Tuition Fees

What are tuition fees?

From September 2006, universities will be able to charge up to £3,000 a year in variable tuition fees, or top-up fees, although the majority of students will not have to pay until after they have finished studying.

They will instead get a student loan to cover the cost of the fees, to be paid back at the rate of inflation once they start earning £15,000. Repayments will start at £1.73 a week and rise to £5.19 a week for those earning £18,000 a year, £8.65 for those earning £20,000 and so on.

Universities will be able to charge up to £3,000 for any full time-course, although they will have to sign an agreement with the Office of Fair Access (Offa) to charge more than £1,150 a year. Prices can vary between courses within institutions.

The government has undertaken not to review the £3,000 cap until 2009 at the earliest, and to permit increases above this level, other than raising it in line with inflation, only with the approval of both Houses of Parliament.


Background

The last 40 years has seen higher education (HE) in the UK transformed from an elite system to a mass participation system: between 1962 and 2002, the participation rate rose from six per cent to around 43 per cent. The Labour government is committed to seeing this proportion increase to 50 per cent.

This increase in the number of students taught in HE has not been met by proportionate increases in funding for universities and colleges. In 2003, the government maintained that HE was underfunded against its needs by around £9 billion.

However, it had long been argued that it was unfair for the general public, most of whom had not benefited from a university education, to be made to pay for the additional costs of HE, when the principal beneficiaries of it were the graduates themselves. Throughout the 1990s, the notion that the beneficiaries of HE should pay for some of the costs began to gain widespread support across the political spectrum. In 1997, Labour's manifesto stated "the costs of student maintenance should be repaid by graduates on an income-related basis".

In 1996, John Major commissioned an inquiry into long-term HE funding, chaired by Sir Ron Dearing. The report, published in July 1997, recommended that students should pay for 25 per cent of the costs of tuition. Later that month, education secretary David Blunkett introduced a new system of means-tested tuition fees, abolishing at the same time the remnants of the student grant system, something Sir Ron had rejected.

Tuition fees were first paid by students in September 1998. They were flat-rate up-front annual charges, to the value of £1,125 in 2004, which all students whose parents earned over £32,000 per annum were liable for. Those with lower family incomes were liable for reductions or are exempt.

The move was highly divisive within Labour, with many on the left of the party opposed to the notion of fees in principal, as discouraging people from low income backgrounds from pursuing HE.

The move was particularly unpopular in Scotland, where four-year degree courses are the norm. In July 1999, the Scottish Executive commissioned the Cubie inquiry to examine HE funding in Scotland.

The resultant report, published in December 1999, recommended that tuition fees in Scotland should be replaced by a graduate endowment scheme, whereby the Scottish Executive would pay the fees. Students would be required to pay £3,000 of it back when their earnings reached £25,000 a year. The executive adopted the plan in January 2000, amending the repayment figure to £2,000 and the earnings threshold to £10,000 a year.

Ahead of the 2001 general election, the Liberal Democrats campaigned on a platform of abolishing tuition fees outright, while Labour claimed in its manifesto that it had made the introduction of top-up fees illegal.

However, just two years later, following intense pressure from universities - particularly the prestigious institutions of the Russell Group - the government's May 2003 white paper included proposals for top-up fees, albeit considerably lower than those sought by the Russell Group. Shortly afterwards, the Conservatives committed themselves to abolishing fees.

The higher education bill, presented in December 2003, set out the government's plans for introducing top-up fees. The bill was tremendously divisive for Labour: Norwich MP Ian Gibson's early day motion calling for a rethink of the policy attracted 185 MPs' signatures, casting serious doubt on the government's ability to carry the bill. However, a series of "seminars" for Labour MPs and concessions made by education secretary Charles Clarke convinced enough members to approve the bill. It was passed into law as the Higher Education Act in July 2004.


Controversies

Higher education funding has been one of the most controversial and divisive issues of recent years. Although one might expect opinion on the matter to be divided along conventional left-right grounds, experience has shown this to not be the case - although the vulnerability of Labour on the issue of top-up fees may have encouraged some to adopt particular stances for political-tactical reasons, rather than on grounds of principle.

Both sides defend their position on grounds of equity. Supporters of fees argue that it is unfair on the majority of the population who have not received the benefits of HE - which are statistically agreed to be fairly substantial in terms of average salaries - to bear the full burden of the costs. As such, shortfalls in HE funding should not be paid for from tax receipts.

Opponents of fees argue that the policy is inequitable, insofar as it discourages students from low income and financially risk-averse backgrounds from entering HE. As such, they claim, the policy is exclusive and will reinforce the middle class domination of HE. Opponents generally regard the replacement of the maintenance grant with student loans as symptomatic of the same problem.

It is also claimed in some quarters that introducing fees undermines the notion of HE being about "education for its own sake", and reduces it to an economic transaction, pointing to the US model where the best universities are also the most expensive as evidence of where the policy leads.

Fees are particularly unpopular with students themselves, many of whom experience substantial financial hardship at university and extensive debts thereafter. There is evidence to suggest that many are put off from attending university at all or drop out, due to financial pressures.

There are also debates about the appropriateness of the particular schemes settled upon. Some have called for a "graduate tax" to be paid by those who have been through HE, instead of tuition fees. Prior to the higher education bill, there was also debate about the fairness of up-front fees as opposed to fees paid off in retrospect.

The tuition fees issue has also been a test case of Scottish devolution, with the abolition of fees laying a major fault-line across the British HE system. Debates continue to rage over the fairness of English students being liable for fees while at Scottish universities and vice versa.


Statistics

93 per cent of former students are in employment or further study within six months of graduation.

Studies show that HE participants earn, on average, 50 per cent more than those who have not. The figure for honours graduates is 64 per cent higher.

Statistics 1 and 2 (Source: DfES, "The Future of Higher Education", January 2003)


Quotes

"We simply cannot duck the funding issue. There is no Plan B. There is no pain-free option of extending opportunity and building a quality higher-education system for the many - not just the few - without someone paying for it."

Tony Blair, prime minister, 2004

"We will not introduce top-up fees and have legislated to p