Vince Cable last night announced university fees were set to double.
Mr Cable, who admitted he benefited from a free university education, told MPs: 'It is quite possible, and indeed desirable, that we could move to a more sensible system where many students study in their home towns.'
His comments came as Lord Browne's blueprint for the future of higher education faced a backlash over its impact on the so called 'squeezed middle classes' – already shocked at the prospect of losing child benefit payments in 2013.
The former BP boss's proposals could become law by 2012.
The report recommends:
The abolition of an annual £3,290-a-year fee limit;
Universities should be able to charge up to £12,000 a year – keeping all income from the first £6,000 and a share of the remainder;
Graduates to repay loans once their income reaches £21,000-a-year, not £15,000 as at present;
A new 'real' rate of interest charged on loans – inflation plus 2.2 per cent.
Sally Hunt, general secretary of the University and College Union, said the proposals represented the 'final nail in the coffin for affordable higher education'.
Cable's Commons statement reneges on an election promise to abolish tuition fees – a promise made by all Liberal Democrat MPs - and means he could face a back bench revolt.
Cable accepted that most courses will no longer be government subsidised and said there would have to be "very difficult cuts. Government funding for teaching will be replaced by graduate contributions – that is very clear and that is at the heart of the government thinking."
In a defiant performance in the Commons, Cable insisted the Lib Dem pre-election pledge to scrap tuition fees was "no longer feasible" and went on assert a broader principle that all commitments made by either of the two coalition parties were no longer valid. He said: "The roads to Westminster are littered with the skidmarks of political parties changing direction."
He said: "I signed that pledge with my colleagues [but] in the current appalling financial situation ... which we inherited, all pledges, all commitments, will have to be re-examined from first principles."
Cable was helped in his handling of his own backbenchers by analysis conducted by the Institute for Fiscal Studies which said that the reforms would be "highly progressive". While all graduates would expect to pay on average at least £5,300 more for their degree, the IFS said, the lowest-earning would be protected from the "burden of increased debt and would actually pay less than under the current system."
It said: "Those in the bottom 30 of graduates would pay back the full amount of their loans. The resulting spread of repayments would be more progressive than under the current system, in the sense that lower-earning graduates would pay less and higher-earning graduates would pay more."
Aaron Porter, president of the National Union of Students, said: "A market in course prices between universities would increasingly put pressure on students to make decisions based on cost rather than academic ability or ambition. Those already feeling the pinch will clearly be unwilling to take such a gamble and face being priced out of the universities that would opt to charge sky-high fees."
Lord Browne has stressed that his recommendations do not mean family's mortgaging their homes in order to pay fees, but students with high earning potential leaving university with a student fee debt - typically expected to be about £30,000.
What do you think? Are you worried about how your children will be able to go to university, saddling yourselves or them with debt?
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