By Mike Baker BBC education correspondent

The way a country treats its university students is a pretty good guide to its collective view of society.

In the USA, there is opportunity for most to go to university, but students are expected to pay their own way, either through work or private loans.

20 years ago British universities were reserved for the academic elite

Education is seen as a personal investment. The state, or charities, help only those who cannot afford to pay.

In Scandinavia higher education is either free or very cheap for all. Both the poor and the affluent are subsidised. The prevailing view is that university is an investment by, and for, society.

What about Britain? Twenty years ago British universities were reserved for the academic elite.

Because university was regarded as the finishing school for the future leaders of society, students were heavily subsidised with both grants to cover living costs and free tuition.

Different times

Now, though, Britain is at a cross-roads. In just two decades we have gone from one person in eight going to university to more than one in three.

The target is to raise that to one in two. In short, we have shifted from an elite to a mass system.

The taxpayer is jibbing at the cost. Or, more accurately, governments think taxpayers will no longer foot the bill of an expanding university system.

The crunch is about to come. Successive governments have already forced us to take some of the nasty-tasting medicine.

Grants have gone, replaced by repayable loans. Means-tested tuition fees are paid by around a half of all students.

Subsidising the rich?

But this only a start. As the Commons Education Committee pointed out in their report, "Post-16 Student Support", we continue to subsidise many students who could afford to pay.

Students have long campaigned over debt

This is undeniable since fees cover only around a quarter of the average cost of university tuition and a zero "real terms" rate of interest is charged on loans.

Yet, the MPs argue, while we subsidise some who could afford to pay more towards an education which will probably boost their earning powers, the system continues to deter many from poorer homes from taking on the large debts associated with getting a university education.

The time has come either to take the full dose of medicine or to accept the prescription we had started on was the wrong remedy altogether.

Review delayed

The long over-due government review of student finance has been delayed again. We are now told to expect it in late October when it might form part of a wider government White Paper on the future of higher education.

The review has taken it as given that university expansion is desirable. So the argument is all about how to pay for it.

At bottom it comes down to the question: "who should pay?" Should the taxpayer be asked to dig a little more deeply or should the burden shift further towards the student and their family?

The Commons Select Committee has hammered its colours to the mast.

The MPs say the government should be looking at charging students higher tuition fees, including the possibility of charging 'top-up fees' for the more popular courses or universities.

Interest on loans

The committee goes further. It has opened the door to charging variable rates of interest on student loans.

Thus a graduate who goes into a high-flying career could expect to pay a much higher rate of interest on his loan than a fellow student who takes a lower paid job in the public sector.

The committee balances this tough medicine with proposals for a limited form of student grant, covering at least the first year at university, and a recommendation that the salary threshold at which graduates have to start repaying their loans be raised from the current �10,000.

Robin Hood approach

These are "Robin Hood" proposals: they amount to taking from the middle-classes to give to the poor.

As such they are a re-distributive approach. They should appeal to Gordon Brown. But the consequences might frighten Tony Blair.

Will Tony Blair buy the Robin Hood approach?

This explains why the review has been so protracted. To over-simplify the two points of view, the re-distributive approach clashes with the pragmatic which is concerned about alienating Labour's new middle-class support.

Many of those who turned to Labour in 1997 - and who stayed with them slightly reluctantly in 2001 - might find the idea of their children paying higher tuition fees and higher rates of interest on their student loans too much to bear.

So the government could find itself caught between two camps: between those who believe education is a public benefit and should remain free to all and, on the other side, those who are unhappy about charging affluent students and their families more in order to cover the cost of subsidies to the less well-off.

It is no wonder the government review - launched with great fanfare by Tony Blair at the Labour Party Conference last October - has been repeatedly delayed.

At its heart are fundamental questions about what sort of society we are and what sort of a political party Labour wants to be.