A paper prepared by Sir Richard Sykes for consideration by the ruling council of Imperial College in London sets out proposals to charge students higher tuition fees to "reflect the true economic costs of undergraduate education".

Sir Richard, Imperial's rector, was appointed this week to the board of the Higher Education Funding Council for England (Hefce).

The paper says the results of the "transparency review" of higher education had shown that it cost about �10,500 a year to teach a student in laboratory-based subjects. Imperial is a science, technology and medicine centre.

The college's current funding, from Hefce's teaching grant and from fees, was about �7,700.

"Hence the college loses around �2.8K p.a. for each student that it teaches," the paper says.

Political sensitivity

"It seems likely that the Higher Education White Paper, which is due to be published in November, will state that the government is considering removing the limitation on the fees that can be charged".

It adds: "The political implications of such a statement are such that it seems that the government would probably only wish to do this if there is public support from a number of higher education institutions."

Sir Richard's assumption is that any change would happen after the next election, so not before 2006.

He argues that it would work only if the present Hefce grant for teaching were to continue so the universities could use that to fund bursaries for students unable to pay the fees.

He says thought would be needed about what level of fee to charge.

One principle should be that it would be the same for all subjects, because a cost-based system would mean higher fees for science subjects which might deter students from applying for such courses.

Fee models

An annex to the paper sets out various options, showing the amount of income that might be generated by different levels of tuition fee.

"If, for example, the fee were set at �10,500 ... then �16.9m would be generated if 30% of students paid full fees and 70% received bursaries."

He says the main clear risk is that higher fees would be unacceptable and have "an adverse impact on student demand".

At present, 40% of Imperial's undergraduates come from independent schools "whose parents are used to paying fees to educate their children" - but would need time to plan trust funds to meet the higher costs.

Imperial's director of strategy development and communications, Chris Towler, said people would continue to be offered a place at Imperial on the basis of their ability.

Once they had accepted a place an assessment would be made of their ability to pay the full rate of fees - with bursaries for "those without the means to come here".