Q&A: Tuition fees

From September 2012, universities in England are raising tuition fees to up to £9,000 per year, amid major budget cuts to institutions' teaching budgets.

The controversial policy, backed by parliament in December 2010, sparked angry street protests. It was developed as the government's response to a review of higher education funding by former BP chief Lord Browne.

Universities in Scotland, Wales and Northern Ireland will also be able to raise their fees from 2012, but their home students will not be affected.

How much?

The government is allowing universities in England to charge up to £9,000 per year for undergraduate courses, raising the cap from its 2011/12 level of £3,375.

Universities wanting to charge more than £6,000 have to undertake measures, such as offering bursaries, summer schools and outreach programmes, to encourage students from poorer backgrounds to apply.

This access agreement has to be approved by the Office for Fair Access. You can see lists of tuition fees by university on the BBC News website (England and Wales) and collated by OFFA (England only).

How much will you pay?

graph of loan repayments

Students - use this tool to find out how much your loan could cost you to repay

How will students pay the fees?

The government will lend students the money for fees, which will be paid back when they graduate and begin working. The fees will not have to be paid up-front.

The threshold at which graduates have to start paying their loans back will rise from £15,000 to £21,000. This will rise annually with inflation.

Each month graduates will pay back 9% of their income above that threshold.

The subsidised interest rate at which the repayments are made - currently 1.5% - will be raised. Under a "progressive tapering" system, the interest rate will rise from just inflation (RPI) for incomes of £21,000, to 3% plus inflation for incomes above £41,000. Interest of inflation plus 3% will be charged while the student is studying.

If the debt is not cleared 30 years after graduation, it will be cancelled.

What will happen to grants and loans?

In England, maintenance grants are set to rise from £2,906 to £3,250 for students from households earning less than £25,000.

But partial grants will only be available to students from households with incomes of £42,000, instead of the current cut-off point of £50,000.

Means-tested loans will continue. While loan amounts have been increased, the threshold for those receiving the most generous ones (£5,500 for students living away from home but outside London) has been lowered from £50,000 to about £42,000.

What is the long-term cost?

Students taking three-year courses charged at £9,000, plus full maintenance loans, will leave university with about £43,000 of debt.

But the government says the lowest-earning 25% of graduates will pay less in total than they currently do. But, according analysis by the Institute for Fiscal Studies, most others will pay more - the highest earners almost double what they currently pay.

The IFS says that, assuming fees of £7,500, for about half of graduates, the plan is essentially a 9% graduate tax for 30 years, because they will not finish paying off the debt by the 30-year cut-off point.

Modelling of the system depends to an extent on the assumptions made. A range of resources from BIS, including a "ready reckoner" spreadsheet, are available explaining the system. Moneysavingexpert.com also has a guide and calculator.

Is there any extra support for students from low-income families?

Universities wanting to charge more than £6,000 have to set out measures to recruit more students from poorer backgrounds - and also to support them when they are studying.

All students who get a full maintenance grant in 2011/12 receive an extra £338 a year bursary. This will end. But a National Scholarship Programme has been set up, with the government committing £50m in 2012-13, rising to £100m and £150m in subsequent years. The Higher Education Funding Council for England has published allocations for each university. The institutions will then, in general, be expected to match the funding and therefore double the total amount available.

Universities have to use the money as bursaries of at least £3,000 for students with family incomes of less than £25,000. No more than £1,000 can be given as cash - the rest will be fees discounts or reductions on services such as accommodation. Information is available from individual universities, which will also handle applications.

When will the proposals take effect?

September 2012. Students applying in 2011 who defer entry to 2012 will have to pay the increased fees. But students who have begun their courses before 2012 will not be affected in their later years of study.

Can I repay early?

You may be able to - for a fee. The government has launched a consultation on whether to charge penalties for early repayments. It suggests charging a fee (eg 5%) on repayments over a certain yearly amount (eg £1,000 or £3,000) - possibly making this apply only to graduates earning over a specified amount (eg £60,000).

What about part-time students?

In England, from 2012, universities can charge up to £6,750 per year fees for part-time courses. The student loans system has been expanded to cover fees for students studying between 25% and 75% of the equivalent of a full-time course. Maintenance loans are not available, but students may be able to apply for bursaries from universities.

Will universities get more money?

Universities argue that much of the money raised from raising tuition fees will simply replace major cuts to teaching budgets, especially in arts and humanities subjects.

Teaching grant cuts of 6% for 2011-12 have already been announced, with a further 16% reduction expected the following year - although by then universities will be getting income from raised fees. Teaching-related capital funding for universities has also taken a hit - 54% in 2011-12.

Cuts of 40% to the higher education budget over four years were announced in the spending review on 20 October 2010.

How are universities funded?

In the UK as a whole, income from fees - including fees paid directly by students such as postgraduates and overseas students - makes up about 29% of universities' total funding, which was £25.4bn in 2008/09.

Another 35% comes from government funding bodies, while the rest comes from other sources such as research grants, endowments and investments.

In England, the balance of funding is going to change - with much of the cost of university courses switching from the taxpayer to the student.

What does the proposal mean for the rest of the UK?

Scotland does not charge Scottish students fees. In 2011-12, students from elsewhere in the UK have to pay £1,820 per year to study at Scottish universities. But from 2012, universities will be able to charge up to £9,000 for students from elsewhere in the UK.

The Welsh Assembly has announced that fees will rise to up to £9,000, as in England, but the government will pay fee costs above £3,465 a year for Welsh students studying at any UK university. Funding for universities in Wales has been cut by 12%.

Ministers in Northern Ireland have said that tuition fee levels will rise only in line with inflation for home students for the next four years, and will be capped at £3,465 in 2012. Fees for other UK students will not be capped "but are not expected to exceed £9,000", the Northern Ireland Executive says.

Maintenance loans and support grants vary between the nations:

Max maintenance loan (London figures in brackets)

Max grant for students from low-income homes

Income threshold for max grant

Further details from

England (2012)

£5,500 (£7,675)

£3,250

£25,000

DirectGov

Northern Ireland (2012)

£4,840 (£6,780)

£3,475

£19,203

Student Finance NI

Scotland (2011)*

£5,417**

£2,640

£19,310

Student Awards Agency for Scotland

Wales (2012)

£4,745 (£6,648)

£5,000

£18,370

Student Finance Wales

* 2012 figures not yet available

** A large proportion of the Scottish student loan is means-tested. This means, for example, that students from families earning more than £61,000 a year can borrow only £915 a year. For students receiving grants, the amount they can borrow as a loan is reduced by the amount of the grant.

What about loans in the rest of the UK?

Wales is essentially adopting the same system as England. Although students will be borrowing less, they will pay back their loans once their graduate incomes hit the £21,000 repayments threshold, with the same sliding scale of interest.

But Northern Ireland and Scotland will be keeping the old systems, although students will be able to borrow up to £9,000 a year for fees, and the repayments threshold will rise to £15,795.

Students borrow and repay their loans under the system for the nation in which they are resident when they apply - so a Scottish student studying in England would borrow up to £9,000 fees under the Scottish system, and have to begin repayments at the £15,795 threshold.

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