Leading Article: Don't leave the best and brightest guessing

Those first year undergraduates will not be chuffed. Imagine it. Tanned and skinny after basket weaving in Africa, or learning Spanish in Cuba, they return bearing photos and trendy ethnic objects, eager to show off to the "boring squares" who came up straight from school. Yet to their horror, since they deferred their entry, the universities have had a change of heart. A pounds 300 bill for top-up fees awaits them when they arrive.

It's bound to happen sooner or later if we go on like this. Tony Higgins, chief executive of the University and Colleges Admissions Service, warns that it might happen in 1997; so the travelling teenagers concerned are the ones awaiting their A-levels this week. But to drift into a haphazard system of top-up fees by default would be the worst possible response to the financial problems that universities and students face.

From the universities' point of view, it is understandable. Their funds per student have been squeezed year by year as they meet the government demands to take in huge numbers of extra students. The rise in teenagers staying on for higher education has been phenomenal; and is one of the few great and enduring educational achievements of this government. One in three teenagers now goes to university. However, the Government's failure adequately to finance the expansion has created a crisis.

Universities such as Oxford, Cambridge and the LSE, who rely on expensive intensive tuition methods, or who hope to compete for top international academics, are struggling to find the money they need to keep the standard of research and education as high as they need. They have tried selling chairs in everything from genetics to political philosophy, seeking sponsorship for research, selling academic advice, and scrounging donations from former students. The latest wheeze, touted often over the last few years, is to charge new undergraduates as well.

But make no mistake: allowing universities unilaterally to start charging fees, because we failed to come up with something better, would be a terrible mistake. Middle-class parents will pay the money up front to make sure their children still get a good education. But those who cannot afford it will turn down their premier place in favour of a cheaper institution, and possibly less challenging course, somewhere else.

Whatever happens, we must not return to a situation where elite education is distributed according to families' ability to pay, rather than merit. Nothing is more likely to restore the worst features of the British class system. Everyone knows a great education from an elite university can win you a nice job, high earnings and the prospect of continuing power and privilege. Poor but brilliant young people should not be denied their chance to compete for such prizes by an inhibiting charge.

Nor will things look much more promising if these prospective students have to borrow on the private market. Should they stumble finding work when they leave, interest rates could rocket upwards, leaving them completely in hock to the banks. Cautious but top-class prospective students could still miss out on the best education in their fear of incurring heavy debts.

What are the alternatives? One would be for the expensive universities to concede their elite status, and muck in with everyone else. All that money invested in the education of a few clever clogs could be more fairly distributed across everyone else instead. But there has already been too much levelling down in the British education system already, before the bright people get to university: it would be a disaster to inflict that culture on universities, too. Moreover, it would be economic idiocy not to continue taking advantage of the excellence in our best universities. Higher taxes are not an option in the present climate. But if we are to protect the best, we need to pay for the best.

David Blunkett has suggested stopping grants and replacing them with graduate loans instead. The savings on student maintenance could presumably be channelled back into university funding. So long as repayment schedules are linked to earnings and ability to pay, it should not prove an obstacle to many students. After all, why shouldn't graduates bear some of the burden of their education, so long as it doesn't deter them from taking the degree. The chances are they will earn considerably more for the rest of their lives, thanks to the money the state has invested in them. Australia, the United States and countless other countries operate student loan schemes, where graduates gradually pay off their debts throughout their lives.

A fully fledged graduate tax would be even fairer. Suppose graduates had to pay, say, an extra 1 per cent a year for 15 years, rather than repaying regular amounts until their debts were paid off. Then the City broker would pay more in total than the teacher. The amount graduates contributed would reflect the personal financial reward they received across their lifetime from their degree. But it would not take away the incentive to get that degree in the first place.

Alternatively, the government could allow universities to charge different top-up fees and help students to borrow to cover them as well as maintenance. Why not let the Oxford graduate borrow more than the Strathclyde graduate, in order to pay for that more expensive Oxbridge education? The average Oxbridge graduate earns more later in life.

Whatever the options, whatever the alternatives, we could do with a little more guidance from our politicians. David Blunkett has set out his stall. The Government, on the other hand, has ducked behind Sir Ron Dearing, who is due to report on the funding of universities well after the next election. Universities would be completely wrong to institute top-up fees unilaterally before we have all seen and discussed Sir Ron's report.

We cannot all bury our heads in sand waiting for the venerable Sir Ron. Politicians should be leading the public discussion over the direction of higher education, not trailing around after increasingly desperate vice-chancellors. The future of this year's A-level students is already at stake.