Radical plans for overhaul of funding

MPs will offer the government stark choices on student funding, with higher tuition fees, a steeper interest rate on loans and graduate contributions among the likely options.

Barry Sheerman, chairman of the influential education and skills committee, said the committee's report on post-16 student support will pull no punches when it is published in early July.

He said the committee had looked at evidence on the benefits and problems of differential fees, the merits and disadvantages of raising the interest on student loans above inflation and on the potential for a scheme of graduate contributions to higher education. The committee is writing up its report.

Mr Sheerman hopes to influence the outcome of the government's student support review, which is due out after the publication of the departmental spending review outcomes in July.

He said the committee wanted to present the government with "some pretty radical proposals that can really make a difference".

Mr Sheerman urged the government to make the system fairer for students from poorer backgrounds. The committee is also interested in a system of student support that would raise additional money for universities.

He said that any solution to student support might seek to address the imbalance in the present system that means wealthy students receive large public subsidies. This is because they pay only a quarter of the total of the average cost of tuition, just £1,075 more in fees this year than the poorest students, and have access to interest-free loans.

"The government cannot walk away from evaluating where the money flows from and to whom. Taxpayers pay a lot of money to higher education, even those who do not benefit from it. At the same time, a lot of money flows to the families who can well afford higher education. Grasping that nettle is something no inquiry can afford to ignore," he said.

Mr Sheerman said the government had concluded that a radical overhaul of student support was necessary.

He said: "If the government had come out in January (when the government review was due originally) with four or five mitigating measures, then people would have thought 'fair enough, the system is bedding down'.

"But I think that the government started looking at this with real clarity and depth and realised that it was only going to scratch the surface and said 'let's do something more fundamental'.

"And given that it has been such a long consultation, people are expecting something more substantial."

Higher education minister Margaret Hodge has made it clear that the review is focusing on the balance of contributions between the government and students and their parents. She has also made it clear that any solution must be sustainable over the next ten years.

The Department for Education and Skills, which is leading the cross-departmental review, postponed the publication of the results from early in the new year because it was testing a range of potentially central reforms to student support to gauge their impact on students and higher education funding overall.