The Government’s decision to allow universities to charge pound;9,000 tuition fees has shaken the higher education (HE) sector to its core.

Before MPs rubber-stamped the move in December, National Union of Students president Aaron Porter warned it would create a generation of students who would “start their adult life already owing as much as pound;40,000, struggling to get onto the housing ladder, possibly working into their 70s, with little prospect of a state pension”.

Fears among students and parents have continued to grow, with a steady stream of universities, from Oxford to Essex, announcing that they intend to charge the maximum fee allowed.

Recent increases in undergraduate numbers suggest that, until now, the prospect of taking on student debt has not deterred young people from going to university, but experts have warned that the sheer scale of next year’s fee hike will finally force young people to look for less expensive ways of getting a foothold on the career ladder.

“Students don’t seem to be debt-averse, but doubling or trebling their fees? It’s going to put question marks in the minds of many students,” says Nick Davy, HE policy manager at the Association of Colleges (AoC).

But while the Government is keen to see colleges offering cheaper, more vocational HE qualifications, such as foundation degrees, to attract young people scared off by the cost of university, many FE institutions are unsure whether the current funding scenario offers them a golden opportunity or is simply a glimmering mirage.

“All the messages from ministers and officials from the Department for Business, Innovation and Skills are that the Government sees HE in FE as an area that they want to expand,” Mr Davy says. “We are supportive of that, but we still have some concerns, some tensions and issues that need to be addressed.”

The main issue for the 250 English colleges that offer HE courses is that the system is still largely controlled by universities.

This leaves them at the mercy of their partner institutions, which have the power to decide what HE qualifications they can teach and how many places they can offer.

With stiffer competition on the way as universities compete for reduced student numbers in 2012, AoC members are warning that some partner universities are claiming back their student numbers for themselves.

Mr Davy says: “There are strains at the moment. We have evidence that some of the universities are pulling numbers back, which is causing a problem for colleges.

“Around half of colleges are only funded indirectly. This is bureaucracy - and it is expenditure that could be spent on students’ experience. Colleges would prefer to be funded directly.

“From 2012, it will be more of a market and it is our competitors that will be controlling the courses that we can develop. A lot of colleges have good relationships with partner universities, but they have the power to limit or withdraw numbers.”

Nick Linford, FE consultant and author of The Hands-on Guide to Post-16 Funding, shares the AoC’s concerns.

“Given that there is not enough funding to satisfy demand and the Government is imposing fines for over-recruitment, I sympathise with university vice-chancellors who are ending sub-contracting agreements and freezing out FE,” he says.

“Colleges have demand for foundation degrees and other vocational HE courses but, by being forced to sub-contract, their income is top-sliced and now many are being held to ransom by the universities.

“If colleges were funded directly for all HE courses, they would have more money to spend on high quality vocational delivery, and the confidence to invest for the longer term in facilities. Direct funding should come with HE awarding powers, allowing HE in FE to flourish for the benefit of UK plc.”

One way in which colleges are able to provide an economic boon to their communities is by responding to local employers’ demands and producing tailor-made qualifications that reflect the skills needed in the marketplace.

But the process of getting approval from a partner university takes too long, Mr Davy believes.

“We very much sell ourselves as working in high-level vocational skills, but it takes 18 months plus to get a degree validated. Colleges are nimble and close to local employers; we need to develop more quickly than that. This would allow us to respond to the market.”

While Mr Davy predicts most colleges will set HE fees “around the pound;6,000 sort of mark”, Ealing, Hammersmith amp; West London College has decided to keep its 2012 fees at less than pound;3,000 per year.

“We are keeping fee levels constant to reflect the market and affordability - young people can’t afford loans,” a spokeswoman says.

“There are opportunities for FE colleges - we can offer degrees close to home, at affordable rates, excellent links with employers and progression routes onto degrees and MBAs.”

In contrast, Newcastle College has decided to play the waiting game and see what universities charge before setting its own fee levels.

There are currently more than 50,000 students taking foundation degrees across the Newcastle College Group, which works in partnership with Leeds Metropolitan, Newcastle and Kingston universities.

John Rowe, the group’s director of HE, insists the qualifications it offers are “work responsive”, making them “fundamentally different” from university degrees,

“It’s a legacy of the volume of work we have always engaged with, in terms of training for employment and apprenticeships,” he says. “Foundation degrees prepare you for the world of work, and would be skills assessed, as well as including academic study.”

The college cannot afford to charge fees of less than pound;4,000, he insists, and needs to balance the conflicting risks of appearing too expensive or too cheap.

“It looks very much like universities will be charging pound;6,000 or more,” he says. “We have to look at a competitive fee, so students will have confidence in the value for money they get. But it has to be an attractive offer to the student, it must not appear as if it is cheap provision. It has to represent the quality we provide.”

Newcastle has also taken the unusual step of applying for awarding powers itself, giving it full control over developing its own qualifications.

Mr Rowe said: “The pressing reason for that is to give us flexibility and responsiveness to allow us to develop qualifications more speedily. Leeds Metropolitan University (the college’s main partner) has been very supportive, but its system takes longer than our employers would require. If we obtained awarding powers, we would be better placed to develop qualifications and training more speedily.”

And while the HE sector is plagued with uncertainty, Mr Rowe insists the potential for FE institutions to capitalise is strong.

“In some respects, situations like this inadvertently cause us to look at what we are doing and how we are doing it,” he says.

“We will actually be able to provide a much better journey for the students and will invigorate teaching and learning. We can offer more opportunities to more people.

“In spite of the economic downturn, I believe the austerity measures offer us significant opportunities.”

Whether universities will allow colleges to capitalise on this opportunity is another question entirely.

PARTNER POWER

`This is a great opportunity’

Cornwall College has been running HE qualifications since 1979 and offers 60 different courses to more than 1,500 full-time undergraduates.

Principal David Linnell prides himself on the strong relationship he has cultivated with partner institution Plymouth University, which has resulted in the college retaining its current student numbers for 2012, in spite of the uncertain fiscal climate.

The college is looking to increase its tuition fees to pound;6,000, pending approval by its governing board, and has a pragmatic attitude to the difficult times ahead.

“I believe 2012 will create all sorts of challenges and it’s difficult to believe there won’t be a drop in HE numbers,” Mr Linnell says. “It’s basic economics - the price goes up, numbers go down.

“In our region, Exeter University is looking to charge fees of pound;9,000; at University College Falmouth I think it will be pound;8,000; Plymouth should be in the region of pound;8,000.

“We are absolutely certain we can provide high-quality teaching with fees of pound;6,000. The college has fewer overheads than universities because teachers are contracted to teach more hours per week than (lecturers) at a university, which keeps our costs down.”

And while he would prefer the college to be funded directly - “it is autonomy, which we do deserve” - and to be able to be more “fleet of foot” in creating new qualifications, he praises the “good relationship” between the college and Plymouth.

“We have had to work hard on that relationship. That relationship has occupied much more of the time of my deputy and myself this year than it has done in previous years,” he says.

“But I think this is a great opportunity for FE and a great opportunity for our communities. We have campuses right in the middle of towns, people don’t have to travel to universities to study, they don’t have to drive or use public transport. It’s just down the road.

“At this point, we are happy with our relationship with the HE institution. We are getting mixed messages from central Government about whether they favour (colleges working independently), or prefer some sort of partnership with a high quality university.”