The cost of a university education will rise as public subsidies are slashed but student repayments will be fairer and linked to earnings, Britain’s business secretary Vince Cable said today.
A rise in the amount students have to pay for degree courses is inevitable, Mr Cable said, as the government seeks cuts of 25 percent in departmental budgets over four years to tackle a record peacetime budget deficit.
"I don't want to see the quality of universities cut, we don't want to narrow the opportunities for young people to go to university, therefore the only possible way forward is by having a bigger graduate contribution," Mr Cable told reporters.
He was speaking after setting out his vision for the future of universities in a coming era of austerity to an audience of academics at London South Bank University.
Mr Cable, in office since the coalition came to power in May, is seeking to avoid a political row over a looming rise in student tuition fees, which his Liberal Democrat party pledged before the election to phase out.
Former BP chief executive Lord Browne is leading a review of student fees and is due to report in the autumn. Universities want a cap lifted on the £3,225 a year they can charge students, saying without higher fees the quality of teaching will suffer.
Mr Cable said he had asked Browne to look at a fairer way of recovering the cost of degree courses than now, where students take out government loans and repay the money when they start earning more than £15,000 a year.
He said the system was unfair because teachers or care workers repaid the same amount as well-paid commercial lawyers or surgeons.
"It is not progressive, it's not related to people's earnings and we need to change that and that's what we are asking Lord Browne to look at."
Mr Cable said he had asked Lord Browne to look at a repayment mechanism of "variable graduate contributions tied to earnings." Mr Cable also said he did not want to tie Browne's hands, but said he envisaged this would mean high-earning graduates would end up repaying more than the cost of their studies, while lower earners might pay less.
He said he did not rule out students having to pay more for studying at elite universities such as Oxford.
A key to the "graduate contribution" would be that it was not regarded as a tax that could disappear into the coffers of the Treasury.
"The whole point is to get revenue that goes into the universities and that it is a protected stream of income," he said.
Mr Cable said universities also needed to look at ways of reducing the cost to students, including shortening degree courses to two years from three years.
More students could be encouraged to save money by staying at home and studying for university degrees externally, along the lines of Open University courses.
Demand for university places has soared to a record high for the fourth year running, thanks to a demographic boom, a lack of jobs as the country emerges from recession, and thousands of applicants rejected last year trying their luck again.
Reuters