Online degrees: A model worth emulating or a plan that risks creating a two-tier system?

For the past 150 years, the University of London has given students the chance to study for an external degree. Nelson Mandela took an external law degree while imprisoned on Robben Island; the Nobel prize-winner Charles Kao signed up for a course as a young refugee from Shanghai, and the Labour MP Gisela Stuart is another alumnus. The University of London has approaching 50,000 students studying by distance and flexible learning in more than 180 countries.

Now the Universities minister, David Willetts, is lauding it as a model for opening up higher education to many more people in Britain without having to spend too much money. The University of London claims to offer the cheapest degrees in the country via its distance-learning qualifications. A law degree costs a mere £3,500 altogether: some degrees are even cheaper; others, such as classical studies, more expensive. That compares with the fees most universities charge of £3,225 a year – £9,675 in total.

"We have a model that could well be emulated by other universities, says Professor Jonathan Kydd, dean of the external system. "It could lead to greater diversity in the sector for private and public institutions. We would solve two of their problems – the curriculum and the standard of their degrees."

Another institution that offers similar distance-learning degrees is The Open University, which, like the London external system, is highly regarded and relatively cheap. It charges more than the University of London, but not as much as a conventional higher education institution.

In a speech at Oxford Brookes University, Willetts said that students should be able to study at a local further education college for an external degree from a university, something that happens already all over the country but not on a vast scale. His idea was that this could be expanded to widen participation, reduce costs and raise standards.

At the moment, the University of London's external system doesn't have dealings with further education colleges, according to Kydd. That's because of the centralised funding system that controls the number of students by capping allocations to institutions.

Kydd believes Willetts could realise his ambition of getting more people to learn at FE colleges in towns that don't have universities by doing away with the controls on student numbers and increasing student loans so that they cover the cost of taking an external degree at, say, the University of London. Although the fees are low, students have to pay extra for face-to-face tuition where they live. Such reforms would free up the system and enable students to find the money they need, he thinks.

At the moment, some FE colleges are given a specific number of higher education places for students. Thus, the University of Liverpool runs various foundation courses with local FE colleges that enable people to progress from the college to a degree at the university. Students begin studies at an FE college for one or two years, and continue at the university in later years. This model applies to degree courses in medicine and dentistry, science and engineering, computer science and information systems.

The University of Warwick has a similar scheme that enables students to gain a degree through two years of study at a local college followed by two years at the university. This is designed for adults without formal qualifications.

The minister's plan has had a mixed reception. The Russell Group universities and those in the 1994 group of small and beautiful institutions such as Sussex are anxious that any shift to external degrees does not lead to a decline in the educational experience.

The university think-tank million+ believes it is a "cheap" and "old-fashioned" idea. Professor Les Ebdon, its chair, says: "Employers do not want people who just sit exams, but people with the graduate attributes and higher-level skills developed at university."

The proposal risks creating a two-tier system where those who can afford it go away to study, while students from poorer backgrounds study in FE rather than at university, he says.

'For me, as a mature student, it's brilliant'

Anita Bowden, 41, has been studying for an English literature degree for the past two years at Goldsmiths, University of London through the external programme.

"I couldn't afford to give up my income, and I wanted to complete my degree in three years, which the London programme allowed me to do. I have always wanted to be a teacher, and for that I need a degree.

I tried the OU (Open University), but that didn't suit me because it would have taken six years and cost more. This fits in better with what I need and what I want to do.

I have two teenage children taking GCSEs and A-levels. I pay for seminars which are conducted online and I have attended some summer schools. They last for five days and are fantastic. External courses don't suit everybody – and they would not suit every subject.

For me, as a mature student, it's brilliant. I didn't have the confidence to go to university when I was younger, and my parents couldn't afford it.

My daughter will go to art college: you couldn't do that remotely. We have our essays marked by email and we can use the online library, so it's pretty much like a conventional university, but minus the parties."