Tories outline scrapped fees plan
<TABLE cellSpacing=0 cellPadding=0 width=629 border=0><TBODY><TR><TD colSpan=3>Tories outline scrapped fees plan
</TD></TR><TR><TD vAlign=top width=416><!-- S BO --><!-- S IIMA --><TABLE cellSpacing=0 cellPadding=0 width=203 align=right border=0><TBODY><TR><TD>Students have protested against government plans for top-up fees
</TD></TR></TBODY></TABLE><!-- E IIMA -->The Conservatives plan to abolish all university fees, including the proposed top-up fees.
But they would remove students' current access to low-rate loans anchored to inflation and charge a commercial rate of interest instead - as much as 8%.
The Tories' long-awaited detailed university finance plans show how they would finance the plan to scrap fees.
Shadow education secretary Tim Collins said students would be "considerably better off" under the Tories' package.
New income
But higher education minister Alan Johnson said the Conservatives' plans would penalise poorer students and women.
Mr Collins argued the scheme had been costed and would benefit students and allow universities to generate new income.
At present, interest on student loans is fixed at the rate of inflation, currently about 3.5%.
<!-- S IIMA --><TABLE cellSpacing=0 cellPadding=0 width=203 align=right border=0><TBODY><TR><TD>The Tories will honour Labour plans for a grant for the least well-off
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But the Conservatives would raise this to a fixed amount above the Bank of England base rate. This would currently be about 6.5%.
But if bank rates go up, they could rise to a maximum of 8%.
Mr Collins told BBC Radio Four a higher interest rate would not make students worse off because the abolition of fees meant they would leave university with lower debts.
He said: "Because the amount of debt is reduced quite sharply the average graduate under the government's plans would leave with loan debt of the order of £19,000 - under our plans they leave with about £10,000."
Credit card debt
That graduate would finish paying off their interest two years early and pay back £7,000 less overall under the Tories' plan, Mr Collins said.
The Conservatives say they will honour Labour's plans for a new student grant for the least well-off.
They also say they will allow students to take out bigger loans, helping them to avoid running up even more expensive debts such as on credit cards.
Abolishing fees will deprive universities of income, but the Conservatives say they will counter this by transferring the so-called Student Loan Book, the debt and interest owed by all students, from the Treasury to the universities to manage.
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Women would be viciously penalised by having children and bringing up a family
Higher education minister Alan Johnson
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The Tories calculate this would allow universities to raise some £20bn over the next 20 years and give them an up-front injection of capital.
Their scheme would also claw back the "very large public subsidy" proposed by the government to pay for top-up fee remission for poorer students.
But higher education minister Alan Johnson criticised the plans.
He said: "They would mean that repayment of student loans would not be based in any way on the ability to pay.
"Those who would be particularly badly hit would be those going into low-paid vocations such as voluntary organisations and the church.
"Women would be viciously penalised by having children and bringing up a family.
"Repayment would not be through the tax system and so would be massively unfair and expensive for the universities to administer. "And most importantly of all, universities would simply not get the money they need for raising the quality of their courses." <!-- E BO -->
http://news.bbc.co.uk/1/hi/uk_politics/3636442.stm
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