Alan Ryan: Top-up fees are merely a drop in the ocean

Now you see it, and now you don't. The £3,000 tuition fee, that is. Setting aside the question of whether the particular scheme that the Government has cooked up is the best that human ingenuity could devise - it obviously is not - there is another question, which is what on earth will really be on offer?

Back to the beginning. Students now pay tuition fees of up to £1,125 - nothing if their parents earn less than around £21,000 and the whole £1,125 if their parents earn more than around £31,000; crucially, they cannot get a government loan for that £1,125. What they get a loan for is living costs: up to £4,000 for most students, and almost £5,000 for students living away from home in London.

The Government quite rightly says that one improvement in a student's position if top-up fees go through is that higher education is "free at the point of use". Over the long term, of course, it is an improvement only for students whose family income is more than £21,000 a year - students from worse-off families today pay nothing towards tuition, and it seems that they will in future pay something.

The real problem for students, will still be that cheap government loans don't cover enough of their living expenses, so they either end up borrowing money on credit cards - at interest rates of up to 20 per cent - or on overdrafts - at interest rates up to 15 per cent a year. Student loans are "income contingent": all you pay is nine per cent of what you earn over £15,000 a year. You have a payment holiday if you earn less; these other debts increase regardless. This is the most important piece of information that students should know. The rest is small beer. An extra £1,875 a year towards tuition is not a lot when added to what most white-collar workers will take out in mortgages and the like.

But, how much good will fees do the underfunded, over-regulated universities? Thus far, tuition fees have been a bust. Perhaps the Treasury would have taken away as much money in so-called "efficiency gains" even in the absence of tuition fees - which have produced around £500 a student a year - so that universities would have been even worse off without tuition fees. But they haven't produced any "new money".

So, you might imagine that universities would look at top-up fees with a good deal of suspicion. And they do. The loudest complaints come from post-1992 universities which have trouble recruiting enough students and find themselves stuck between the need for more resources to look after non-traditional students and the resistance of those same students to paying £3,000 a year for rather basic courses.

If they charge enough to get the resources to do a good job, they won't have any students; and if they don't, they won't have the resources to look after them properly. Quite how one gets round that corner is a mystery that neither the DfES nor the Treasury seems to have worked out. And now comes the joker in the pack. Out of the extra money, bursaries will have to be funded to ensure that the worst-off students will face no increase in tuition fees at all, or perhaps no more than around £850.

Now imagine your vice-chancellor; at a new university, he or she faces the prospect of not being sure how much to charge, but knowing that however little it is, a third of it has to be given to students from the worst-off families. So the dilemma is sharpened; charge enough to have the resources to pay the bursaries and you will have no students to give them to.

Contrast that with Cambridge. Only about 15 per cent of its students will be eligible for bursaries; the extra £1,875 a head will yield about £19m, so a bit above £6m will be available for bursaries - and 1,800 students will find themselves £3,300 a year better off. Since Cambridge already has a decent bursary scheme, and charges low rents for accommodation, fears about students from poor families being deterred by the cost of élite universities look exaggerated, while the difficulties of students at the non-élite institutions seem as far away as ever from being solved.

The writer is warden of New College, Oxford

education@independent.co.uk