Tuition fees furore: what exactly are the plans?

Controversial new plans to raise the level of charges in England were passed this month which could see some university go-ers pay £9,000 a year.

That's £27,000 over the course of a typical three-year degree, which could leave many in debt for 30 years (see the Student Loans guide).

But who exactly will pay such high fees and what more do we know about them?

Our Q&A guide below helps answer your questions.

How much will fees really be?

Most universities will be able to charge students up to £6,000 a year, but only in special circumstances can they extend the cost to £9,000 – if they can prove it represents value for money.

No university has yet decided how much it will charge. It is likely institutions will levy the full amount allowed, though it is hoped competition may force prices down.

The maximum universities can charge now is £3,290 a year.

When will they come into effect?

The new fees apply from 2012 admissions, so the regime will only affect first years from that time. Even if students defer their 2011 start to 2012, they will pay the hiked fees.

Anyone who starts or started their degree earlier will NOT pay the increased fees.

How can students fund these fees?

They will be eligible for a loan to cover tuition costs if they can't fund the fees themselves.

A maintenance loan will also be available to cover living costs, but the size of this loan will be dependent on family income and circumstance. Details on the size and criteria for these loans have yet to be released.

Many students from less well off backgrounds will be eligible for a maintenance grant which they will not have to pay back. Those from families with an income of less than £25,000 will get £3,250 and those from families with incomes up to £42,000 will be entitled to a partial grant.

The Government is also launching a national scholarship programme to target bright potential students from poorer backgrounds. The details of this are yet to be confirmed.

How will the loans be paid back?

Students will begin repaying their loans at a rate of 9% on all their income above £21,000 a year.

This is not the interest charged but the amount they have to pay back each year.

All outstanding repayments are written off after 30 years from the April after studying ends.

The current system sees students paying back their loan at the same 9% rate but on income above £15,000 a year, with outstanding debt written off after 25 years.

The Government is also working on a scheme to make early repayment easier for those on lower incomes while not allowing more affluent graduates to buy out of the system and therefore avoid higher interest costs (see below).

How will interest be charged on loans?

Interest will accumulate on loans from the point they are taken out at the Retail Price Index (RPI) inflation measure + 3% until the April after graduation.

At that point, graduates enter a different repayment scheme. Interest will then be worked out as follows:

• For graduates earning up to £21,000 a year, interest will be charged at the RPI rate.

• For graduates earning between £21,000 and £41,000 interest will be calculated on a sliding scale from RPI to RPI plus 3% depending on their salary. The more they earn, the higher the interest. A graduate earning £31,000 would pay RPI plus 1.5% interest, for example.

• Graduates earning above £41,000 will pay RPI plus 3%

Interest rates and the threshold for repayments are subject to review in April 2016, when the bulk of the first graduates to use this system will start paying back their loans.

Will the Government still fund university education?

Universities are currently given a large grant directly from the Government which is topped up with student fees.

Under the new proposals, universities will get much more of their funding directly from students, though they will still get some public funding.

The Department of Business Innovation and Skills says: "In future, the majority of public support for the cost of university teaching will flow through undergraduate students via the loan system and according to their personal choices rather than as block grants via the funding council."

How is the Government justifying increased fees?

It insists the rises are vital to cut the huge deficit. It argues the new scheme will benefit lower earners over their lifetime.

Many students will not be required to repay the full amount of the loan and those whose earnings rise slowly could benefit from the new system, it is claimed.

Aaron Porter, National Union of Students president, says: "The Government is playing fast and loose with the facts on fees.

"Repeated claims the proposals will reduce the deficit are not supported by the Office for Budget Responsibility, which said that they would increase public sector net debt by £13 billion by 2016."

Further reading/Key links

Cut the cost of being a student: Should I Repay My Student Loan?, Student MoneySaving, Student Bank Accounts