Are university tuition fees set to be increased?

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Luke Jovetic
Know Your Money Editor

A major review of university funding has recommended that universities in England should have no limit on the fees they charge.

Lord Browne's review has called for the £3,290 cap on fees, which students borrow in loans, to be scrapped.

Instead it suggests a free market in fees - allowing for charges of up to £12,000 a year for a degree course.

However, the proposals have been criticised amid concerns they would shut off higher education for a number of people.

The report does make clear those universities that charge more than £6,000 a year would lose a proportion of the fee to help cover the cost of student borrowing.

Speaking to BBC Breakfast Lord Browne said: "We have taken off the cap but we haven't taken off the restrictions."

He added all higher education institutions were different and needed different amounts of money to retain their world class status, but he predicted few would increase their fees to high levels.

"They would be paying the same interest rate as the government uses to borrow. They will only pay it back when their earnings go above £21,000," he said.

Opposition from the Liberal Democrats?

An increase in fees would be a direct reversal of personal pledges made at the election by the Lib Dems and may cause a number of difficulties for the coalition government.

Business secretary Vince Cable is among those who have expressed caution about the extent of the potential fee increases, suggesting he was keen to find a fair solution.

He said: "We are looking at the proposals carefully and considering a tuition fee level of £7,000."

Shadow business secretary John Denham questioned Mr Cable on the potential damage allowing universities such as Oxford and Cambridge to charge fees of £10,000 or £12,000 could cause.

Mr Denham suggested high fees would effectively shut bright, poor students out and in response Mr Cable said: "He rightly refers to the difficulties which would arise if certain... institutions were allowed to charge very large variable fees.

"That's why I made no commitment on Tuesday as to how we would deal with that problem, we need to reflect further on it - he's quite right there's an issue of fairness and we are going to address that."

Parental concerns

While the issue is yet to be resolved, or an increase in fees confirmed, it does seem likely the cost of university education will remain high for the considerable future.

This may leave a number of parents concerned about their finances and in need of assistance as to the best steps to take.

Careful financial planning may be necessary as the average student starting university this year could expect to graduate with around £24,000 of debt if the coalition government adopts Lord Browne's report.

And for those attending the most in demand colleges this figure could see fees as high as £10,000 a year.

For those who have recently had a child and are starting to think about the future there is mixed news. On the plus side there is plenty of time in which to save a university fund, but at the same time experts are suggesting a pot of £60,000 may be needed to get a child through higher education.

One option parents may like to consider F and C's Children's Investment Plan, which enables parents to choose from a dozen F and C-managed investment trusts. These have a minimum monthly investment of £25 per trust, while the minimum lump sum is £250 and savers can stop, start or change their payments at any time.

For more information on children's investment plans click here.

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