Reforms will hit middle-ranking universities

A dramatic shift in higher-education provision with middle-ranking universities struggling to survive is predicted today by the head of one of the country's biggest exam boards.

More students will be encouraged instead to stay at home and earn while they learn rather than go away for a three-year university course.

A growing number of school leavers will sign up for further-education colleges offering degree courses because they charge less, said Mark Dawe, chief executive of the Oxford, Cambridge and Royal Society of Arts exam board. His comments were echoed by university lecturers' leaders last night.

Sally Hunt, general secretary of the University and College Union, said: "There is a real danger of many institutions charging fees just to make up the shortfall from the slashing of their teaching grants."

Many further education colleges are fixing their fees at less than £6,000 a year – the figure beyond which providers need agreement with the higher-education access watchdog, the Office for Fair Access, to charge more. Students will do foundation degrees with the colleges before finishing their degrees with better-known universities. In addition, the Open University, which is planning to charge £5,000 for courses, will pick up student numbers once the rest of the sector is able to charge up to £9,000 a year.

Mr Dawe said universities in the Russell Group – which represents 20 of the country's most prestigious universities – would have no difficulty in keeping up student numbers.

"There will be competition amongst them to pick up students with AAB passes [at A-level]," he said. "It's a number of the middle-ranking new universities that must be worrying whether they're going to get their student numbers."

Some university vice-chancellors believe they may have to reduce their fees in 2013 if they fail to recruit enough students next year charging the maximum fee. Seven universities are already on a list of institutions thought to be "at high risk" prepared by the Higher Education Funding Council for England. One estimate suggests this could rise to 23 by the end of the first year of the new fees structure.

These are understood to include London Metropolitan University, which has been forced to pay back £32m to the Government after overclaiming for students, and Thames Valley University, now known as the University of West London.

A later report warns of the risk to funding if student numbers drop next year – 56 per cent of universities are expecting a reduction. It also says university-budget surpluses are set to fall in 2012 by nearly £400m to £215m, adding that this is mainly accounted for by just a few well-off institutions.

Mr Dawe also disclosed that his board was recommending incentives to spur academics into becoming more involved with setting exam papers. The Education Secretary, Michael Gove, would like to see universities more involved in the setting of questions – so that the exam stretches candidates more and gives them the expertise to embark upon a university course.

One way this could be done is by rating dons on their involvement with setting exams. This would give universities that boast excellent teaching standards extra grants.