Students at for-profit universities and other unconventional education providers will be allowed greater access to the student loan system from 2012-13 as part of the coalition’s drive to create a vibrant market in higher education.
About 4,000 students will qualify under the new regime and will be allowed to borrow £6,000 towards tuition fees. They may currently borrow only £3,290.
These students attend courses approved by the Department for Business, Innovation & Skills at one of 83 alternative providers. The institutions receive no direct government subsidies, but are less heavily regulated than conventional universities.
This sector includes charitable, religious and profit-making institutions, notably the College of Law; for-profit BPP University College, owned by Apollo Group; Kaplan Open Learning, part of the Washington Post Company; and the University of Buckingham.
The measures are part of plans to sharpen market pressures in higher education. David Willetts, universities and science minister, said: “All our higher education reforms are designed to place students at the heart of a more dynamic sector.”
From 2012-13, students at mainstream universities will pay a larger share of the cost of their tuition.
Fees, which are now capped at £3,290, may rise to £9,000. The direct subsidies they enjoy will also be cut.
There will not be a level playing field between mainstream and alternative providers: students at mainstream providers will be allowed to borrow £9,000 for tuition.
However, unlike conventional universities, alternative institutions may charge fees higher than the maximum loan and are not obliged to meet conditions on widening participation. Places at alternative institutions will also be additional to those provided at mainstream institutions, and outside the normal limits on numbers.
The arrangements will be temporary, with a permanent solution to be published as part of a white paper on higher education in the summer. They will marginally increase the competitive pressure on universities – a key objective for ministers, who have been surprised by the number of mainstream universities declaring an intention to charge high fees.
Despite claims that few institutions would charge the maximum £9,000 from 2012-13, most that have revealed their intentions have said they want to do so.
Average fees in mainstream universities are likely to be higher than the £7,500 assumed by the Treasury. If so, other university subsidies will be cut in subsequent years. Whether the cuts will be tens or hundreds of millions of pounds is, however, uncertain.
Many institutions that are expected to charge low fees have yet to declare. Even those institutions that have revealed an intention to charge £9,000 will either offer discounts or tiered pricing that will keep the average fee lower.
Nicola Dandridge, chief executive of Universities UK, the umbrella body for existing providers, said: “We are concerned about what controls for quality there will be, and in particular we are mindful of the recent experience in the United States of opening up the market to for-profit providers.”
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