TUITION FEES: NEW ARRANGEMENTS

Parliament has agreed changes to the future arrangements for student finance for those going into higher education. Individual universities will be able to set their own rate of tuition fee and can charge up to £3000 for each student, per year. Most of the changes to student finance arrangements come into force from September 2006. They affect students who live in England only.

Changes from 2005

From April 2005 the starting point at which former students begin to repay their loans will increase from £10,000 to £15,000. This will apply to all students with income-contingent loans, including those currently in repayment. Students will not therefore, have to start making any repayments on their loan until they are earning over £15,000 a year. This means that after April 2005 someone earning £20,000 will pay £8.65 per week no matter what they owe, rather than £17.31 per week as under the current scheme.

At the moment, students are asked to pay £1,125 contribution towards their tuition fees, but this depends on their parents' income and 60% of students don't have to pay the maximum contribution.

Why have the tuition fees been increased?

Some of the reasons that the government's given have been outlined below;

• The current system doesn't provide a "level playing field" – allowing universities to set different levels of fees is recognition of differences that already existed between institutions, e.g., some universities like Oxford and Cambridge offer a higher standard of degree, so it's felt they should be able to charge more.

• To tackle the budget shortfalls facing many universities and help pay for expansion: the government wants at least half of young people to enter higher education by 2010.

• To give the higher education sector an annual increase in funding of 6% a year for the next three years.

Changes from 2006 – tuition fees

From September 2006 no full-time undergraduate student will have to pay fees upfront, or while they are studying. Instead, both new and existing students will be able to defer payment of their tuition fees until after they leave higher education, by taking out a 'fee loan' from the Student Loan Company, which they will only start to repay once they have left university and are earning over £15,000 a year. The maximum fee loan available would be £3,000 a year for new students and around £1,200 for existing students. The loans are paid upon graduation.

What can a university charge?

From September 2006, universities will be allowed to vary the fees they charge new students, from zero to £3,000 per year. The amount they can charge will be capped at £3,000 (apart from an adjustment to take account of inflation) until at least 2010.

Existing students will not be asked to pay variable fees. Variable fees will only affect students who start their course in September 2006 or later (note that there will be slightly different arrangements for students taking a Gap Year in 2005, described in the 'Gap-year students' section below).

Universities will only be allowed to charge more than the 'standard fee' of around £1,200 if they have signed up to an Access Agreement with the new Office for Fair Access (OFFA). These agreements will set out the universities' proposals for improving access, including the action they will take to promote fair access, so that students from all backgrounds are encouraged to apply.

What this means is that a student receiving the full £2,700 maintenance grant (see below) and who is on a course charging £3,000 a year will get at least £300 a year in extra support, such as a bursary, from their university. Some will get more than this, as many universities are expected to offer bursaries of more than £300.

Will universities only take students from affluent families?

Education Secretary Charles Clarke announced there would be an Access Regulator who would check that any university which wanted to increase its tuition fees had admissions procedures that encouraged applications from students from less advantaged families.

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