Colleges' low-cost courses and greater competition could help them capture a larger part of degree-level provision as Lord Browne's review of HE funding is implemented, the FE sector has predicted.
The cost of a typical degree-level course at college is nearly pound;2,000 less than at university, raising the possibility that with students meeting almost the entire cost of many courses with fees, college will seem a more attractive option.
They currently charge an average of pound;2,300 in fees at degree level, compared to pound;3,290 at almost every English university. They also receive about pound;1,000 less than the typical pound;4,000 grant from the Higher Education Funding Council for England, as accrediting universities usually top-slice about a third of the funding.
The removal of recruitment caps for institutions is also likely to allow greater college HE expansion if they can attract students. Already, colleges such as Newcastle have outstripped some universities in the amount of degree-level work they carry out.
Lord Browne's removal of fee caps is expected to mean university fees rise to around pound;6,000 to pound;7,000 a year to compensate for severely reduced public funds, with a higher repayment threshold and a longer repayment period, which would see average earners pay back only about pound;30 a month.
Julian Gravatt, assistant chief executive at the Association of Colleges, said previous attempts to compete on price had not always been successful, however.
"One college advertised saying something like `a quality degree at a low price'," he said. "It didn't work. But students will tailor what they do to the resources available. If fees go up, then prices will be a factor in their decision. There's going to be a very strong encouragement to do more part-time work."
Part-time students on courses that are as short as a third of a full-time course will be able to claim subsidised loan support, helping many HE in FE students.
Alan Tuckett, chief executive of adult education body Niace, said: "The vast majority of part-time students are in full-time jobs and Browne recognises that part-time acquisition of higher-level skills benefits the economy through up-skilling the current workforce.
"But Browne risks shifting costs for workers' study from employers to learners. We were unconvinced that the review will lead to increased employer investment."
Lord Browne said employers would contribute through higher graduate salaries. Mr Tuckett said he had also failed to address the need of many people to reskill later in life with different qualifications at the same level of study, which will still not be supported.
Business secretary Vince Cable is believed to have had to resist calls from backbenchers to divert funding from adult skills to prevent high fees at universities.
A source said the debate revived an earlier, pre-election discussion within the party over whether money from Train to Gain should be taken from FE and used to prop up the universities budget.
The proposals may make it more difficult for Mr Cable to introduce an equivalent loans system for level 3 adult skills, however. Previously, the Treasury has insisted that the thresholds for repayment are uniform, but the pound;21,000 figure may be too high to accommodate lower level skills.