The Government has announced that English and Welsh universities will be able to raise maximum tuition fees to £9,250 a year from August 2017 – and the increase could hit those already studying too. But as founder Martin Lewis explains below, in practical terms most won't pay more.

In a written ministerial statement published today, Universities Minister Jo Johnson said the fee cap for the 2017/18 academic year will be increased by 'forecast inflation' of 2.8%, raising it from £9,000 to £9,250, while for part-time students it will rise from £6,750 to £6,935.

The increase – the first since 2012 – will apply to all new students and eligible students who started their courses at publicly funded universities since 1 September 2012. Students at Scottish and Northern Irish universities aren't affected by today's announcement.

When the current system of tuition fees was introduced in 2012, the idea was that there would be some expensive degrees and some cheaper degrees, with the cost of tuition ranging from between £6,000 and £9,000 a year. In practice though, nearly all universities now charge full-time students £9,000 a year – and this announcement means that's set to go up next year.

For full info on how student finance works, see our Student Loans Mythbusting guide.

'In practical terms, most won't pay more'

Martin says: "As long as we continue to call this type of finance 'student loans', the increase in tuition fees could prove to be a psychological deterrent for people from non-university backgrounds.

"In practical terms, most people will not pay more because of the increase in tuition fees. This is because repayments are set at 9% of everything earned above £21,000, which means most people do not already repay what they borrowed plus interest in full over the thirty years before their loan wipes.

"Only very high earners – those on starting salaries of roughly £40,000 and above inflation rate pay rises – will actually see the amount they pay in total increase because of this rise.

"The sooner we change the name of this finance from the misnomer of 'student loans', into the more realistic 'graduate contribution', the sooner we stop risking scaring many people who should be going to university off going to university for the wrong reasons.

"So while I'm not that bothered about the cost increase for most people due to this rise, I am worried at the continued potential impact it may have on those from a background with no history of going to university."

Watch Martin's immediate reaction to today's announcement below:

Martin's also campaigning at the moment on the separate issue of the Government's retrospective hike in student loan payments – see the MPs debate student loan repayments news story for the latest on this.

What's the background behind today's announcement?

MPs had been due to debate an increase in maximum university tuition fees in Parliament this autumn. However, it emerged earlier this week that several universities have already begun advertising courses at the £9,250/year rate, after being told earlier this year they would be able to increase the £9,000 maximum in line with inflation.

Today's ministerial statement means fees are now almost certain to rise next year, though some opposition MPs have planned to fight the rise and push for it to be debated in Parliament.

Will student loans increase too?

Yes. Johnson's statement confirmed that maximum fee loans will also be increased by 2.8%, to £9,250 a year for full-time students and £6,935 a year for those who are part-time.

Maximum loans for living costs will also rise by 2.8%, to:

  • £8,430 – for students living away from home studying outside London
  • £11,002 – for students living away from home studying in London
  • £7,097 – for students living in their parents' home
  • £9,654 – for students studying overseas as part of their UK course (eg, EU student-exchange programme the Erasmus scheme)

If you're already a student and have a maintenance grant, these will also rise. Full-time students who started their courses on or after 1 September 2012 but before 1 August 2016 will get an increased grant of £3,482, while those who started before 1 September 2012 will see it rise to £3,197.

Will all universities be able to raise fees?

Technically no – only universities which the Government has deemed as 'meeting expectations' will be allowed to do so. However in practice the vast majority have achieved this – see a full list of higher education providers which have.