Universities urged to make deal with banks to accommodate potential tuition fee increase

University leaders were told to forge deals with high street banks if they wished to charge their students higher tuition fees.

Some university vice-chancellors want the cap on fees raised from £3,225 per year to amounts in excess of £7,000. However lifting the cap may make subsidising student tuition fee loans with government money unaffordable.

Speaking at an annual conference of university leaders last week, Richard Brown, former chief executive of the Council for Industry and Higher Education (CIHE), put forward plans to limit the cost of Government-subsidised tuition loans by asking universities to make pacts with high street banks.

Brown suggested that banks should be encouraged to lend students the extra money needed to cover increased tuition fees, while in return universities would provide a fund that would limit the banks’ exposure to the risk of students defaulting on their loans.
Brown argued: “The state of public finances may not allow a simple raising of the cap on student fees” but also emphasised the need for an injection of cash into the higher education system in order to compete internationally.
However, Wes Streeting, President of the National Union of Students (NUS) insists there is a more equitable way to raise funds for universities through the form of a ‘graduate tax’ as set out by the NUS.
Streeting said: “[Our] proposals would make a university education free at the point of use, with graduates giving back to the system according to how much they earn – a system that would ensure that those who benefit most from higher education contribute the most.”