What Blunkett says...

THE GOVERNMENT's alternative plans for funding, announced at almost the same time as the details of Dearing's report, would "build" on Dearing's preferred option, education secretary David Blunkett said in a six-page response.

The two funding visions differ significantly. While Dearing wants all graduates to pay a flat-rate annual fee towards tuition costs, the Government is to introduce a means-tested tuition fee where students from "lower income families" will be exempt.

And while Dearing wants to retain the present system for student maintenance, the Government is to abolish the student grant altogether, and all living costs will be met through means-tested loans.

Dearing leaves the door open for top-up fees. The Government said they "play no part" in its proposals.

"The Government agrees with the committee that the cost of higher education should be shared between those who benefit," said Mr Blunkett. Graduates earn more money than non-graduates, so it makes sense that they should contribute.

The present student support system "is not working well", said the Government. It has not encouraged students from lower socio-economic groups to participate, and has not given students the assurance they need that they will have access to funds to cover their living costs. It is out of line with the Government's commitment to lifelong learning.

The Government will introduce an annual tuition fee of Pounds 1,000, which represents about a quarter of the average cost of a course. Labour has insisted that tuition remain free for those from lower socio-economic groups.

The size of a student's tuition fee bill will be dependent on parental income. Only students from families with the highest incomes, thought to be those above a Pounds 35,000-a-year salary threshold, will pay the full Pounds 1,000. Fees will be paid up-front.

Maintenance grants will be scrapped. Currently, students meet their living costs through a combination of the means-tested student grant, and a loan. Now all maintenance costs will be met through bigger loans, the size of which will be also be based on parental income.

Poorer parents will not be expected to contribute, and the overall cash contribution expected of parents who can afford it, Mr Blunkett insists, will be no bigger than at present.

Students will pay back their loans on an income-contingent basis when they find work. Dearing recommends that graduates should start paying back borrowed money when their income reaches Pounds 5,000. The Government rejects this as too low and has set a new repayment starting point of Pounds 10,000. The Government also rejects Dearing's proposed pay-back timetable, deciding that repayments should be paid over 20 years instead of ten - with consequently smaller contributions. More detail will come in the autumn.

The payback collection mechanisms have also yet to be established, although the Government has promised that it would "consider carefully" the Dearing recommendation that cash should be collected through the tax system.

It is expected that the measures will be in place for new entrants to university in October 1998, consultation will end in September 1997, before a full policy statement in the autumn.

"These proposals will mean more money for universities, and the Government will ensure that savings are used to improve quality, standards and opportunities for all in further and higher education," the Government said.