Yesterday, the Public Accounts Committee warned the government about a spending black hole, caused by high fees at English universities. They are concerned that if universities charge too high, the government will be unable to back up the bulk of student loans. The Ministry of Education (or the Treasury) will have to cover a projected student debt of £70bn by the next 4 years (now at £24bn). And today, Oxford lectures voted for a motion of no confidence to David Willetts, not necessarily because they disagree with high fees, but because the guy seems to not know what he's doing.
The coalition gevernment told the academic community they won't fund teaching anymore and then "liberated" the student market: you can charge up to £9000. But they made sure to say that they think fees should be £6000 instead. The poor things, they did really expect that universities would be willing to charge less, when they can charge more. Honestly, they thought the average fees would be £7500 (you guessed it: halfway between the highest and the highestest cap), but found out it is £8,765.
Oh dear, oh dear.
It is a bit like the publicly-funded railway network: after the privatisation of the sector, no-one was willing to take on the maintenance cost. But after a few derailed trains the government had to start subsidising a railway network that is used by private companies to profit - companies who are unwilling to pay the maintenance cost. Only, this time it is a black hole: the less the funding you provide, the more the student debt you have to back up, essentially by transferring it to the government's accounts - ouch!
I don't really know what's the worst case scenario here. It's another puzzle for the big society. The bigger your society the better. But the big society is a free society and can decide to become smaller, e.g. by reducing student numbers, and ha! the big society becomes a small society. But big enough to study at their own privatised University of London; just for £18,000 a year.
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