University students should pay for their own education

The Prime Minster was so surprised by the strength of middle-class outrage at the partial withdrawal of the perk of free university education that he did what he always does in a tight spot. He ordered a review. That led to expectations, stoked by Estelle Morris, the Secretary of State for Education, that grants might be restored for students from poor families – only for them to be dashed by the Treasury.

Into the confusion that now reigns steps the Education Select Committee, suggesting higher interest rates on student loans and higher tuition fees, with the possibility of even higher fees charged by the best universities. This is precisely the opposite of what the opponents of the present system wanted.

Broadly, however, the committee is right, and the hankerers for a better yesterday, who include student union leaders (such as Will Straw, the Foreign Secretary's son), the Association of University Teachers and the Liberal Democrats, are wrong.

The old system was an inequitable subsidy by the taxpayer of a minority with the highest earning potential. The real defect of Labour's scheme is its departure from the principle that beneficiaries of university education should bear the cost – if they go on to earn higher than average incomes.

The main fault of the present scheme is that it means-tests students according to their parents' income. That is unjust. The other departure from the principle was to set the threshold at which student loans should start to be repaid at a mere £10,000 a year.

Putting these defects right would be expensive in the short term, which is why the Treasury would not sign Ms Morris's cheque. But Gordon Brown should have the courage of the committee's convictions in his spending plans on Monday. If he is to end the middle-class subsidy of child benefit for 16- to 18-year-olds in full-time education, he should do the same for the 18-21 age group. University students should bear the full cost of their higher education through a graduate tax payable on above-average earnings.