The price of a university education is about to go up. A lot. Last month the Browne Review announced the results of its year-long investigation into student funding and called for the current cap on tuition fees to be lifted. The coalition hasn’t quite gone that far, but has suggested that it will shift the cap up from its current level of around £3,000 a year to £9,000.
“We believe a limit is desirable and are therefore proposing a basic threshold of £6,000 per annum,” says universities minister, David Willetts, with an absolute limit of £9,000 “in exceptional circumstances”. The phrase ‘exceptional circumstances’ hasn’t been explained, but probably refers to the fees the top universities, such as Oxford and Cambridge, will be able to charge as long as they also find some way to prove that they are working to attract students from poorer backgrounds.
So what will the changes mean for student finances? The good news is the money won’t have to be paid upfront. So students who don’t have the money will still be able to gain a higher education. Instead, people will start to pay off the cost of their university degree once they’ve graduated and are earning more than £21,000 a year. Then 9% of their income will be taken to pay off the debt.
This is where the bad news starts. The government has said that the rate of interest charged on the debt will be tied to earnings – so the more you earn, the more interest you pay. Worse, those who can afford to pay off the debt early will face a penalty charge of up to 5%.
In other words, the better you do, the more you’ll pay, assuming the proposal becomes law. This isn’t yet a given, and with many Liberal Democrats conscious that they promised not to raise tuition fees, the government could be set for its first big battle. Here’s hoping a more palatable solution is reached.