Students: Prepare For Price Hikes!

When higher education funding is reviewed next year, the cost of getting a degree could soar. Laura Starkey looks at what you can do to prepare.

Anyone who's graduated from University in the past few years probably has pretty strong opinions on the funding of higher education (HE). Personally, I can't say I'm thrilled about the bill for almost £20,000 that landed on my doormat this month - a bill which, thanks to recent increases in student loan interest rates, I'm unlikely to make much of a dent in this year. And while I'm old enough to have escaped them, the introduction of top-up fees for English and Welsh students back in 2006 was a political hot potato for many reasons... Not least because Labour's 2001 election manifesto pledged that they wouldn't be brought in. A `Progressive' System That said, the current higher education funding system in England is still considered to be one of the most progressive in the world. Students are able to pay for the cost of their degrees after graduation, and there is financial aid available so that, in theory, anyone can go to university - regardless of their family's income. However, giving students the hefty loans they need for tuition and living costs means the average graduate leaves university with debts of £12,363. Moreover, a new report from the Higher Education Policy Institute (HEPI) suggests we could be on the cusp of a new - and serious - row over higher education funding. The 2009 Review A review of university funding for England and Wales is due to be commissioned in 2009. Unsurprisingly, some likely opponents have already started squaring up to fight. Lord Dearing, the politician who recommended the introduction of tuition fees in 1997, suggested last summer that the cap of £3,000 on tuition fees should be lifted at the review. Like many others, he argues English universities need more revenue if they are to stay competitive and retain their reputation for excellence. And while the NUS state their opposition to the introduction of `market forces' into higher education, HEPI confirm the 2006 top-up fees have not gone far enough to fill the hole in HE funding. The report also makes clear that the current system of student support is already costing the taxpayer enough. At the moment, student loans and grants cost the government around £1.4bn per year, and according to HEPI it is unlikely that any government would be prepared to increase this. Extra money for universities will therefore need to come from somewhere else. Four Options HEPI outline four possible `options' from which a government might choose to help universities financially. While all have their pros and cons, not one of them rules out raising the cap on tuition fees. Rather, all four accept that the fee `cap' will probably be raised to either £5,000 or £7,000 per year. Differences between the four options relate to how students might pay the extra tuition fees charged - particularly those from lower-income families. Ideas range from increasing the amount of government-subsidised loan available, to asking that students take out `top-up' loans for expensive courses at real rates of interest. There's only one option that won't involve all students paying significantly more for their degree courses. It would require universities to waive fees above a certain level for students whose parents can't afford to pay. But let's face it - with the universities clamouring for more cash, they're unlikely to fall in love with that one. Overall, the HEPI document makes for pretty depressing reading. A £7,000 fee cap could mean a £12,000 increase in the cost of a three-year degree course - so overnight, the cost of becoming a graduate could go up by 133%! To me, it seems clear that funding a degree in future could leave many young people with huge, mortgage-style debts. Conversely, it's unclear how students - particularly those whose parents cannot help them financially - will cope with this. What Can You Do? If you or a member of your family is planning to go to university, there are things you can do now to help prepare for it. Depending on how soon the course is due to start, it's crucial to find out what government support you or your child is entitled to, and how you can apply for it. Directgov offer information and advice about many aspects of higher education, so this is a good place to start. Also, it's worth checking out our Student Finances Discussion Board. Here, fellow Fools share their wisdom on everything from cutting the cost of textbooks to finding bargain booze (obviously a key student concern!). If you can, it's a great idea to save up as much money as possible in advance of going (or sending someone) to university. Saving regularly in a Cash ISA is a great way to put pounds aside without the taxman interfering. And if you're pregnant or have recently had a baby, using his or her Child Trust Fund to build up a higher education hoard would be a good move. It might seem premature while you're still changing nappies, but in my opinion it's never too early to start collecting cash for university costs. It's also vital that prospective university students learn to budget. Knowing how to live within your means is a skill I think we should all acquire before setting foot in a hall of residence. Whatever changes are made to HE funding in 2009, they're likely to be expensive - and the one thing students really won't be able to afford is economic `ignorance'. Starting to save and learning some basic finance lessons now are probably the only real ways to keep down the cost of that cap and gown in years to come. More: A Monster Guide To Student Finances | Money Talk: Financial Survival Tips For Students