Graduates could pay higher interest rates on their student loans and pay them back earlier to help avert a funding crisis, a report says.

The Russell Group of top universities says it faces a £1.1bn black-hole in its finances by 2012-13.

The claims are in its submission to England's official review of student finance and fees.

The National Union of Students said students already paid "more than their fair share".

President-elect Aaron Porter said: "These are elite universities that are simply turning around to students saying they have to foot the bill for cuts in government funding - but they should have anticipated this and thought about their provision".

The Russell Group represents the 20 most research-intensive universities in the UK, and includes the likes of Oxford, Cambridge and University College London.

It says that without extra income its members will be forced to make significant cut-backs.

The group has suggested the £900m-worth of cuts planned by the Labour government for the next three years would bring the UK's higher education sector to its knees.

But it kept its submission to the independent review of higher education funding and student finance secret until now.

The review will report to the government in the autumn.
Under-investment

Although this submission stops short of suggesting higher tuition fees for UK students, it appears to indicate that other solutions may not be fully workable.

It also argues that one way to make the student finance system more sustainable would be to charge students a real rate of interest on their loans.

This could be linked to the cost of government's overall cost of borrowing. It also suggests the threshold at which students start paying loans back could be lowered from the present £15,000.

The Russell Group says: "The lack of a real rate of interest on student loans" is a "subsidy which imposes high costs on the Government, and which exceeds the requirements of ensuring fair access to higher education".

It is set to make a number of submissions to the review in the next few weeks.

The group says variable tuition fees have enabled top universities to maintain high standards and widen access.Source:- news.bbc.co.uk/2/hi/uk_news/education/10115822.stm