Call for new loan rules

September 19, 1997

THE GOVERNMENT's response to funding proposals in the Dearing higher education report is ineffective, inequitable and unrealistic, according to education researchers at the London School of Economics.

An up-front Pounds 1,000 tuition fee that is not covered by loans coupled with Government opposition to top-up fees means no more money for higher education but possibly more public spending, Nicholas Barr and Iain Crawford of the LSE Centre for Educational Research will tell MPs next week.

British students could find it harder to win places at the best universities if they expand their intake of overseas students on full fees, they warn.

The central problem for ministers is to change Treasury accounting procedures so that student loans are no longer counted in full as public spending.

The researchers are expected to tell the Commons' education and employment committee, which is gathering evidence on the Dearing report, that the cash crisis in higher education cannot be resolved unless the Government over-rules objections to change from the Office of National Statistics. The ONS argues that there are problems because of the way private funding is classified by European accounting rules.

But without the public accounting changes, ministers will be unable to resolve the higher education funding crisis, the quality of courses will suffer, and there will be greater restrictions on access.

No more money will be available for higher education, since neither public spending nor parental contributions will increase under the Government proposals, while loans to students continue to count against the public sector borrowing requirement.

The proposals could lead to a rise in public spending if, as expected, there is a jump in the number of students taking loans. Up-front fees will hit access, especially if the Government abolishes maintenance grants.

If the Government persists in its opposition to top-up fees, British students are likely to find it harder to find places at top universities.

Even if the proposals were ideal, it would still be difficult to introduce them by 1998/99, since the Government has yet to answer questions such as how means-testing will work, how it will apply to European students, and who will collect fees from students.

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