? Fees

The review recommends that the cap on tuition fees, set at ?3,290 this year, should be abolished. The government would provide upfront funding for fees up to ?6,000 through loans to be repaid by graduates.

Above ?6,000, the government would still cover upfront costs through loans, but universities would be subject to a state levy on income above that amount to cover the increased risk of students defaulting on their loans.

The levy would increase on a sliding scale: for example, the government would take 40 per cent of the first ?1,000 above the threshold, rising to 75 per cent by the time the fee level hits ?12,000. However, a university that charges ?12,000 would still receive 73 per cent of the total revenue once the government had taken its share.

The review says that a ?7,000 fee would be "roughly equivalent to what institutions will have to charge to maintain investment at current levels based on our assumptions about the reduction in ³ÉÈËVRÊÓƵ Funding Council for England funding". But the soft cap is set below ?7,000 to encourage "efficiency", it adds.

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A graduate tax is rejected as "unworkable" as it would require the state to fill an upfront funding gap "until 2041-42".

? Student finance

Graduates would begin repaying their loans once they earn more than ?21,000 - up from the current threshold of ?15,000 - at 9 per cent of their income above the threshold.

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The current system of subsidised interest rates, calculated on the lower figure of either retail prices index inflation or the Bank of England base rate plus 1 per cent, would be abolished. Graduates would pay a real rate of interest equal to the state's cost of borrowing (inflation plus 2.2 per cent, according to the report).

Graduates earning below ?21,000 would not have to make repayments, with the balance increasing at the rate of inflation rather than a real interest rate.

Those earning just above the threshold, whose repayments would not cover the real interest charged, "will have the rest of the interest rebated to them by government".

A cost-of-living loan of ?3,750 should be open to all, with no means test. Students from low-income backgrounds would have access to an additional cost-of-living grant of ?3,250, available in full to those from households with income below ?25,000 a year and in part to those with a familial income of below ?60,000.

"Families with high household incomes will be more likely to pay upfront voluntarily and graduates with very high earnings will be more likely to choose to make early repayments," the review says.

With fees at ?6,000, students would end three years of study with almost ?30,000 to repay in tuition and cost-of-living loans. Outstanding loan balances would be written off after 30 years, an increase on the current 25-year figure.

The obligation on universities to provide a minimum bursary should be removed in favour of "freedom" to concentrate on other outreach activities that may be more effective. Upfront fees for part-time students would be abolished and they would have access to the same cost-of-learning support as full-time students (but not cost-of-living assistance).

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? The higher education system

Public funding cuts to higher education should be made "by removing the blanket subsidy that the public currently provides for all courses through the Hefce grant; and targeting investment in priority areas". These would include "science and technology subjects, clinical medicine, nursing and other healthcare degrees, as well as strategically important language courses".

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"New providers", such as private institutions, should be allowed to "apply for targeted higher education investment if they offer priority programmes". Students in private institutions would be given access to the student-finance system.

Institutional "failure" should be handled through options including "mergers or takeovers led by other providers".

Hefce, the Quality Assurance Agency, the Office for Fair Access and the Office of the Independent Adjudicator would be replaced by a single ³ÉÈËVRÊÓƵ Council. This body would have five key responsibilities: "investing in priority courses; setting and enforcing baseline quality levels; delivering improvements on the access and completion rates of students from disadvantaged backgrounds; ensuring that students get the benefits of more competition in the sector; and resolving disputes between students and institutions".

All new academics with teaching responsibilities would undertake a teacher-training qualification accredited by the ³ÉÈËVRÊÓƵ Academy.

? Competition and student choice

Total student numbers should be increased by 10 per cent over three years, as the current cap means "growth within successful institutions is stifled" and "less successful institutions are insulated from competition".

Within that overall intake, institutions would "face no restrictions from the government on how many students they can admit", opening the door to fierce competition between rival universities.

Yet access to the student-finance system would be determined on a "minimum tariff entry standard" based on Universities and Colleges Admissions Service points, effectively giving the state the power to set overall student numbers.

Student choice "will shape the landscape of higher education" and "drive up quality" by distributing funding following the removal of the centrally allocated "blanket subsidy" for all courses.

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Institutions and students should produce "student charters" providing detailed information on courses, including graduate-employment rates.

john.morgan@tsleducation.com.