You don't need rich folks to pay the fees

Returning from five and a half years in America, I am amazed at the lack of public debate about how higher education should be financed in Britain.

For more than a decade budgets have been squeezed. For just as long academics have been moaning about their lousy pay. Now student numbers have doubled, which means more work, and more pressure on an already beleaguered system.

Yet - outside the rarified confines of Whitehall and university vice- chancellors - almost nobody questions whether we should continue with a structure that relies almost entirely on government funding and in which undergraduates pay little towards the cost of their degree. OK, students increasingly pay for board and lodging, but that sum is peanuts set against the cost of tuition.

There is a lot wrong with higher education in the United States - not least the escalating fees at some elite private universities - but the system is buoyant and, above all, free of central government control.

By contrast, British higher education sounds defensive and demoralised - not surprising, perhaps, given its dependence on the state. How much better funded it would be if students had to contribute through top-up fees or a graduate tax. How much more responsive that would make it to consumers. How much fairer to taxpayers.

As it is, the better-off, who use higher education proportionately more than the rest of society, receive a hefty subsidy from the Government in the form of free tuition. American students are astonished by that fact. With such a subsidy, the already well-off are able to increase their earning power yet further (all official statistics show that a degree boosts earning power).

I can hear the objections. Ah, but fees limit access. You can't charge because that will deter bright kids from working-class backgrounds. It will return Britain to pre-Second World War days when only the nobs could get to university.

The answer is that doesn't have to happen. In the US a patchwork of loans, grants, scholarships and what is known as "work-study" - jobs on campus - results in students going to college in large numbers. Clever students, and those in need of financial help, are given scholarships paid for out of the money garnered from the better-off.

Charging fees doesn't mean only an elite goes to college. The proportion of 19-year-olds in American higher education is something like 50 per cent, compared with just over 30 per cent in Britain.

The fact that money for higher education comes from a multiplicity of sources in the US - from students, their parents, corporate America and alumni, as well as the federal and state governments - means the system is flexible and extraordinarily diverse.

Students expect to work part-time during the term, by taking jobs, for example, in the campus post office or visitors' centre. They expect to take out loans, from the federal government, their own institution or a private bank. And they expect to pay the money back when they finish their studies.

Most American students stitch together a "financial aid package" with the help of their financial aid office. It includes grants, subsidised loans and work-study.

I remember one student I met at Bill Clinton's alma mater, Georgetown University, in Washington DC, who had accumulated debts of $30,000 after two years in college. The debt did not faze him. He was confident he would graduate and pay it off.

In fact, he thought the only way to have a high percentage of the population going to college was to make people pay. That student was no exception. His debt might be higher than most, but his attitudes were par for the course.

America - as we know - is far from perfect. Inner-city blacks rarely escape from the ghetto. And for middle-class Americans the Ivy League universities have become a vanishing dream. But the fact remains that higher education is open to anybody who gets through high school and can hustle a financial aid package. The critical point - easily overlooked by the vested interests in British higher education - is that more flexible funding creates more flexible institutions. Broadening the funding base broadens access and diversity.

Why is this such a taboo subject in Britain? The answer is politics.

Politicians in all parties are terrified of alienating middle-class voters who benefit from the subsidy. Labour is frightened of the traditional Labour voter who still believes students should receive maintenance grants; the Conservatives don't want to upset the solid ranks of middle England,

In a report last year, the World Bank urged developing countries to be brave - to face down the elites whose children were cramming the lecture theatres and graduating to improve their prospects still further. It called on them to find new ways of funding higher education.

The signs are that some countries are heeding the call. Hitherto unreconstructed regimes in Vietnam, Hungary and China are making changes. China, for example, has opened a private university and Vietnam has introduced tuition fees. In Eastern Europe, private universities are popping up all over the place.

So what is stopping us? Only a lack of political will.