Guardian UK: Student numbers could be cut to cover spiralling cost of loans

Student numbers could be cut to cover spiralling cost of loans
Ministers underestimated how many universities would charge £9,000 fees – and now face huge bill to fund student loans

Polly Curtis and Jeevan Vasagar
The Guardian, Tuesday 7 June 2011


Tough quotas on student numbers may have to be introduced to avoid the creation of a spending black hole under plans to raise tuition fees at English universities to a maximum of £9,000, a powerful committee of MPs has warned.

Ministers underestimated how many universities would charge the maximum fee and now face an annual bill to fund the interest-free student loans that is "several hundred million pounds" higher than anticipated, the Public Accounts Committee (PAC) reports.

The current balance of outstanding loans – £24bn – is expected to rise to £70bn by 2015-16, the report says.

Margaret Hodge, the chair of the committee, said: "At present, more universities intend to charge higher fees than the department had expected. If the universities' plans to widen participation are approved by the Office for Fair Access, this will leave a substantial funding gap which will either require further cuts in higher education or further resources from the Treasury." ............(more)

The complete piece is at: http://www.guardian.co.uk/education/2011/jun/07/student-loan-demand-may-force-cuts

Seems a little odd the govt would set the maximum at 9k and then only budget for 7.5k. Did they really think schools were not going to charge the max if they can?

They assumed that universities would say "we've got a product; we've got to find a price point that makes it competitive against others" as if they are any business. But universities don't see themselves as businesses; they want to provide a high quality education, so they want to plan for high fees; and there is also a matter of 'prestige' - part of the 'product' is the perception of it as 'top quality', and the easiest way to measure that is the fee charged for it. As it was, experts reckoned a university would have to charge minimum of £7,500 to make up for the government allowances that were withdrawn. Charging any less would mean increasing the student/staff ratio significantly.

Just change the entry level requirements to 4 top grade A Level passes. That would be a satisfactory rationing system.