It is like a household which could once afford to run one Rolls-Royce but which is now struggling to keep 10 Ford Escorts on the road. When very few went to university the taxpayer could afford to bear the brunt of the cost of providing free tuition and help with students’ living costs. For undergraduates, the British system was - and still is - one of the most generous in the world. In 1993, 45 per cent of government’s total higher education spending went to students in the form of subsidies for living or tuition costs. By 1998 this had fallen to 35 per cent. However, this still leaves British students far better supported than those in most other countries.

The UK, along with Canada and New Zealand, devotes more than a third of higher education spending to student support. By contrast, Spain, France, Portugal and Switzerland all devote less than 10 per cent to supporting students (OECD Education At A Glance, 2001).

The United States, which has a mass higher education system, provides limited publicly-subsidised grants and loans to students but differs from the UK in that there is extensive use of private student loans. Students expect to work their way through college.

This is made easier by the more flexible credits system which allows students to determine how long they will spend getting their degree. But poor students often spend more time working than studying and can spend six to eight years as undergraduates.

Tuition fees are very high especially at the elite private universities. American students run up debts well in excess of the UK average of around pound;10,000. However, starting salaries for graduates arerelatively generous.

As well as deciding how much public subsidy to provide, governments around the world must also decide how they want to distribute it. Most countries opt for a combination of two routes: loans or grants.

The advantage of loans is that they stretch the money more widely, providing help to more students than the more expensive non-repayable grants. However, some countries prefer grants, arguing they are more effective in targeting help at low-income students.

Australia has been through a long spell of university expansion. Around one in three school-leavers enters university. In 1989, to enormous student protest, tuition charges were brought in. Students pay around a quarter of the full cost of their courses and, unlike in England, the fee is higher for more expensive courses such as law and medicine. It can either be paid up front (with a 25 per cent discount) or after graduation. Payment becomes compulsory once graduates reach the average annual income.

Australia still pays student grants towards living costs under the ‘Austudy’ scheme. Grants are means-tested and around half of students receive some help.

In Europe, the tradition of free education is much stronger. For the most part, no fees are charged in the Scandinavian countries, Germany, Austria and Portugal. In France and the Netherlands, students pay a relatively low registration fee but in Canada, Spain and New Zealand fees range from 10 to 25 per cent of the cost of study.

Since devolution, Scotland has gone its own way on tuition fees. Despite popular perception, though, it has not abolished fees. However, instead of paying while they are at university, students pay a pound;2,000 contribution to university costs after graduation. In effect, Scotland has shifted from up-front to ‘back-end’ fees.

In Japan, all students pay fees of around pound;3,000 a year at public universities. At private universities they are higher still. Students must also meet their living costs. Loans are available from a government-supported scholarship fund. They are interest-free while students are studying but begin to bear interest after graduation.

The US and Japanese models only work where the public accept that student debt is a long-term investment rewarded by higher salaries. In Britain the problem is persuading all social groups that this is the case.