University students will have to pay for their higher education
UNIVERSITY students will have to pay up to £1,000 a year towards their tuition under a reform of higher education financing to be announced by the Government next week.
It is the first step towards a "graduate tax" under which students repay the cost of a degree.
The decision to require a million full-time university students to contribute towards their tuition fees could be one of the most controversial actions of Tony Blair's administration.
Education ministers have described it as "the most difficult decision on education faced by the Government". However, ministers are understood to have concluded that they have no option but to act radically because of a growing cash squeeze.
Universities are predicting a £3 billion shortfall by the millennium. Some leading institutions have already threatened to introduce top-up fees of £1,000 unless the Government acts.
The announcement is expected to follow publication of the Dearing report into higher education funding next Wednesday.
The report was commissioned by Gillian Shephard, the Conservative Education Secretary, before the election. Her Labour successor, David Blunkett, threw his weight behind the study. The report is expected to recommend that students be offered loans to cover part of their tuition fees.
Minister will use this recommendation to justify the policy move.
The Government could raise at least £500 million a year by introducing tuition charges and a new system of student loans, repayable after graduation through National Insurance contributions or an income tax surcharge.
The report is understood to include calculations suggesting a repayment of up to £2,000 a year for tuition and maintenance.
Ministers will argue that a shift to student contributions to tuition costs can be justified because graduates tend on average to get higher salaries than those who do not go to college.
A package of measures to soften the impact of the announcement is also expected to be presented next week. These include scholarships to ensure poorer students do not miss out and tighter means-testing of the maintenance loans system. This would release Government cash now going to better-off students.
New methods of repaying the debts accrued in student years are also under consideration.
A system of automatic deductions through the National Insurance or tax system when a graduate's earnings hit a certain level is being considered. Nevertheless, ministers expect that the move will provoke accusations that the Government risks restricting higher education to the better-off.
The decision to require students to contribute towards tuition fees comes seven years after the Conservative Government introduced student loans for maintenance costs in the face of stiff Labour opposition.
Labour was careful during the election to leave open the possibility of abandoning its opposition to fees if Sir Ron Dearing recommended it. Similar proposals raised by the former education secretary, Sir Keith Joseph, were dropped after they faced middle-class protests.
The National Union of Students said it would "fiercely oppose" any suggestion that students should pay towards tuition.
"To include tuition fees in the debt graduates are expected to repay would be a step too far," an NUS spokesman said. "Charging for higher education will inevitably deter some youngsters from going to university."
Stephen Dorrell, the shadow education secretary, said: "This is symptomatic of a tendency to make a snap judgment. The Government is rushing its fences if it has announced the consequences before Sir Ron Dearing's options have been published and before everyone has had the chance to examine all the implications."
Before the election, Mr Blair was admitting privately that he believed some of the reforms to the education system which a Labour government would have to introduce would - alongside welfare reform - amount to the most controversial political decisions facing it.
Ministers will nevertheless argue that it is the only way it can free up the necessary resources to boost Britain's universities and colleges.
The Treasury is believed to be particularly keen on the move to demand partial repayment of tuition fees because it will enable the Government to signal its commitment to higher levels of spending in our universities without seeking more resources from the taxpayer.
Labour has sought to prepare the ground for the move by keeping its options open in Opposition. Mr Blunkett signalled a shift in Labour thinking before the election when he admitted that his party no longer opposed the concept of loans for student maintenance costs.
He also said in Opposition that Labour was "not persuaded" by the case for students to repay part of their tuition fees. But he was careful to stress that it was awaiting the outcome of the Dearing report.
Ministers are likely to estimate that the general public - increasingly accustomed to the concept of student loans - will not make a major distinction between loans for maintenance and loans for tuition fees.
Already, more than 50 per cent of students use the offer of loans for maintenance costs. The average student has debts of £2,745 - 25 per cent up on last year's £1,982 - according to the 1997 Barclays Student Survey.
The Dearing report presents a number of options to ministers, but it is understood to indicate clearly that requiring graduates to repay part of tuition fees is preferred.
It recommends that students repay around £1,000 for each year they spend at college - only part of the actual fees, which average between £4,000 and £5,000 and can be much higher for medical degrees.
Sir Ron suggests that the money could be repaid over a longer period than the five years expected for existing maintenance loans, and that repayments would be "income contingent".
Repaying tuition fees would generate income for the Treasury, which would be under pressure to pass its savings on to universities.
