Universities give discounts on tuition fees paid up front
By Julie Henry, Education Correspondent
Last Updated: 5:25PM BST 02/06/2012
Universities are offering discounts of up to five per cent to students who pay their tuition fees up front.
It means an individual can save more than £1,000 over the length of a course, if they can afford to pay at the outset rather than take out a Government-subsided loan.
While the drive to collect fees early will help to fill university coffers, the discounts have been criticised by some academics for benefiting only better-off families.
Most undergraduates starting university this year will take out a state-backed loan to pay for tuition costs of up to £9,000 a year.
In these cases, the money is paid to universities by the Treasury in instalments, while the students pay off their debts gradually after they complete their courses.
However, all universities have a mechanism by which students are allowed to pay their fees directly to the institution instead of taking out a loan. Many allow payment in instalments by direct debit.
Most do not publicise the schemes in case it gives the impression that undergraduates must settle the bill before they start their degree.
Now, a series of universities have introduced discounts of between 2 and 5 per cent for families who pay before the start of term. They include Portsmouth, Gloucestershire, Swansea and Southampton Solent.
Portsmouth University gives a 2 per cent discount if the yearly bill is settled, as does Swansea. Gloucestershire gives a £200 discount on its standard fee of £8,250 a year.
At Southampton Solent, which is charging £7,800 a year, 5 per cent will be taken off the bill, amounting to savings of £1,170 on a three-year degree.
Sally Hunt, the general secretary of the University and Colleges Union, said: “These discounts are likely to mean students leaning once again on the bank of mum and dad, and will inevitably benefit those with the deepest pockets. What a mess the Government has created for both students and universities.”
The task force on student finance, headed by Martin Lewis, the financial expert, and made up representatives from Universities UK and the National Union of Students, cautioned against paying fees up front.
It said parents could be wasting their money if their child becomes a low paid artist or full-time parent and never has a job which pays more than £21,000 a year – the level at which loan repayments are triggered.
“Unless they are guaranteed a lifetime of high pay, it makes financial sense to put the cash in a high paying ISA or savings account during studies and take the loan out,” the task force said.
“Afterwards if it looks like the loan will have to be repaid, clear the debt then. Or, alternatively, it may simply be better used towards lowering a mortgage or car loan, which are worse and costlier forms of debt.”
The Government recently dropped plans to levy a charge on students who have taken out loans and want to repay early.
Figures published this week show university applications have fallen by 50,000 this year as growing numbers of students are put off by the rise in tuition fees.
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