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University tuition fees 'should be cut to £7,500' University tuition fees 'should be cut to £7,500'
(about 4 hours later)
University tuition fees in England should be cut to £7,500, according to a review which would balance this by extending student loan repayments from 30 to 40 years. University tuition fees in England should be cut to £7,500, says a landmark review commissioned by the government.
The government-commissioned review calls for better funding for students in vocational education. This will be balanced by extending repayments from 30 to 40 years - so that people could be paying back student loans into their 60s.
Maintenance grants to support poorer students, scrapped in 2016, should also be reinstated, says the review. But the review calls for the return of maintenance grants, which were axed in 2016, for poorer students.
"I believe it is time to bring them back," said Prime Minister Theresa May. Prime Minister Theresa May said scrapping them had been a mistake.
Lower fees, longer repayments What are the main proposals?
But Mrs May, soon to leave Downing Street, acknowledged the fate of the proposals would depend on the next prime minister. The review, chaired by the banker Philip Augar, has come up with ideas to provide better value for money in higher and further education.
"It will be up to the government to decide, at the upcoming spending review, whether to follow this recommendation," she said. His big conclusions are that fees are too high in university - and that funding is too low in further education.
The prime minister said it was right to lower fees as "plenty of courses do not cost the full current rate of £9,250 per student per year to teach". Universities have seen "generous funding" while other sectors have faced austerity, he argues, and he suggests that more support should be switched towards vocational education.
The review, chaired by Philip Augar, warns that "some students are charged too much for their degrees" - and calls for the maximum fee to be reduced from £9,250 per year to £7,500, beginning from 2021-22. The review proposes:
This fee level would be frozen until 2023-24, says the review, after which it would rise with inflation. 'Burning injustices' must end, says PM
Such changes to the level of fees would have to be approved by Parliament before they could be implemented. The review is the prime minister's personal project and she pressed ahead with publishing its findings in her final days in office.
It will be one of the last major announcements before she leaves No 10 - and she spoke with conviction about trying to drive "social mobility".
Echoing her own words at the beginning of her premiership, she called for an end to "burning injustices".
Mrs May accepted that her party's abolition of maintenance fees had not worked.
But she argued the package of measures would remove barriers and make sure that no-one should feel that "because of who they are or where they are from, the world of higher education is not open to them".
She also made a strong call for better funding for further education, saying that colleges had been "overlooked, undervalued and underfunded".
But in terms of how it went down - the conversation afterwards, in an audience of education leaders, was about the curious gap between the strength of the message and the absence of such activity while in office.
Or perhaps that Brexit had consumed everything else around it.
It sounded like a rallying call going into government, rather than a legacy on leaving it.
Who would benefit most from the changes?
The Institute for Fiscal Studies (IFS) says that the biggest winners will be the highest earners.
They pay off their debts relatively quickly, saving on interest charges. The cut in fees will mean that they will pay even less, with the IFS estimating that the highest earning 20% could cut payments by 30%.
The losers could be lower earners, who currently might never have paid off their debts and had them written off. Extending the repayments to 40 years could mean they have to pay off more of their loans.
Former universities minister Jo Johnson said the system was "regressive".
But there are other factors to be considered.
The return of non-repayable grants will cut costs for poorer students.
And the longer-term aim is to reduce the number of "low value" courses, so that fewer students are taking degrees which are going to give them low earnings in the jobs market.
Will universities go bust with lower fees?
The prime minister was unambiguous about the scope for cuts in fees.
"Plenty of courses do not cost the full current rate of £9,250 per student per year to teach," she said at the launch of the review.
Dr Augar said universities had enjoyed rising incomes, while other sectors had faced a decade of austerity - and there was room for "efficiencies".
There are also proposals for direct funding to fill the gap of reduced fees.
But this will also be a lever for the government to influence the courses being offered - by giving more funding to courses which are either expensive to deliver, such as some sciences.
Or else it will be a financial incentive for universities to teach courses which are seen as being of "high value" to the economy.
The Russell Group of universities says there would need to be a "cast-iron guarantee" that any shortfall would be replaced.
The Association of Colleges, facing a boost in income for further education, was much more enthusiastic.
"For too long, we've had a system that works for half the population whilst neglecting the other half," said chief executive David Hughes.
How has the idea of cutting fees gone down?
A snap poll from YouGov showed that the idea of lowering fees is popular - backed by 59%.
But Conservative and Brexit supporters are the least likely to want lower fees, say the pollsters.
There is also a question of perception.
