Leader: Trouble in store for discounts?

Was there a private assurance - a nudge, a wink, a word to the wise - or wasn't there? The answer is: it doesn't really matter what is at the root of the "misunderstanding" between Universities UK and the National Union of Students about whether institutions will cut tuition fees to fill up student places in clearing this summer.

The fact is that there is nothing to stop universities lowering fees or increasing bursaries to fill course gaps in August. Financially, there will be everything to gain. Vice-chancellors may have the odd moral qualm about creating a system where those who make the grade pay more or receive less aid than those who enter higher education through clearing. But with Bill Rammell, the Higher Education Minister, predicting a drop in applications this year and funding council chiefs warning that one in three institutions will be in the red in 2005-06, there is every reason for v-cs to do whatever they can to get student bums on lecture hall seats this summer.

But be warned. This bargain-basement element of the burgeoning competitive market in higher education comes with risks attached. Would parents still encourage their children to apply for a university place well in advance if they knew higher education might be more affordable in August? Will the first institution to offer a clearing discount face some kind of legal challenge from students? Would it breach discrimination laws? Even if v-cs tried to forestall claims of unfairness by offering the same discount to all students on a course, it would come at the cost of reduced income from fees. Finally, if clearing discounts become the norm, there are wider implications for the admission system. Ministers are keen - even if v-cs of the Russell Group and the 94 Group are not - to move to an after-A-level results admissions system by 2010.

One criticism of the Government's consultation paper on post-qualification admissions was that it failed to canvass the views of students. Rising numbers of students waiting until August to apply for a university place, simply because of the apparent economic benefit of doing so, would be a powerful addition to the Government's case. So before the first £3,000 fee-paying students arrive in September, vice-chancellors face one final tough decision stemming from the Higher Education Act: to discount or not to discount. They will be damned if they do, and damned if they don't.