The government is considering dropping tuition fees for students who stay at home to study in exchange for them waiving their right to grants and loans, it has emerged.

Ministers are considering the plan as one possible solution to the mounting conundrum over how to fund the growing university sector in a recession. The idea is contained in draft plans for a framework for the future of higher education, the BBC said.

It is thought the idea will appeal to students from the poorest backgrounds who might be put off applying to university for fear of getting into debt, and to the rising numbers who are supporting themselves through part-time work while studying.

Wes Streeting, president of the National Union of Students, said: “The idea may work out well as a financial bonus for particular groups of individuals who we are desperately trying to bring into the higher education system, who have the ability but don’t want the traditional experience of studying away from home.

“My key concern is that to incentivise students to stay at home could be a barrier to choice. I would be concerned if people limit their horizons and study at home when there may well be a better course or university elsewhere.”

Students pay £3,225 a year in fees but receive a loan to cover the cost, plus loans to live on and free grants for the poorest students. Even though the government eventually gets the loans repaid, the subsidy is a huge drain on the exchequer. The proposals would partly reduce that subsidy. A spokesman for the Department for Business, Innovation and Skills stressed that at this stage all proposals were only being considered and the plans have not been finalised.

“As part of the higher education framework we are considering a number of measures to increase access to higher education and maintain our sector’s world-class status,” he said.

“Ahead of its publication any discussion of the proposals it will contain are purely speculative.”

The framework for the future for higher education is due to published in the autumn. A review of fees is also due to begin before the end of the year.

The problem of funding higher education is becoming increasing acute. Universities face record applications for this September – fuelled by increases in older applicants attempting to sidestep the recession. But the government has reduced the cap on student numbers after it discovered a £200m black hole in its funding. This will create the most intense competition ever for places after the A-levels results are published in August.

Ucas will tomorrow publish the latest figures on applications for this year, expected to show another rise to around a 10% increase on last year.

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According to a report published by Universities UK, University Tuition fees need to rise significantly to maintain decent teaching standards at institutions across England.

The conclusions are made by Universities UK, which represents vice-chancellors, ahead of an official Government review of tuition fees later this year.

“This Universities UK [UUK] report assumes that higher fees are inevitable, and that the shambolic current system of student support will remain in place.”

It comes despite warnings from accountants that a similar rise would lead to average student debts of £32,000. Critics warned that any major increase would prove hugely unpopular with students and would hit those from middle-class families hardest because many are ineligible for grants.

Wes Streeting, president of the National Union of Students, said: “In the context of the current recession, it is extremely arrogant for university vice chancellors to be fantasising about charging their students even higher fees and plunging them into over £32,000 of debt.

At the moment, students are charged up to £3,145-a-year in fees. Those from households earning less than £25,000 are eligible for a full grant of £2,835 and at least two thirds of undergraduates get at least some subsidy. Students can also take out low-interest Government loans.

University leaders quizzed as part of the report “suggested a very wide range in the level of fee that would be required” but the “median figure was around £6,500″, said the report.

It claimed undergraduates would not react if fees were raised to £5,000, but admitted they would begin to turn their backs on university if costs increased to £7,000.

“There was a general recognition of the political difficulties for the Government in going to Parliament to seek a substantial increase in the fee cap,” said the report. “Yet, without an increase, much undergraduate teaching would be increasingly unsustainable after 2010.”

The report said if fees increased to £5,000-a-year – and the existing student loan system remained – students would be hit by average debts of £26,412 by 2016. If fees increased to £7,000 the average debt would hit £32,462.

Wendy Piatt, director general of the Russell Group, which represents 20 leading universities, said: “There is a growing consensus that without increased investment, there is a real danger that the success of our world-leading universities will not be sustained. In a difficult economic climate there is even greater urgency to find additional funding.”

But Stephen Williams, the Lib Dem skills spokesman, said: “Young people will be shocked that many of the vice-chancellors involved with this research would like to see tuition fees more than doubled. The conclusions would be very different if students’ views were considered instead of just those of university chiefs.”

[Source: Telegraph.co.uk]

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