Shakira Martin, president of the National Union of Students, said it would help to address "the debt aversion caused by high fees, high living costs and the lack of maintenance grants".Shakira Martin, president of the National Union of Students, said it would help to address "the debt aversion caused by high fees, high living costs and the lack of maintenance grants".
Student loans into their 60s Dr Augar also reminded the launch event about how negatively high fees and debts could be viewed, and the misunderstandings of the system.
But students would pay back loans for another decade. Instead of any unpaid loans being cancelled 30 years after graduation, deductions would continue for 40 years. He said research for the review had come across a grandparent wondering whether they should sell their house to pay off a grandchild's student debt.
This could see graduates paying back loans through most of their working lives into their sixties. When would any changes happen?
Graduates would continue to be charged interest rates based on inflation plus 3% - but interest charges while students were still studying would be reduced. The review says a fee cut would not happen before 2021-22 at the earliest.
Repayments would also begin at an earnings threshold of £23,000 rather than the current £25,725. But there remains another significant political catch. Changes in the level of tuition fees have to be approved by both houses of Parliament.
But the Institute for Fiscal Studies warned that the biggest winners could be the highest earners. With the current political deadlock it seems unlikely that such a measure will be pushed forward any time soon - and the future of the plans will depend on the response of the next prime minister.
The think tank's researcher Jack Britton said it would mean the highest earning graduates benefiting the most from the proposed changes, while lower and middle earning graduates will be squeezed. Labour, which wants to completely scrap tuition fees, has already dismissed the review as "all talk, empty promises and very little action".
A former universities minister, Jo Johnson, said: "The full fees at the moment are only really repaid by those who go on to earn the most in their careers.
"Those who are asked to pay the fees for longer, for as much as 40 or more years, as Philip Augar is proposing, will be lower-earning and middle-earning graduates and, in this sense, this is regressive."
Maintenance grants
The wide-ranging report calls for the restoration of non-repayable maintenance grants for poorer students, worth up to £3,000 per year.
The prime minister welcomed this proposal, both for those at university and on higher level technical courses.
"My view is very clear - removing maintenance grants from the least well-off students has not worked," said Mrs May.
Speaking at the publication of the review's findings, the prime minister emphasised the importance of providing support for further education colleges.
"They are vital engines of both social mobility and of economic prosperity," said Mrs May.
There would also be a "lifelong learning loan allowance", accessible for those in upper levels of technical qualifications as well as universities, and open to mature students as well as school-leavers.
The cost of university accommodation should also be scrutinised by the regulator, the Office for Students, the review says.
Universities have complained that they would struggle with a loss of fee income - but the report says the gap should be made up with direct funding.
There would, however, be higher levels of funding for some subjects - such as those that are expensive to deliver or those considered by the government to be priorities.
'Care and neglect'
The report highlights the need to shift more funding towards further education rather than universities.
"Our work revealed that post-18 education in England is a story of both care and neglect, depending on whether students are amongst the 50% of young people who participate in higher education or the rest," said Dr Augar.
He warned that this "disparity simply has to be addressed" - with calls for more support for further education colleges, more access to loans for students, investment in staffing and £1bn extra for capital spending.
"For too long, we've had a system that works for half the population whilst neglecting the other half," said David Hughes, chief executive of the Association of Colleges.
He welcomed the shift in emphasis to improving vocational education and tackling skills shortages, saying that the "education and training system is not delivering to meet these needs now, so changes and fairer investment are vital".
'Very little action'
Tim Bradshaw, chief executive of the Russell Group of universities, said extra funding for further education was "long overdue".
But he warned that if the next prime minister went ahead with a fee cut, there needed to be a "cast-iron guarantee" that the funding shortfall would be replaced.
Vanessa Wilson, head of the University Alliance of universities with strong business links, said there were "real doubts that the money, legislative space or political impetus will be there to see this through".
In Scotland, Prof Sir Anton Muscatelli, principal of the University of Glasgow, expressed concern that Scottish universities would lose £31m a year if the fees paid by English students studying north of the border are cut to £7,500.
Currently, Scottish students get free university tuition in Scotland, while English students studying there have to pay £9,250 per year in fees.
Labour's shadow education secretary, Angela Rayner, said the review was "all talk, empty promises and very little action".
With no guarantees of any extra funding to support it, she said the review "does nothing to address the burning injustices facing our education system".
Education Secretary Damian Hinds defended the current student finance system as "fair and progressive" but said there were "also courses where value, in its widest sense, is not being delivered either to students or to taxpayers".
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