Theresa May has launched a year-long review of tuition fees and university funding.
However, she has ruled out scrapping tuition fees altogether, stating in a speech in Derby that she still remains committed to the principle that those “who benefit directly from higher education should contribute directly towards the cost of it”. She argued that scrapping fees would lead to increased taxes and fewer university places.
May said university students in England faced “one of the most expensive systems of university tuition in the world”.
She argued that the current system has failed in delivering sufficient competition on price and “the level of fees charged do not relate to the cost or quality of the course”.
May said poorer students should have an “equal chance” in higher education but that they currently faced the greatest level of debt.
As well as reviewing tuition fee levels, the review will consider methods of decreasing costs such as reducing interest rates on loans reintroducing maintenance grants.
Labour has said that it will abolish tuition fees and ensure the return of maintenance grants. Angela Rayney, Labour’s shadow education secretary, labelled the review an “unnecessary waste of time” that demonstrated that “Theresa May has finally admitted that her government got it wrong”.
Rayner said “Labour will abolish tuition fees, bring back maintenance grants and provide free, lifelong education in further education colleges”.
Currently, in England, universities can charge a maximum of £9,250 per year, with most courses charging this amount. Interest rates are up to 6.1%. The Treasury select committee, chaired by Nicky Morgan, former education secretary, has expressed worries about the high level of interest rates. Other former Conservative and Labour education ministers Charles Clarke, Lord Adonis, Lord Willetts and Justine Greening have all raised concerns about interest charge levels.
According to the Institute for Fiscal Studies, students in England accrue more than £5,000 in interest charges even before leaving university which contributes to graduate debts which average £50,000.
In Scotland, there are no tuition fees for Scottish students and, in Northern Ireland, fees are up to £4,030. In Wales, fees are up to £9,000 and there are currently plans for greater levels of maintenance support.
In England, students do not have to pay tuition fees upfront, but can borrow the full amount. They can also take out a maintenance loan to cover living costs. Disadvantaged students are able to borrow more for living costs as it is assumed better-off students can be supported by their parents.
Students begin repayment of loans once they earn £21,000, with this threshold being raised to £25,000. Unpaid debts are written off after 30 years.