Everything you need to know about tuition fees - Ahead of further protests, Jeevan Vasagar offers a guide to the government's controversial plans for university funding

24 Nov 2010

Webmasters Note - this is a useful article which answers many of the questions which the rest of the press has not answered.

Should I be protesting tomorrow? I promise not to throw any fire extinguishers.

That depends on who you think should pay for higher education. The government's plans to raise tuition fees, coupled with slashing university budgets, will transfer a great deal of the cost from the taxpayer to the individual graduate.

You may think that's fair. But even if you don't like the idea of subsidising kids to spend three years skipping class and downing vodka, there is more that may cause you disquiet. Lord Browne, the former BP chief executive who investigated the issue for the government, has proposed a market vision for higher education in which stronger universities can expand, weaker ones will contract and the money will follow the individual student.

This is fine if a student can make informed choices, but in practice it might end up simply rewarding those universities that are most prestigious. Prestige does not always equate with a good service to students; high ratings for research don't always mean that academics are keen to educate the next generation. Watch out for a future in which universities engage in noisy PR campaigns and aggressive expansion, because they fear the alternative is extinction.

Remind me, how will the proposed system work?

At the moment, top-up fees are £3,290 a year for undergraduates at English universities. Universities will be allowed to charge £6,000 a year, or up to £9,000 in what the Government describes as "exceptional cases". Actually, it's hard to see £9,000 as the exception. There will be a strong financial incentive for universities to charge as much as they can after the government outlined plans to cut state funding for higher education in its spending review. No one will have to pay the fees upfront.

But could you pay upfront?

Yes and then you wouldn't have to worry about accruing interest. Arguably, this favours the rich, although business secretary Vince Cable suggested this might also apply to thrifty students who worked on a building site for a year to raise money in advance. Most students will carry on doing what they do now. That is, borrowing from the taxpayer and paying it back after they graduate.

And for the rest?

No one will have to pay anything back until they are earning more than £21,000. At the moment the repayment threshold is £15,000. Graduates will pay 9% of their income above this threshold. To counter fears that graduates with a lucrative City job would be able to repay their loans rapidly and escape interest payments, the government is proposing a penalty for early repayment. There are no details of this yet. Graduates will pay interest on their loans, of a maximum of inflation plus 3%. Any outstanding repayments will be written off after 30 years, so graduates with low lifetime earnings will be protected.

What about maintenance grants?

Students from families with incomes up to £25,000 will be entitled to a grant of up to £3,250. The government will save money by cutting maintenance grants for students from wealthier households - the current threshold of £50,000 will be reduced to £42,600. Loans will still be available. There will also be scholarships for bright students from poor homes. A fund worth £150m will be set up, and universities charging more than £6,000 a year in fees will be required to participate. The government is consulting on the details - but it is likely to focus on teenagers who get the new pupil premium when they are at school.

Is there not a better alternative?

The National Union of Students proposes a graduate tax, with no variation in fees. The money raised would not go to the Treasury but would be paid into a trust controlled by the higher education sector, which would be independent of government. Bonds would be issued to raise money on financial markets, against future income from graduates. Critics, including Browne, say a graduate tax breaks the link between students and the university; there will be no incentive for universities to improve the student experience.

How are Labour doing on this?

Well, its leader and shadow chancellor don't see eye to eye on this one. Ed Miliband favours a graduate tax, but Alan Johnson, who introduced top-up fees as Blair's higher education minister, has publicly disagreed.

We have had top-up fees for years; why are students suddenly so angry?

The fees being proposed now are much higher. They are also concerned about the cuts to teaching budgets, which will fall hardest on arts subjects because sciences are regarded as priority for economic growth.

So will we have the most expensive state universities in the world?

Yes. Taking figures from 2006/07, Iceland charges students US$6,449 a year (£4,000). Public universities in the US charge $5,943 (£3,752). However, a third in the US go to private universities, where the average fees are $21,979 (£13,900). (But at least the elite US universities have lavish bursaries to meet the full cost of fees.)

Er, should we feel proud of that?

