Fees of up to Pounds 30k could pay for poor

June 2, 2000

Students from wealthy families could end up repaying tuition fees of up to Pounds 30,000 once interest is taken into account, under plans being considered by top research universities.

Economists who have drafted proposals on top-up fees for the Russell Group of leading research universities want the government to introduce income-contingent loans with interest rates at 3 per cent above inflation. The government's target underlying inflation rate is 2.5 per cent.

In a paper drafted for the Russell Group, the economists estimate that the annual interest paid would raise at least Pounds 300 million a year to pay for a national scholarship fund to ensure that the poorest students are not deterred from entering higher education.

It would mean students taking out loans ranging from, say, Pounds 12,000 to cover fees for an arts degree to perhaps Pounds 30,000 to become a doctor.

Students would pay no up-front fees. On graduation, however, they would start to repay the loan at, for instance, 5 per cent of their earnings. Student loans are currently repayable with interest equal to the rate of inflation.

Nick Barr, economics lecturer at the London School of Economics and a member of the group that drafted the paper, said this would be a reasonable price for a scheme that required no up-front fee payments and spread the costs over a long period in employment.

"If you set repayments at 5 per cent of earnings it would not be too much of a burden," he said.

The national fund would supplement scholarship funding raised by individual institutions. It could be divided between institutions, schools and local authorities, rather than being placed in one national scheme, Dr Barr suggested.

Andrew Oswald, professor of economics at the University of Warwick and also a member of the group, commented: "We have to find money from somewhere if we want to have scholarships for those from low-income families." Warwick already runs a scholarship scheme for its poorest students, funded by alumni.

A statement issued on behalf of the Russell Group, which received the economists' report on Wednesday, said that it was unable to comment on the work.

However, it added: "The group remains committed to identifying a funding system that creates the additional resourcing necessary to help Britain's top universities to remain among the best in the world for both teaching and research. This must be a system that ensures access to higher education for all students who can benefit from the opportunity, regardless of their circumstances."

The comments came as education secretary David Blunkett reiterated promises to break down the privilege that comes from "having gone to the right school or having been brought up in the right family".

Addressing the National Association of Head Teachers' annual conference in Jersey yesterday, Mr Blunkett said the educational aspirations of young people needed to be lifted.

"We want far more pupils to see university, including top universities, as a natural destination, not a world apart," he said.

Mr Blunkett said there needed to be a sea change in the number of high achievers in state schools and colleges applying to top universities. He said this could be achieved through more twinning of schools, colleges and universities, and through summer schools and "a much more professional recruitment and selection effort by universities".

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