Money makes the world go...

March 27, 1998

THES reporters assess the trouble in store in the autumn when tuition fees are introduced

Students who pay their tuition fees in instalments may be charged extra by universities, according to Miles Hedges of the British Universities Finance Directors group. He added that institutions that did so would have to consider the impact on access.

A Department for Education and Employment spokeswoman said: "Universities are independent bodies but if they impose any additional charges they would have to satisfy higher education authorities that they were providing service, teaching and research to standards set down by the Higher Education Funding Council for England or otherwise face penalties."

One university finance director, whose institution has yet to decide whether to charge, said that the charge would just cover administration costs and loss in cash flow. But it would have the advantage of encouraging students to pay upfront: "We certainly do not want to make it financially attractive for students to put their money in high-interest building society accounts at our expense."

Finance directors also believe universities may have to find another Pounds 25 million to cover the cost of collecting tuition fees and writing off bad debt in the first year. They believe that it could cost up to Pounds 50 per student to collect means-tested tuition fees from university entrants this October. With admissions expected to be about 300,000 this entails a cost to the sector of about Pounds 15 million.

Mr Hedges said that in addition to this, universities could have to write off about 6 per cent of total potential fee income for those students who should pay but do not. He said that this could come to about Pounds 10 million across the sector.

* Who pays what: government guidelines on the student support system for next year have clarified doubts created by earlier advice.

The Department for Education and Employment booklet Financial Support for Students: A Guide to Grants, Loans and Fees in Higher Education 1998-99 explains in greater detail how residual income, the figure used to decide how much parents should contribute to the Pounds 1,000 annual tuition fee, is calculated.

This is defined as their gross income for income tax purposes minus allowances for: a dependant adult who is not their spouse and has an income of less than Pounds 2,140; interest payments, dependants' pension schemes, life assurance and superannuation payments qualifying for tax relief; domestic help, in some cases wages up to Pounds 1,680; living abroad; parents who are award holders.

Students will escape tuition fees if their parents' residual income is less than Pounds 16,945. The new booklet explains "this is, on average, a total income of around Pounds 23,000 a year".

Critics said previous DFEE guidelines issued to parents were insufficiently clear on this issue, citing in particular the bald statement in an earlier DFEE booklet that "if a student's gross family income is below about Pounds 23,000 a year, the student and the student's family will not have to pay anything towards tuition fees and living costs".

Pamela Platten, a Norwich parent who wrote to the DFEE and Norfolk County Council about the issue, described the advice as "very misleading to parents who are on low incomes". She pointed out that an income of Pounds 23,000 with none of the qualifying deductions would lead to an annual fee of Pounds 552.

* Supplementary allowances: Jim Wallace, leader of the Scottish Liberal Democrats and MP for Orkney and Shetland, has accused the government of continuing to dodge the question of Scottish students' supplementary allowances, including travel grants.

A student from Shetland starting at Stirling University this year faced more than Pounds 400 in annual travel costs, he said. They could claim this back for their first year under the scheme, but thereafter there were no firm arrangements.

In a letter to Mr Wallace, Scottish education minister Brian Wilson said:

"The move to loans in 1999-2000 does require us to look at the detail of some of the allowances and this work is in progress I Under the new arrangements, those students who require additional support will receive it at broadly the same level as now."

* Income from fees: students will bear all of the burdens of tuition fees while universities will see none of the benefits, according to a leading opposition education specialist.

Conservative Nick St Aubyn, a member of the House of Commons education select committee, launched his attack after confirming government estimates of the savings in 1998-99 to 2000-01 from the abolition of student grants and introduction of tuition fees. He also asked how much more the government would have to spend on its loans system. Education minister Kim Howells confirmed fees and grants savings as Pounds 2,500 million and additional cumulative loans spending as Pounds 2,250 million. This, said Dr Howells, leaves an estimated cumulative combined saving by 2000-01 of Pounds 250 million.

Mr St Aubyn said that this scheme yielded far less that Sir Ron Dearing's original flat-rate fees proposal at a time when, according to Sir Ron, universities would face a Pounds 500 million shortfall. He said that the government should have offered income-contingent student loans with real rates of interest provided by the private sector. This might have saved much of the Pounds 2,250 million additional cumulative cost to the state of providing loans.

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