Minister warns of universities 'radical change'
Updated on 10 June 2010
As the universities minister warns that students in England may have to pay more for their education, the Russell Group head tells Channel 4 News higher fees do not deter poorer students.
Mr Willetts described the current funding system, introduced by Tony Blair in 2004, as "clearly unable to respond to the current economic climate". It was "predicated on the good times never ending - heavily dependent on an increasing flow of money from the exchequer," he said at Oxford Brookes University today.
In an interview with The Guardian newspaper, Mr Willetts said that the current system of funding degree courses was "unsustainable" and is in need of radical change.
He said students should regard university fees "more as an obligation to pay higher income tax" than as a debt.
While stressing that he did not want to pre-empt the review of university funding, set up by the previous Labour government and currently being conducted by Lord Browne, Mr Willetts said that the cost of degree courses for hundreds of thousands of students was "a burden on the taxpayer that had to be tackled".
He added: "My view is that it is not a matter of simply changing the fees. The system doesn't contain strong incentives for universities to focus on teaching and the student experience, as opposed to research."
Dr Wendy Piatt, director general of the Russell Group representing Britin's top 20 universities, told Jon Snow that if you get the student support package right, fees do not deter poorer students.
She said David Willetts was "absolutely right" to point out that the tuition fees system in this country was not "credit card debt".
She went on to call for a "full liberalisation regime" which would allow universities to charge more, if necessary. In such a situation her organisation would make sure that the support system for poorer students was "robust".
But Aaron Porter, president-elect of the National Union of Students, argued that the government "shouldn't turn to students to make up the balance sheet.
He claimed there was £18m of unspent bursary money which students were failing to avail themselves of.
And he asserted that many with the ability to go to unversity "simply will decide not to" when faced with the prospect of graduating with more than £25,000 of debt.
'There's more support out there than students realise'
Johnny Rich, editor of the independent university guide Push.co.uk tells Channel 4 News we need a funding system that doesn't deter the poorest students from going to university.
"The system does need fixing: some universities are in dire financial straits," he said. "We need higher education to be successful in this country if we want a way out of recession."
Today the Chartered Institute of Personnel and Development estimated government spending cuts could increase the jobless total to three million. "Unemployment is a luxury we can't afford," Mr Rich said. "When you have graduates, you don't just have doctors and nurses and lawyers, you also have people who employ people: managers and entrepreneurs."
With higher education funding set to be a political and economic hot potato, the coalition government will be among those looking closely at the forthcoming funding review. "Lord Browne should recommend a system that's not a disincentive to anyone and is simple," he said. "At the moment the system does offer more support to the poorest, but they don't appreciate that because it's so complicated."
Potential students should remember there is far more to a university experience than just debt. "There's more support out there than they realise," he said. "Students should find out what's available, and not just think about the cost because for most people university is worth it."
Tuition fees - currently set at £3,225 a year - are one of the major fault lines between the Conservatives and their Liberal Democrat coalition partners.
The Lib Dems fought the last election on a manifesto promising to scrap tuition fees when resources permitted and the coalition agreement makes provision for their MPs to abstain on any proposal to raise the fees.
The Lib Dem business secretary, Vince Cable, who is nominally the head of Mr Willetts's government department, spoke last week of plans to reduce the number of students going to university.
As part of its £6billion cuts package for this year, the coalition agreed to halve Labour's planned 20,000 extra university places this autumn.
While students in England and Wales have to pay university tuition fees, higher education is free for Scottish students studying north of the border.
Sally Hunt, general secretary of the University and College Union, told Channel 4 News she was "worried" Willetts was trying to pre-judge an independent review and called for a debate that isn't just about "how much more can we squeeze out of the student cash cow".
"A system that's based more and more on making students and their families pay and get into greater debt is a very unstable way of underpinning a fundamentally important part of our economy," she said.
"We need to look at who isn't paying. The state is paying - that's you and me. Students and their families are paying. Where we're not getting the same kind of investment is from business."
She urged Lib Dems who fought the election on a no-fees-increase ticket to "think very carefully" about what the coalition government's position says in terms of "trust and confidence" of those people who voted for them.
"There are many constituencies where Liberal Democrat MPs have been elected very much on the back of student and academic votes because they trusted and really respected the promise that they made," she said.
Newly-elected Lib Dem deputy leader Simon Hughes said this morning: "Our position has been that in a tight economic situation we need to think about university numbers, we need to make sure there is value for money.
"But it would be wrong to put more financial burden on students by way of tuition fees. I honestly don't see the party voting to raise tuition fees and we are a democratic party, that's how our policy is formulated."
A system where cost counts: lessons from the US
There are a myriad of choices for students who want to pursue higher education in America - but those choices are often influenced by cost, writes April Brown.
While scholarships, grants, and loans are available, they have become much more competitive and, in these difficult economic times, fewer or with reduced payouts. Many college leavers in America find themselves with significant debt after completing a four-year undergraduate degree as the cost has been rising, both at state universities and their private counterparts such as Harvard and Yale.
State universities, as the name suggests, are partially funded by the state government. Due to the recent economic downturn, the amount of money many of them are getting is being cut. That has resulted in student tuition fees rising significantly in recent years.
They range from several thousand dollars per year to upwards of $10,000 per year, not including accommodation, transportation or other costs. Students who are not residents of the state where they are going to university also pay significantly more than those who are. For example, so-called in-state students attending the University of California at Berkeley this academic year paid $8,352, while their out-of-state counterparts had to shell out $30,022.
Private universities, which are as diverse as small liberal arts colleges to large Ivy League institutions, are also generally much more expensive than state universities. Top-rated Harvard University charged $37,012 in tuition and fees for the 2009-2010 academic year but it is not the most costly of all private universities.
Several, including Columbia University in New York and Tulane University in Louisiana, already charge more than $40,000 annually. The outlook is not so rosy, though, as it's expected tuition and fees for some of the most highly-rated universities will soon reach $50,000 per year.
- April Brown is a graduate of the University of Arizona
In a BBC interview this morning, Mr Willetts said that Labour had left behind an assumption that "hundreds of millions of pounds" would be cut from higher education spending, but had not set out how this was to be done.
He said another possible route to cost savings was to enable more students to qualify for a degree from a university while studying at a further education college near their family home.
"That means that you don't have the costs of living away from home, but you do get a prestigious degree and that's actually how we spread our access to higher education," he added.
The existing system means that students are not required to begin to repay tuition fees until they are earning at least £15,000 a year. But the National Union of Students says that means that students are graduating with huge debts.
They have published an alternative funding plan which involves abolishing up-front fees and setting up a "People's Trust for higher education".
Former students would make contributions for 20 years after the completion of their course - with levels dependant on their levels of income.
Their employers would also be encouraged to contribute and the NUS says that this would eventually raise more than the current system - even if the tuition fees cap was raised to £5,000 a year.
It would, however, mean that government contributions would continue to be needed for the foreseeable future, until the size of the trust fund could be built up.
