Browne review lifts cap on university feesStudents face higher bill, but will pay later

12 October 2010

Universities encouraged to compete for students. Loans to cost more but repayment threshold to rise from £15,000 to £21,000.

Students holding books walking to class

Full-time students do not count as residents

Browne says current funding and finance systems are 'unsustainable' and need urgent reform.

Tuition fees

Academic fees in England and Wales are currently capped at £3,290. The Browne review calls for this to be lifted and suggests that individual institutions should be permitted to set their own charges. It envisages a free market, where universities 'compete for well-informed, discerning students, on the basis of price and teaching quality, improving provision across the whole sector, within a framework that guarantees minimum standards.' 

Supporters of the proposal, such as the Russell Group of leading universities, argue that a fees hike is necessary. Its Director General, Dr Wendy Piatt said: 'We support the urgent and necessary reforms outlined by the Browne Review. These recommendations could make or break our world-class universities. That’s because, bluntly, our leading institutions will not be able to compete with generously-funded universities in other countries if they are not able to secure extra funding.' 

The University and College Union (UCU), which represents university lecturers, was less supportive, saying that: 'if implemented, the proposals would be the final nail in the coffin for an affordable university degree for the vast majority of ordinary families.' 

The National Union of Students was also critical. NUS President, Aaron Porter, said: 'Lord Browne's review would hand universities a blank cheque and force the next generation to pick up the tab for devastating cuts to higher education. The only thing students and their families would stand to gain from higher fees would be higher debts.'

Student loans

The Browne review suggests keeping the current student loans system largely unchanged. It proposes a simplification to the current means testing for maintenance loans and a slight increase to the amount available as a maintenance grant by students from less affluent families.

The review also suggests keeping the current repayment system, where whose earning above a certain amount have money deducted from their salary via PAYE. It proposes a rise in the threshold from £15,000 to £21,000. The rate of deduction would stay at the current 9% above this. 

The review also suggests increasing the rate of interest charged on student loans, from the current system - which charges the rate of inflation (RPI) - to one that charges inflation plus 2.2% for all graduates who are repaying their loan. Those who have not yet reached the new earnings threshold will continue to pay interest at the rate of inflation.

Despite measures designed to mitigate the impact of any fees increase, students look likely to be under yet more financial pressure in future years. Student loans will remain cheaper than commercial rates, but other borrowing will be even more critical. Student bank accounts with interest free overdrafts, and graduate accounts that offer people time to pay off their debts, will be key for students in managing their money and making ends meet.         

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