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Higher Education Act
The Higher Education Act abolishes upfront fees, brings back grants, and makes student loan repayments cheaper and fairer.
The Facts
1. From September 2006 no full time undergraduate will have to pay fees up front - payment of fees will be deferred until after they finish their studies. As students will not pay anything towards their studies until they can afford to, no-one should be put off going to university.
2. Students from low income households will receive a non repayable maintenance grant of up to £2,700 from 2006. From 2004, students from low income households are eligible for a Higher Education Grant of up to £1,000 a year. 4000 students from low income backgrounds will benefit from £300 million in non-repayable cash.
3. From April 2005, the starting point at which students begin to repay their loans will increase from £10,000 to £15,000. This will apply to all students, including those who have already begun to pay back their loans. This means that after April 2005, someone earning £20,000 will pay just £8.65 a week, against £17.31 under the current scheme. Any debts outstanding after 25 years would be written off.
- A recent graduate who earns £12,000 a year pays back £3.46 a week at present. From April 2005, they will pay back nothing.
- A graduate who earns £30,000 currently pays back £34.62 a week. From April, this repayment will fall to £25.96 under the Government's system.
4. The Office of Fair Access provides a statutory framework to ensure that students from under represented groups are not disadvantaged by the new system. No institution can charger higher fees without first having an access agreement, approved by OFFA. It is not more expensive to go to Cambridge University than other universities. The level of subsidy and number of bursaries available at Cambridge University make it a much cheaper university for those who have the right qualifications.
The Alternatives
The Lib Dems' plans for higher education simply don't add up. The Lib Dems claim they would fund their higher education policies through the 50% tax on earnings over £100,000. But this tax also has to fund: free long term care for the elderly; cuts in council tax; increases in pensions and the abolition of dental charges.
The Lib Dems' wish list includes free eye tests and prescriptions for students, restoring housing benefit for students in the holidays and loans to cover maintenance, but these are uncosted pledges.
The reality is that under the Lib Dems, students would be forced to study near home, access to higher education would be limited, Charles Kennedy said in June 2003, "Students would normally attend a college or university near where they lived and worked".
OFFA would be scrapped, and students would be encouraged to do two year courses.
The Institute for Fiscal Studies (IFS) published an independent analysis of the 3 parties' policies for higher education funding. The report says, "Students would be better off under the proposed systems - by the most under Labour, where their net position would improve by almost £1.5bn as a result of grants and fee deferral. The position of students would improve the least under the Conservatives."
Under Tory plans, the interest on a student loan would start rising at 8% per year immediately, instead of increasing in line with inflation as it does now. This means that the interest rates on student loans will rise at credit card levels for every graduate, regardless of their income. Poorer students take out larger loans and will have to contribute more to the cost of higher education.
The Tories' sums are out by as much as £1billion per year.