Universities call for cash up front

January 16, 1998

NEW universities are calling for more of their annual funding up front amid fears that the introduction of tuition fees will cause serious cash flow problems.

The Committee of Vice Chancellors and Principals was today due to hear a report on the potential problems of collecting fees. Many vice chancellors want the Higher Education Funding Council for England to "front-load" its annual grant - it is now paid in ten monthly instalments.

They say that if HEFCE pays more of its grant at the start of the 1998-99 academic year it would help cover income shortfalls resulting from the delays in many students paying their fees of up to Pounds 1,000.

The government has refused to compensate universities for the extra costs of collecting fees. In addition, vice chancellors believe that there will be no net cash benefit accruing to their universities from fees since HEFCE grants will be reduced accordingly.

Vice chancellors at many new universities believe that unless steps are taken institutions will have to raid cash reserves or seek bank loans to cover the shortfall. They say this could be compounded by the extra costs of hiring staff to collect fees.

Peter Knight, vice chancellor of the University of Central England, said: "It is essential that the funding council pay as much of the grant up front as possible to recognise that we may not recover many students' tuition fees for months."

John Bull, vice chancellor of Plymouth University, said: "The problem is that, in order to pay their fees, many students will have to receive their loan from the Student Loans Company.

The SLC says it can turn around loan requests in two weeks "but in practice things can get dragged out."

HEFCE has already adjusted its grant payments to help with potential cash flow problems but it can only go so far because the government will not allow it to bring grant forward from 1999-2000.

The Department for Education and Employment said that it has allowed for 5 per cent of the total estimated Pounds 130 million accruing from tuition fees in 1998-99 to be used to cover administration and default.

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