Cambridge University stands to generate an extra £21 million a year from tuition fees from 2006 - but roughly half will be spent on bursaries and financial aid, writes Paul Hill.
The university hopes the extra revenue will help to reduce a predicted £71 million deficit it expects to accumulate over the decade.
The university predicts that by 2008 it will spend about £10 million of its extra income from fees on "the bursary scheme and other costs" linked to agreements with the Office for Fair Access.
Fees for overseas students will also be raised by 2 per cent above the rate of inflation for 2006-07, generating an extra £500,000.
Tony Minson, pro vice-chancellor for planning and resources, said it would take three years for the extra income from top-ups to reach a "steady state" because only first-year undergraduates would be charged the proposed £3,000 fees in 2006.
"Anyone who has the ability, and wants to come to Cambridge, will have no financial barriers to deter them," Professor Minson said. "To support this aim, we will be offering a comprehensive needs-based bursary scheme, allowing students from low-income backgrounds to focus more on their studies and less on affording their education.
The university expects a number of measures, including extra revenue from tuition fees and requests to each academic school to control spending, to help close the funding gap by 2008.
* Oxford University and England's other premier-league universities must develop new business models to avoid "progressive decline", according to Richard Lambert, a government adviser.
Mr Lambert warned that £3,000 tuition fees would "not make a big difference" to Oxford's financial situation. In a newspaper article, he urged Oxford to consider three ideas: to change the student mix; to "get serious" about alumni donations; and pressing for a system in which wealthy students pay up to £10,000 while the poorest undergraduates pay nothing.