Students should be called to fork out thousands of pounds more for their education, including paying higher interest rate on loans and accepting a significant increase in tuition fees, a report by business leaders has recommended.

The Confederation of British Industry says that students should provide the majority of extra cash needed to fund universities in the UK. Under the proposals, students face the triple blow of higher tuition fees, fewer grants and a rise in interest on loans.

The CBI has also called for more sponsorship and bursaries from private companies. It said that Labour’s aim of getting 50% of 18 to 30 year olds into higher education should be temporarily suspended to help cover the ballooning cost of higher education and protect its quality in the face of increasing competition from other EU nations.

The National Union of Students attacked the report as “gross hypocrisy” from the “fat cats at the CBI”, and said that the proposed fee hike would mean a return to elitism in higher education. But the plans have received cautious backing from two leading university groups.

The 1994 group of research universities, which includes Bath, Exeter and York Universities and several University of London colleges, welcomed the move, saying that without increased funding, higher education faces a “valley of death” of severe cutbacks.

These universities also support the increasing of tuition fees and cutting the subsidy on student loans, which have carried a very low rate of interest since their introduction.

“The fees cap needs to be high enough to bring in sufficient funding and enhance competition to further drive up quality,” said the 1994 Group’s executive director, Paul Marshall.

“In addition, a sensible interest rate should be introduced on student loans, set at the current government cost of borrowing, to rectify the huge subsidy that the government currently pays.”

The Russell Group, representing some of the UK’s most prestigious universities including Oxford and Cambridge, also backed the proposals.

“The CBI is right to call for an exploration of new sources of funding and to say that the priority is to maintain quality rather than expand numbers,” said the Russell Group’s director general, Wendy Piatt.
However, teachers’ union ATL attacked the proposals as “arrogant and elitist”.

“The CBI should be arguing to maintain higher education funding in real terms, just as they argued for huge injections of cash to support failing businesses,” said ATL’s Martin Freedman.

The CBI’s report suggested that businesses should do more to help finance university education and offer golden handshakes to those who study science and engineering subjects. It recommended that maintenance grants be restricted to students from households with the very lowest incomes, and said that students should pay higher, commercial rates of interest on loans, saving the government up to £1.4 billion a year.

In addition, it recommended the government raise tuition fees to £5,000 a year. It called on universities to make efficiency savings and consider mergers or work with the private sector to cut costs.

Richard Lambert, the director general of the CBI, said: “The economic downturn makes cuts to public funding for higher education inevitable, so new sources of funding have to be found … we say that savings should come from the student support system.

“The UK’s student support is on a par with some of the most generous in the world, and the priority must be to preserve quality as well as assisting those unable to pay to ensure that higher education remains open to all.”

Wes Streeting, president of the National Union of Students, said: “I am astonished that the CBI should be making such offensive recommendations. When the fat cats at the CBI recommend that we abandon targets for widening participation from poorer students, they are talking about restricting the opportunities of other people’s children rather than their own. This is gross hypocrisy.”

This entry was posted on Monday, September 21st, 2009 at 2:18 pm and is filed under Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.