Student Finance - December 2010

Like the Media coverage, most of my emails and letters on the higher education issue have focussed on the opposition to the proposals and in particular the riots. Many of my correspondents have demanded the use of water canon or tear gas to disperse the protesters. The few emails that I have had about the details of the proposals themselves have indicated almost complete misunderstanding and I have had to reply giving basic facts. One correspondent asked me how he could afford to go to university given he did not have £9000 for his first year’s fees. It is extraordinary that an issue that has caused so much controversy has been so comprehensively misunderstood.

On Thursday Parliament, with effect from October 2012, raised the annual cap on university tuition fees from £3000 to an upper limit of £9,000 and with a lower threshold of £6,000. Courses charging between £6,000 and £9,000 will be subject to new requirements on widening access to the poorest students. However, students will not pay anything towards their tuition while they are studying. Parents will not need to contribute anything to tuition costs. Graduates will only start to pay their contribution when they are earning more than £21,000 a year (and this threshold will rise annually with average earnings). Repayments for all graduates earning more than £21,000 will be £45 less each month than they are at the moment: this means an annual saving of £540. All contributions will cease after 30 years, regardless of how much or how little has been repaid by that point. As a graduate’s earnings increase the interest rate will rise to a maximum of RPI +3% at an income of £41,000, but a quarter of graduates –those on lower earnings- will pay less than they do now. In addition students from poorer homes will benefit from increased maintenance grants and a scholarship programme.

Currently part time students who make up 40% of all students have virtually no access to student finance, under the new system they will not be disadvantaged.