UK university tuition fees could be cut as early as next year, according to press reports

The change could be announced as part of the Budget in November and introduced as early as next year, according to the report. The government is also considering cutting the current 6.1% interest rate on student loans and raising the salary threshold at which repayments start to £25,000, the paper said (registration required).

Chancellor Philip Hammond is currently reviewing student finances amid concerns that universities are not offering value for money by charging the maximum possible fee for every course, including those that are less expensive to run and those whose graduates are not anticipated to earn as much.

The new tuition fee structure would include some form of fee level variation linked to graduate earnings and employability, while the government planned to 'top up' fees for students enrolled on more expensive courses such as science and technology with a payment of up to £1,500 per student to the university, according to the report.

The Sunday Times said that "several universities" were operating at a substantial budget surplus from tuition fee income.

Last week, a Labour party motion demanding that the government reverse plans to increase tuition fees to £9,250 for academic year 2017/18 was approved by the House of Commons following a decision by the Conservatives not to vote against it. The government has said that it is not bound by the motion.

Universities, which are already planning for loss of research funding and falling numbers of students from the EU as a result of Brexit, have already incorporated inflation-linked fee increases into their medium-to-long-term financial planning, according to Gayle Ditchburn of Pinsent Masons, the law firm behind Out-Law.com.

"This would be a substantial real terms cut in university funding which would seriously affect many institutions, particularly those which are already in a weak financial position," she said. "There are implications for all subjects of study: institutions routinely cross-subsidise between subjects, and there are no overall fee rises for STEM courses to counter the loss of this ability if non-STEM course fees are lowered."

"The speedy way in which the Sunday Times is reporting this change will be delivered has huge implications for short and long-term financial planning that has been predicated on fees of £9,2500 and above, which would cause issues for everything from planned campus improvements, to staff recruitment, to bond repayment schedules. And, lest we forget, institutions have always been encouraged to run a surplus as part of HEFCE's regular financial health checks. To castigate them for following good governance practice seems harsh," she said.

The new fee structure trailed in the Sunday Times report would cap fees, along with the maximum permitted fee loan, at £7,500 for all courses. The maximum permitted fee loan could be lower than this for courses whose graduates are not expected to command higher earnings, based on graduate outcomes and Longitudinal Earning Outcomes (LEO) data.

The government would provide a top-up payment to institutions of up to £1,500 per student enrolled on high-cost courses, such as those in science, technology, engineering and mathematics (STEM) fields. These payments would operate in the same way as the top-ups currently made by HEFCE for students enrolled on clinical and pre-clinical courses.

The government was forced to delay plans to link tuition fee increases and teaching quality as part of negotiations to pass the Higher Education and Research Act ahead of the early general election in June. It currently intends to revisit this after the 2020 conclusion of an independent review of the new Teaching Excellence Framework (TEF), against which universities will be assessed based on different aspects of teaching.