |
The study has also looked at the viability of a graduate tax, an idea that had been debated before the introduction of the current system of fees and loans. | The study has also looked at the viability of a graduate tax, an idea that had been debated before the introduction of the current system of fees and loans. |
This would be a system in which there were no fees and universities were funded by government, but graduates would pay a higher level of taxation. | This would be a system in which there were no fees and universities were funded by government, but graduates would pay a higher level of taxation. |
The London Economics report says that a graduate tax would allow the government to borrow less than at present, although it would mean a change in accountancy rules. | The London Economics report says that a graduate tax would allow the government to borrow less than at present, although it would mean a change in accountancy rules. |
"Questions remain about the sustainability of the coalition's higher-education reforms and their impact on participation, but few details have emerged about the alternatives," says Pam Tatlow of Million+. | "Questions remain about the sustainability of the coalition's higher-education reforms and their impact on participation, but few details have emerged about the alternatives," says Pam Tatlow of Million+. |
"The modelling shows that these two alternatives could be introduced at no additional cost to the Treasury while also preserving the unit of resource in universities." | "The modelling shows that these two alternatives could be introduced at no additional cost to the Treasury while also preserving the unit of resource in universities." |
This was disputed by the Department for Business, Innovation and Skills, which is responsible for universities. | This was disputed by the Department for Business, Innovation and Skills, which is responsible for universities. |
"This report confirms that reducing tuition fees to £6,000 would mean a £2bn shortfall in funding for higher education," said a spokesman for the department. | "This report confirms that reducing tuition fees to £6,000 would mean a £2bn shortfall in funding for higher education," said a spokesman for the department. |
"That would be bad for students, bad for universities and bad for graduates. The second alternative of a pure graduate tax would also cost more than the current system, while weakening incentives on individual universities to deliver a high-quality academic experience. | "That would be bad for students, bad for universities and bad for graduates. The second alternative of a pure graduate tax would also cost more than the current system, while weakening incentives on individual universities to deliver a high-quality academic experience. |
"Our reforms in contrast deliver well-funded universities, more student choice and a better academic experience." | "Our reforms in contrast deliver well-funded universities, more student choice and a better academic experience." |
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