Tuition fees: Theresa May challenges over-priced universities

Theresa MayImage copyright Reuters
Image caption Theresa May’s review will consider the cost of tuition fees and repaying student debt

The prime minister is to call for better value for students in England, admitting they face “one of the most expensive systems of university tuition in the world”.

Theresa May will announce an independent review of fees and student finance on Monday.

She will also argue for an end to “outdated attitudes” that favour university over technical education.

Labour says it would abolish fees and bring back maintenance grants.

Mrs May, announcing the year-long review of student finance and university funding, will warn that the system has failed to deliver sufficient competition on price – with almost all courses being charged at the maximum £9,250 per year.

For many students, the prime minister will say, “the level of fees charged do not relate to the cost or quality of the course”.

Fee freeze to stay

There are “serious concerns” about the cost among parents and grandparents as well as students, she will say.

There is a temporary freeze on fees at £9,250 and that is likely to be extended for at least another year during the review.

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Media captionEducation Secretary Damian Hinds

Education Secretary Damian Hinds said he wants “more variety” in the level of fees, rather than almost all courses and universities charging the maximum amount.

He also calls for more flexibility in how courses are delivered, such as two-year degrees, encouraging “commuter degrees” where students live at home and making it easier for part-time students and those who want to carry on working while studying.

But there have been no suggestions from ministers that the review will consider scrapping or radically reducing fees, or replacing the system with a graduate tax.

“If you’ve benefitted from a university degree, we know that typically people earn over £100,000 more over the course of their life… then you should be making a big part of that investment,” Mr Hinds said.

Former Labour education minister, Lord Adonis, called for a more significant change – arguing that fees should be much lower or abolished, in the way that had happened in Germany.

He accused universities of being “bloated” on high fees and said they needed to “get real” over how much they should charge.

But Lord Adonis rejected the idea of different subjects having different costs as a “big backward step”, which would reduce numbers applying for science subjects, if they became more expensive than arts and humanities.

The tuition fee review also will consider ways of reducing costs such as cutting interest rates on loans – currently up to 6.1% – and reintroducing maintenance grants for disadvantaged students, as well as examining the level of fees.

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Mrs May will say the review needs to make sure poorer students can have an “equal chance”.

Students from poorer families are offered bigger loans for living costs than better-off students, who are expected to be partly supported by their parents, but it means they graduate with bigger debts.

Restoring maintenance grants for poorer students, scrapped last year, would reduce their level of borrowing.

Support for vocational training and apprenticeships in “post-18 education” will also be considered.

The prime minister will also warn that the route into further technical and vocational training is “hard to navigate”, saying the standards across the sector “are too varied” and the funding “is patchy”.

Labour’s shadow education secretary, Angela Rayner, has called for services in further and higher education to be free at the point of delivery.

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Media captionFive things you should know about your student loan debt

She called the tuition fee system “unsustainable” and called for fees to be scrapped and maintenance grants brought back.

The Treasury select committee, chaired by former education secretary Nicky Morgan, has raised concerns about the high level of interest rates.

How do tuition fees work in England?

  • Universities can charge up to £9,250 per year
  • Students do not pay this up-front, but can borrow the full amount
  • They can also take a loan for living costs
  • Disadvantaged students can borrow more for living costs, on the assumption that better-off students are supported by their parents
  • Interest of up to 6.1% is charged on loans from when students start at university
  • Students begin to repay loans once they earn £21,000, with this threshold being raised to £25,000
  • Any unpaid debts are written off after 30 years
  • In Scotland’s universities, there are no fees for Scottish students
  • In Northern Ireland, fees are up to £4,030
  • In Wales, fees are up to £9,000 with plans for higher levels of maintenance support

The Institute for Fiscal Studies says students in England face more than £5,000 in interest charges before they have even left university – contributing to average graduate debts of more than £50,000.

Other former Conservative and Labour education ministers Ms Greening, Lord Willetts, Lord Adonis and Charles Clarke have all raised concerns about the level of interest charges.

Mrs Morgan has also called for more support for part-time students, saying that their numbers had “collapsed”.

She said that the review needed to find a way to encourage more flexibility in courses and costs, saying that when the fees system was introduced it was “naively assumed” there would be be more competition.

‘Variety’ of fee levels

But there have been warnings against different levels of fees for sciences or humanities and arts, or for different types of university.

Lord Willetts said higher fees for courses with the highest graduate earnings would become a “reverse pupil premium”, giving even more money to the most advantaged courses and institutions.

Image copyright Reuters
Image caption Labour’s Angela Rayner says fees are unsustainable and should be scrapped

Sir Anthony Seldon, vice-chancellor of the University of Buckingham, backed calls for more flexible approaches – such as two-year degree courses – but warned that setting different fee levels would be a “bad idea”.

Dame Janet Beer, president of Universities UK, said the current system needed to be “better understood and feel fairer to students”.

The priorities should be support for disadvantaged students and reversing the collapse in numbers of part-time and mature students, said the university group leader.

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