Top-up fees

Top-up fees (not their official name) are a new way of charging tuition to English, Welsh and Northern Irish undergraduate and PGCE students who study at universities in England, Scotland or Northern Ireland. Legislation to enable the introduction of top-up fees was proposed by the Labour Party Secretary of State for Education, Charles Clarke and became law in the Higher Education Act 2004. The law will come into effect for the 2006-2007 academic year.

Contents

1 How the fees will work 2 Controversy 3 Arguments for and against 4 External links

How the fees will work

Currently, most English, Welsh and Northern Irish students pay a contribution towards their tuition fees (anything from £0-£1,250 a year). The amount they pay is based on their or their parents' income (called means-testing) in the tax year preceding each academic year. The fees are paid up front during each academic year. In addition, students are entitled to a means-tested student loan of up to around £4,000. The loan is separate from the tuition fees and is paid back by the student after they have graduated. It is repaid at the rate of 9% of gross income over £15,000 a year (different limits apply to unearned income and non-residents). The interest rate on loans is changed on 1 September each year and the annual rate is set to the Retail Prices Index increase the previous April.

The new top-up fees will operate as follows (figures are given for the academic year 2006-2007, and may rise by no more than the inflation rate until 2010):

Universities will be able to charge students anything from £0 up to a maximum of £3,000 per year. In order to charge more than a basic £1,250 fee universities must satisfy a new Office for Fair Access (OFFA) that their admissions policies are equitable.

Rather than pay the fees up front (as is the case now), they will be paid by the governement-owned Student Loans Company (SLC), the same body that currently provides student loans. The SLC will also continue to pay means-tested student loans directly to students. Students will repay their loans and tuition fees after graduation in the same income-dependent way as at present. Interest on the loans will still be tied to inflation, so they have a zero 'real' rate of interest.

The changes will only affect students from England, Wales and Northern Ireland who go to university in England, Northern Ireland and Scotland (English, Welsh and Northern Irish students who study in Wales will only be liable for the current £1,250 tution fees). Students from Scotland and the EU will continue to pay no tuition fees if they study in Scotland.

Controversy

This became law despite a Labour manifesto promise reading:

"We have no plans to introduce University top-up fees, and have legislated to prevent their introduction."

The Labour Party has publicly defended this decision, by saying that the manifesto commitments only apply to the 2001 - 2005 Parliament, and that the legislation introducing top-up fees will not take effect this Parliament. However, many members and supporters of the Labour Party, as well as many Labour MPs, are angry at this mechanism of defence.

In the key vote in the House of Commons, the Government (which at the time had a overall majority of some 160 seats out of 660) only barely managed to contain a rebellion among its own MPs - the voting was a mere 5 votes in the Government's favour. This was the closet the Labour Government had come to defeat in the Commons since being elected in 1997.

Arguments for and against

Since each institution will be able to vary the fee they charge and be able to keep the revenue raised this way, the Government claims this means that over-subscribed and popular universities can charge more money, while institutions that may be struggling can charge less to attract more students. Supporters say that the abolition of upfront fees should encourage more young people to apply.

However, due to the current funding crisis in UK higher education, it is likely that many institutions will be forced to charge the full fee, removing this incentive. Instead, critics claim students will be put off from studying due to the large amount of debt they will have to incur to study, with only rich families being able to afford this amount of debt, thus making higher education less widely available. It has transpired that almost all universities in England will charge the full £3000 for all their courses, with the market being made in the nature and size of the various 'access' bursaries that are offered.

External links

• Department for Education and Skills factsheet (http://www.dfes.gov.uk/studentsupport/students/new_2006_finance_ar.shtml)
• Text of Higher Education Act 2004, which introduced top-up fees (http://www.legislation.hmso.gov.uk/acts/acts2004/20040008.htm)
• National Statistics, the body that calculates things like the Retail Prices Index (http://www.nationalstatistics.gov.uk)
• The Student Loans Company (http://www.slc.co.uk)