Graduates will owe £21,875, say experts

Students will face a maximum debt of £21,875 for a traditional three-year degree course under the Government's controversial top-up fees proposals, financial experts said yesterday.

The prediction by the respected Institute for Fiscal Studies is broadly in line with those made by Charles Clarke, the Secretary of State for Education. Critics of his plans for tuition fees say that the cost to students will be much higher.

The IFS has found otherwise but says those facing the biggest debts would be from middle-class families who just miss out on the maintenance grants of up to £2,700 a year on offer from the Government. But its study claims that the repayments to be made by any graduate would be "relatively small compared to the income tax and national insurance that graduates will be paying anyway''.

Meanwhile the élite Russell Group of universities has warned that Mr Clarke's cap on variable top-up fees at £3,000 a year will not be enough to solve the funding crisis in higher education.

The group - which represents the 19 top research institutions in the country, including the universities of Oxford and Cambridge - wants the ceiling set at £5,000 a year although it acknowledges such a figure would be politically impossible to steer through Parliament at present.

The Russell Group is warning the Government of its intention to lobby for extra cash to cut what it believes will still be a funding gap of around £7bn if the Bill passes into law. The current gap is around £8bn and the fees proposed by ministers would only bring in an extra £1bn.

The Conservatives claim that the extra available would be minimal once financial aid had been given to less well-off students. But the Institute for Fiscal Study says the government package will bring in substantial sums for universities to improve their spending on teaching resources. Only £50m of the £1bn must be given to students from the poorest homes so that universities can charge the maximum top-up fee of £3,000 a year, it says. "The top-up fees will therefore provide universities with up to an extra £950m to spend on increased teaching resources for students - depending on how generous their bursaries are," the report adds.

The IFS says that a student's potential debt rises to a maximum of £21,875 for those whose parents' income is £33,600 a year - just above the level to qualify for a grant.

Those from the poorest homes would incur a maximum £19, 335 debt. The IFS estimates that those from the highest-earning families with £44,000 a year or more would run up debts of £18,664.

The study indicates that those taking long courses - such as the six-year medicine courses where the British Medical Association says debts could reach £64,000 - would find their loan repayments were a higher proportion of their tax bill (7.4 per cent) than those of most other graduates. But that would be only marginally more than the proportion paid by a graduate earning £50,000 a year after a traditional three-year degree course (6.6 per cent).