University students should pay higher interest rates on their government-backed support loans and expect higher tuition fees in future in order to plug a gap in higher education funding, employers said on Monday.
The Confederation of British Industry (CBI) said the government should save 1.4 billion pounds a year by removing its interest rate subsidy from student loans and reinvest the money in university teaching and research.
Maintenance grants should be restricted to the poorest students while a rise in the 3,200-pound-a-year cap on tuition fees looked "inevitable."
It noted that universities believed an increase to 5,000 pounds a year would not lead to a decline in student demand while raising an extra 1.25 billion pounds in annual income.
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