This article is more than 2 years old

This article is more than 2 years old

Theresa May is to set out details of her government’s long-promised major review of higher education funding in England – with the current structure of £9,000 undergraduate tuition fees up for scrutiny.

In her speech on Monday, May will outline the delayed review of university funding, with vice-chancellors nervously awaiting the small print of the overhaul that is expected to take up to a year to complete.

The options being considered include cutting tuition fees for students in England from the current level of £9,250 to closer to £6,000 a year, by dismantling requirements on universities to spend funds on widening participation measures and bursaries aimed at disadvantaged students.

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Calculations by the London Economics consultancy firm found that cutting fees down to £6,000 would take more than £3bn a year away from universities, and mainly benefit higher earning graduates, who would pay less back in student loans.

Such a change would mean the government having to increase its funding for higher cost courses such as medicine, engineering and many sciences, which it already subsidises, as well as funding widening participation efforts.

Other changes are likely to include the way interest is calculated and applied to student loans, with the current top rate of 3% plus the retail price index of inflation to be revised.

The prospect of the “radical review” announced by May at last year’s Conservative party conference had receded after opposition from the previous education secretary, Justine Greening, and universities minister, Jo Johnson.

But both Greening and Johnson were moved by May in her last reshuffle, leaving the way clear for a more disruptive review as envisaged by May’s advisers to take place.

Before May’s announcement, the University and College Union (UCU), which represents many academic staff, called for the review to look at reintroducing maintenance grants for students from poorer backgrounds.

“Too often recent reviews have simply resulted in finding new ways to saddle students with record levels of debt,” said Sally Hunt, UCU’s general secretary.

“Reversing recent cuts in corporation tax would free up money to fund students’ fees, bring back maintenance support and still leave the UK with a competitively low rate of corporation tax.”

Parliament’s Treasury select committee is preparing its own recommendations on student loans, including a look at reintroducing maintenance grants and simplifying the current loan structure, which baffles many parents and students.

May’s announcement comes at a difficult time for university leaders, who face increased public scrutiny over high levels of pay for vice-chancellors, strikes over staff pensions and the arrival of the sector’s controversial new regulator, the Office for Students, which becomes fully operational in April.

Under the system introduced by the coalition government in 2012, annual tuition fees in England were £6,000 with an option to rise to a maximum of £9,000 if universities gained approval for access agreements targeted at improving admissions among students from disadvantaged or under-represented groups.

But in practice universities quickly adopted access agreements and raised their fees to the highest level, which now sit at £9,250 a year.

Along with student loans to cover living expenses, the average graduate debt has increased to £46,000, and to £57,000 for students from less well-off households. The debts are repaid by taking 9% of graduate income above £25,000, with any remaining debts 30 years after graduation being scrapped.

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A recent report by the Institute for Fiscal Studies estimated that 77% of graduates taking out student loans would have part of their loans written off by the Treasury because they would not earn enough to repay them within the 30-year limit.

London Economics calculated that cutting fees to £6,000 a year would reduce the average student debt on graduation by just £9,400 to £36,600.

Mark Leach, editor of the Wonkhehigher education thinktank, said the government should resist cutting tuition fees merely to win headlines.

“Key questions right now are: the current fees are frozen at £9,250 but for how long? And if fees are to be seriously cut, just how low will they go? And will the government plug the gap for lost income to universities after the cut?” Leach said.

