Means tests delay cash

August 14, 1998

UNIVERSITIES could be substantially out of pocket this autumn because of delays in means-testing students for tuition fees, writes Alan Thomson.

Local authorities, which carry out initial means-testing, say technical and administrative problems with the new system could leave many students without statements confirming parental means. Universities need these statements to decide how much of the maximum Pounds 1,000 to charge new undergraduates.

Delays would cause cash-flow problems. Universities would have to cover any shortfalls and so less wealthy institutions could be hardest hit. The rest of the cost of tuition will continue to be covered by local education authorities.

Steve Chicken, chairman of the British University Finance Directors, said:

"If money is coming in later than we expect then there will be cash-flow problems. The real concern is that if the whole system slips LEAs may not be able to make their payments until the following financial year."

A spokesman for the Local Government Association said: "It is proving a headache for local authorities. There have been problems with software and we expect there will be further aggravation when the academic year begins. We are afraid there may be some difficulty meeting the deadline."

He said local authorities were "cautiously optimistic" about completing the bulk of the means-testing for the start of the academic year in September/October. But he said additional problems would be caused by late applications and changes in parental income.

Roughly a third of first-years, whose parental income is more than Pounds ,000 after certain permissible deductions, will contribute the full Pounds 1,000. This is a quarter of the total average annual cost of their tuition. A third will pay part of the Pounds 1,000 and the remainder will pay nothing. Therefore student contributions will account for between a sixth and an eighth of the total average annual cost of teaching. The state continues to pay the rest.

Rephasing of recurrent grant payments by the Higher Education Funding Council should help universities meet part of any shortfalls. Institutions will receive nearly 60 per cent of their total for 1998-99 in the six months from the end of this month to January. This takes account of the change to LEA tuition fee payments, which will be made in February and not monthly as before.

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