Well, England does have some of the world's best universities. Oxford and Cambridge are ranked joint sixth in a league table published by the Times Higher Education supplement. Imperial College London is ranked ninth.

Will poorer teenagers be put off going to university?

This will be a social experiment - no one knows. There's no evidence that the introduction of top-up fees in 2006 deterred students from poorer homes. In fact, in the last five years there has been a sustained increase in the number of young people from more deprived parts of the country attending university. But there is still a big gulf between rich and poor. Children from wealthier homes are far more likely to go to university than poorer kids. And this divide is sharpest when it comes to the most competitive universities - the ones expected to charge the highest fees.

Will our universities go private?

If state funding for teaching dries up, there may be a temptation for some elite universities to go private so they can charge very high fees and ignore government targets on widening access. There was speculation last month that Cambridge is considering the possibility of going private, while the LSE's governing body recently studied a finance paper on the implications of declining government money.

Shouldn't we be more angry about the abolition of the education maintenance allowance?

For some teenagers the EMA, a weekly payment of up to £30 for 16- to 18-year-olds with a household income of less than £30,810, is essential to pay for travel to college. The government says it will be replaced by "more targeted support". The thinktank Policy Exchange argued in 2008 that the EMA should be scrapped, saying the payment only had a "minimal" impact on participation - and that when the school-leaving age is raised to 18 in a few years' time, it will be defunct anyway. An assessment by the Institute for Fiscal Studies disagreed. It said that the EMA did increase participation, particularly among young men. One of the Policy Exchange paper's authors, Sam Freedman, is now education secretary Michael Gove's policy adviser.

What's to stop graduates bunking off abroad?

You won't escape repayments by moving overseas. Not unless you change your identity. If you have no appetite for life on the run, it's probably not worth the hassle. If you are planning to live abroad for more than three months, you have to inform the student loans company, as there may be a different threshold for loan repayment. The repayment threshold if you move to Poland is £9,000, for example.

Won't Scottish universities suddenly become super popular? They are free, aren't they?

They are free for Scots, and other EU nationals. But English undergraduates have to pay £1,820 a year (£2,895 for medicine). There has been a rise in the number of English students heading north but there have been reports that the Scottish government - which is due to publish a green paper on higher education next month - will raise fees for English students to bring them into line.

How did we get into this position? Are too many people going to university?

Currently, 45% of young people go on to higher education. That's up from 39% 10 years ago - and just 6% 50 years ago. We've moved from a system where education for a tiny elite was funded by every taxpayer, to a system in which increasing numbers go to university every year in an expansion encouraged by Labour. Since 2006, the government has limited student numbers. That has led to a great deal of frustration; one in three of those who applied for places this year did not get in. That's not just a shame for the individual candidates; our future prosperity depends on having a highly skilled workforce. Other developed countries are desperate to raise university participation; Obama wants at least 60% of Americans to have a college degree by 2020.

Is the idea to put students off ?

No, the reverse. Ministers argue that their proposals will allow an expansion of the system by transferring more of the cost from the taxpayer to the individual graduate. The scale of fees may be daunting, but the government believes students are aware of the increased earning potential conferred by a good degree.

What about two-year courses? Are they a good thing? Will they be looked down on by employers?

Two-year degrees would keep costs down; a university might charge £7,000 a year for intensive teaching rather than £6,000 annually for a three-year course. Some students might welcome the combination of smaller debts and a chance to get into the workplace faster. There are already condensed four-year medical degrees open to graduate applicants - and these are regarded as an equally legitimate route.

But three-year degrees are likely to remain the gold standard. Any university crafting a two-year degree will have to work hard to overcome suspicion that it is just a cheap option.

How come university is free in France?

Higher education is funded by the state, and tuition fees are very low. Some universities are free - and even pay a salary to students. To say the sector is resistant to reform is an understatement; politicians have feared the power of student protest since 1968.

Is it true their universities are rubbish?

Yes, for the most part. France has a two-tier system - the highly competitive grande écoles, which train the future elite, and the facultés, which forbid selection but are overcrowded and run-down. President Sarkozy wants to allow universities more independence and access to private funding. Meanwhile, plenty of French students are coming here to study