Nine out of ten universities and colleges plan to charge the full £3,000 a year fee for courses from 2006, curbing student choice and threatening the government's higher education and financial plans.
A need for extra money and a fear that students may equate cheaper degrees with inferior quality has convinced most institutions that they have no option but to charge the maximum for most courses, The THES has found.
One university vice-chancellor, who did not wish to be named, said: "It seems we can't afford not to charge the full amount."
Even higher education colleges expect to raise their fees. John Cater, director of Edge Hill College and chair of the Standing Conference of Principals, said: "The need for resources means that colleges are looking at top-up fees, and no one wants to be seen occupying the cheap and inferior end of the market."
Since £3,000 fees were announced in the higher education white paper last month, both education secretary Charles Clarke and higher education minister Margaret Hodge have maintained that universities will charge different amounts for different courses. They expect relatively few institutions to charge the maximum for most or all of their courses.
But it is understood that the government was warned before it published the white paper that it could expect some 90 per cent of institutions to charge the full fee.
Despite this, ministers remain confident that students will vote with their feet, forcing universities to pitch prices according to demand. Variable course pricing from 2006 is key to the government's funding plans.
Fees of £3,000 across the board could also deter the poorest students, contrary to the government's widening participation strategy.
If full fees were charged by all institutions, it would cost the government about £1.8 billion a year to provide the student loans needed to cover them, according to vice-chancellors. And it could take up to ten years before graduate repayments cover the annual loan outlay. This implies a total bill of nearly £20 billion.
Ms Hodge said that it was too early to say how many institutions would charge the full fee for all courses. But she indicated that, even if they did, the government would cover the cost.
She said: "I do not think it will happen, but there has been a recognition across government to pick up the upfront costs."
Many in higher education remain unconvinced. They are worried that the Treasury agreed to top-up fees because the Department for Education and Skills persuaded it that there would be significant price differentiation between courses.
Despite reassurances from Mr Clarke that teaching funding for higher education will be maintained beyond 2006, many fear that the Treasury will squeeze other parts of the higher education budget in the 2006 spending review if all courses cost £3,000.
Vice-chancellors claim that there is already, at best, no real-terms increase in core teaching funding, removing cash for specific initiatives, for the spending review period up to 2006. Overall, teaching spending will rise by 4 per cent in real terms up to 2006.
Geoffrey Copland, vice-chancellor of Westminster University and chairman of the Coalition of Modern Universities, said: "Given the level of funding for core teaching that has emerged, we are all facing at best no increaseI unless we charge an increased fee."
A source from Universities UK, which represents vice-chancellors and principals, said: "We are getting an overwhelming indication that it is highly likely that universities will charge the full £3,000 fee."
Bahram Bekhradnia, director of the Higher Education Policy Institute, asked: "Is the Treasury cheque open-ended? Or will the funding council grant be reduced by the amount that the fee commitments are exceeded?"
Speaking at the launch of the Higher Education Policy Institute this week, Lord Dearing said: "Pitching the price right is a potentially hazardous business for the institution. It would not be surprising if, to avoid the consequences of misjudgements, institutions were minded to seek understandings with their competitors."