Warning over massive tuition fees funding gap

Students in classroom

Universities in England could be hit by a funding gap of "hundreds of millions of pounds" due to miscalculations in the number to charge higher-rate fees.

The Public Accounts Committee (PAC) says more universities than expected will go for a tuition fee hike of £9,000 next year.

This will leave a funding gap between the upfront fees, paid by the government, and the money paid back by students upon graduation – and then only when they have secured a job paying at least £21,000.

It's unclear exactly who will fund this gap but the PAC says it will require either more cuts in higher education or more money from the Treasury.

Student loans could treble

The report also raises concerns about students as the funding gap may lead to fewer university places and the amount of student debt from outstanding loans could treble to £70 billion by 2015/16.

It calls for students in England to be given greater financial education on the value for money of certain courses and asks the Higher Education Funding Council to implement this.

Although ministers originally said universities could only charge the top rate of £9,000 in exceptional circumstances, 60 out of 124 institutions say they will be implementing this.


Universities are now deciding on fees for new students for the academic year 2012/13 and the PAC says it's unclear if higher fees will deter more students from attending university.

Read: Graduates: The forgotten generation

The Rt Hon Margaret Hodge MP, chair of the PAC, says: "Unprecedented change is about to take place in the higher education sector as it moves towards a system in which funding for teaching follows the student.

"The Higher Education Funding Council for England will no longer be able to rely upon its funding role to influence the sector and a new system of regulation will be required."

The report was compiled on the basis of evidence from the Department for Business, Innovation and Skills, the Higher Education Funding Council for England and representatives from three institutions on financial regulation.