Expensive campuses may be forced to cut fees

The Higher Education Policy Institute (HEPI) has also said that Government reforms could lead to an “arms race” for high-achieving students, with people from disadvantaged backgrounds likely to lose out,

The findings are part of the think tank’s analysis of the Higher Education White Paper which will see fees rise to up to £9,000 a year and allow universities to recruit unlimited numbers of the most able students.

The new report said most universities would be obliged – if not immediately, then within a year or two – to reduce fees to £7,500 or they would quickly become “unviable”, losing eight per cent or more of their students every year.

HEPI said plans to allow universities to take unlimited numbers of “high achieving” AAB students, but to cut places for less able students could bring “unwelcome” consequences. It also said fee cuts by some universities to avoid losing students could lead to a “polarised sector”, with some charging the top fee of £9,000 and the majority charging £7,500 or less.

HEPI said: “Students in the former will pay more – but they will have a better experience, with much more resources devoted to them. However, even institutions in the £9,000 category will not have a comfortable time, as they will need to provide increasingly generous financial inducements to AAB+ students in order to avoid losing them to other universities that offer such inducements.”

Tuition fees are set to soar to £9,000 a year from 2012 as universities cope with a massive cut – £2.9bn by 2015 – in their state support for teaching degrees.

The new cap on fees is between £6,000 and £9,000 but the majority of universities plan to charge top level fees. Five universities in Yorkshire will introduce maximum fees of £9,000 a year: Bradford, Hull, Leeds, Sheffield and York. Leeds Metropolitan, Sheffield Hallam and York St John each plan to charge £8,500.

Huddersfield will be the lowest charging university in the region with fees of £7,950 while Leeds Trinity – a university college – is setting its fees at £8,000.

The new report says students from disadvantaged backgrounds will be less likely to get into the most selective universities, and would be more likely to attend cheaper further education colleges and universities, where they would have fewer resources and less advantages on graduation.

And it suggested universities could end up providing financial support for better-off students, with competing institutions finding themselves embroiled in “an arms race of “merit-based” scholarships exclusively available for AAB+ students as if one university offered them others would be obliged to do so too or risk losing the most able candidates.

“The upshot may be that while there will not in reality be a large movement of AAB+ students between these universities, they will pay a high price to maintain their share of these.

“They will also lose eight per cent of their remaining quota. To maintain their numbers they will have to recruit AAB+ students from other less selective low-fee universities.”

The report said such scholarships would be “needs blind”, adding: “Because school achievement and economic privilege are closely-related, these scholarships will effectively provide financial support for better-off students.

“An arms race will have been created, with no beneficiaries other than those students with AAB+ grades.”

Universities Minister David Willetts said: “The intent of our higher education reforms are clear: we are putting students at the heart of the system with a financing system that is fairer and affordable for the nation. While we expect universities to offer good value for money, students will have the information to decide what course and institution is right for them.”