Fee cap will close gates to the less well-off

In the fifth of our series on universities in the 21st century, Sarah Fitzpatrick argues that the time is right for institutionsin the United Kingdom to be free to decide what to charge.

It has never been clear to me how higher education could possibly be a right, not a privilege. Rights are absolute. No one is guaranteed a place at university - some young people would never get in because they do not have any of the range of necessary qualifications. Higher education cannot be a right because no one is entitled to a place.

Those who think of higher education as a privilege do not necessarily think of it as the preserve of the privileged. Opposing the notion that higher education is a right in the same way that freedom of speech is, is not incompatible with believing that access should be widened and that no one should be prevented from attending a university because of lack of resources.

The player in this game most lacking resources is not the graduate, or even the potential student, but the university. Universities are being asked to educate more people, more flexibly and with more course choice on less money per student. Spending per student has fallen by 50 per cent in the past 20 years. While the chancellor's announcement of Pounds 100 million for universities in the comprehensive spending review came as a welcome surprise, the extra is not enough.

One of the claims repeated whenever the "new economy" is mentioned is that we will need a highly skilled workforce to compete in it - and higher education will help create that. We will need a greater proportion of the population to participate in higher education. We will also need universities to allow more students to participate part-time or as mature students or through distance learning. But simply attending university does not ensure that skills are learnt. A student has to experience work. Low contact hours, low workloads (in some arts subjects, as few as three or four 1,500-word essays are expected each ten or 11-week term) and demoralised and poorly paid staff are unlikely to give us a highly skilled workforce.

Student activists would like extra money - enough to increase university funding and eliminate tuition fees - to come from the government. But the recent report by David Greenaway and Michelle Haynes for the Russell Group of universities concludes that for spending per student to return even to 1990 levels, income tax would have to be raised by 3p in the pound. Unless there is some radical change in the political environment over the next decade, it is not going to happen. Even if a government were to put 3p on income tax, surely it would be better spent on pensioners or hospitals or schools.

Now that this government has established the principle of tuition fees, there is nowhere for them to go but up, despite protestations to the contrary. This is more likely as the system's unfairness is increasingly publicised. The fact is that the social mix of university students is so weighted towards socioeconomic groups I and II that the system charges the poorer taxpayer for the education of the richer. This seems inherently unfair, especially when we are reminded that a graduate earns additional income of about Pounds 400,000 on average over a lifetime as a result of his or her degree.

Of course, society does benefit from higher education as well and I would not foresee or recommend the government ceasing to contribute to the costs of teaching undergraduates or graduates. However, in the interests of both fairness and improving the quality of higher education, fees will have to rise above the current maximum. Universities must also be allowed to compete by charging differential fees. The question then arises of how the goal of widening access to higher education will be met if the individual is expected to pay more. Proper arrangements for borrowing money or more widespread provision of scholarships will be necessary.

One of the many fears voiced when tuition fees are mentioned is that the United Kingdom may "end up like America". Because some major universities in the United States charge up to Pounds 17,000 per year, horror is expressed that British graduates may be left with about Pounds 50,000 of debt in tuition fees if forced to borrow to pay that amount.

It is perfectly rational for most graduates to take on that kind of debt - especially because the universities that charge the most are generally among the most prestigious and so more likely to guarantee a higher income later on. As it is, only about 50 per cent of students at Harvard pay full fees upfront. The rest are on full financial aid or borrow the difference through loans. Fees differ greatly between institutions, largely between public and private universities, but it is not necessarily the case that public universities are bad and private universities are good. Oddly, participation rates are higher and more evenly spread across socioeconomic groups in the US than they are here.

The real issue for the government and universities over the next decade is how to conquer the problems of middle-class reluctance to save and debt aversion among poorer groups. In the US, paying for a college education is an anticipated expense for middle and upper-income groups. Students from lower-income backgrounds are more used to borrowing and are assured of some financial assistance.

A political problem in the UK is that middle-class parents have not expected to pay large amounts, while universities' funds are not high enough for scholarships to be available for poorer students. It would be a brave government that took the risk of annoying the much-needed electoral constituency of the middle classes. The problem only gets worse if a scheme also forces poorer students to borrow sums each year that add up to more than their parents' annual income. Charging that took this form would not encourage wider participation in higher education.

The Greenaway-Haynes report recommended income-contingent loans. The thinking is that the debt is less frightening because money will only be paid back according to earnings. If not enough is ever earned over a lifetime (though the statistics on graduate salaries suggest this is unlikely), then so be it. However, they also make calculations on the basis that fees will be capped by the government at Pounds 4,000, and acknowledge that it will be hard for universities to build up funds for financial assistance with only this amount of extra income.

Financial aid is probably the only way to encourage both sixth-formers and mature students from poorer backgrounds to go to university if fees are higher. Only by rejecting a cap on fees can appropriate funds be built up to make sure that students from the poorest families can always attend university for free. Only by rejecting a cap on fees will universities be able to pay for reforms of the courses they offer and be able to compete with other countries for staff.

Those higher fees may have to be phased in to make it politically possible for wealthier parents to be charged high sums. Perhaps parents and potential students should be given time to get used to borrowing far more money than has previously been the case - even if it is done on an income-contingent basis. But it is time that the need for universities to be free to charge what they must and what the market can bear is acknowledged and for the changeover to begin. That way, universities will begin to receive the income they desperately need now. But, also, the parents of today will know that they must begin saving for the fees of the undergraduates of the future.

Sarah Fitzpatrick is a research officer with the Social Market Foundation.