CHOOSING which universities to apply for is a stressful business, but A-level students intending to start student life in 2006 have more to worry about than which city offers the best nightlife.

Student debt could soar by 70 per cent on the back of the new tuition-fee regime, set to start in September next year, according to a study by the National Institute of Economic and Social Research.

Top-up fees, which are being brought in to help to fund universities, will increase the cost of study from about £3,000 now to a maximum of £9,000 for a three-year course.

The new rules will have a significant impact on prospective students and their parents, but most remain in the dark about their future finances.

The Government is conducting a £1 million campaign to educate students and parents about top-up fees. An important change is that fees will no longer be paid upfront, but will be paid along with student loans after graduation. The amount paid back each month will depend on income.

The immediate benefit of the new system will be lower outgoings while at university, allowing a greater proportion of loans and any part-time income to be spent on living and accommodation costs. The drawback is that students will leave university with much larger debts.

The financial burden of higher education on parents will be alleviated, with the responsibility for payment of fees shifted on to the student after graduation.

From April this year, the loan repayment threshold will increase from £10,000 to £15,000 gross earnings. Once a graduate’s salary passes the £15,000 mark, repayments will be 9 per cent of the excess.

Weekly repayments will fall for new graduates under the revised rules, despite the greater debt burden. But the time it will take to repay will increase substantially. A graduate on a starting salary of £20,000 will pay back £8.65 a week, compared with repayments of £17.31 a week at today’s rates.

A student on a three-year course starting in 2006, who takes out maximum student loans and owes fees of £9,000, will be £20,745 in debt at the end of the degree. Assuming there is no rise in salary or inflation, it could take the student more than 40 years to repay the loan. However, any debt remaining after 25 years will be written off.

Students whose parents earn less than £15,000 will be eligible for a non-repayable grant of £2,700 a year. If the university is charging the full fees of £3,000, it must stump up the extra £300 itself.

Any student whose parents’ joint income is between £15,000 and £33,000 may be eligible for a partial grant.

A flexible approach when it comes to choosing where to study should reduce costs. