With the new tuition fees system threatening to become more expensive for the government than its predecessor (owing to a non-repayment rate of 45 per cent), the question of how to sustainably fund universities has risen again. There are three ways in which ministers could attempt to plug the blackhole (which stands at over £1.5bn a year): a reduction in the earnings threshold for graduate repayment (currently £21,000), an increase in state subsidy (funded by higher taxes or greater cuts elsewhere), or a rise in tuition fees (provided that this does not similarly result in a higher bill).
When challenged to rule out the latter option in an interview with Channel 4 News on Saturday, universities minister David Willetts notably refused to do so, merely stating that "we will have to see how the income of universities performs. But we have a structure for £9,000 and £21,000 and that is working". Pressed again by presenter Cathy Newman as he was leaving the studio on whether another increase was on the way, he revealingly replied: "could be".
One option known to be under discussion in Conservative circles is the removal of the cap on tuition fees all together (the policy recommended by the 2010 Browne Review), with universities free to charge as much as they want in a pure market system. In order to ensure that the new model is affordable, institutions could be required to provide loans to students to cover the share of the fee above £9,000. One figure commonly proposed by vice-chancellors is £16,000 (the annual cost of educating an undergraduate).
With the Tories likely to go into the general election refusing to rule out another increase in tuition fees (if not ruling one in), the question is raised of where the Lib Dems, the party more associated with this policy area than any other, will stand. After much internal angst, the party endorsed the current system at its autumn conference last year while retaining a commitment to review the system after the general election and abolish fees "if possible or necessary". The latter ambition is rejected by ministers, who rightly warn that a pledge of this kind would not be regarded as credible by voters. But while the current limit of £9,000 has been accepted, and dreams of abolition have been abandoned, this leaves unanswered the question of whether the party will promise to oppose a new rise in fees. Nick Clegg has previously reassured students, "Don't worry, we're not going to raise tuition fees to £16,000", and plenty in the party will want this evolve into a formal election pledge.
But recent history means Lib Dem ministers will be understandably wary of such a commitment. It was the party's promise in 2010 to vote against any increase in fees that led to its post-election humiliation when fees were tripled by the coalition; it cannot risk a repeat. Yet any refusal to oppose an increase will lead to accusations from Labour that the party has pre-emptively accepted Conservative plans for a rise. With Ed Miliband expected to propose a reduction in fees to £6,000 (not least on the grounds that it could save money), the Lib Dems risk being further disadvantaged in the battle for the student vote (on which the survival of several of their MPs rests). How to resolve this dilemma is a question Clegg will soon need to answer.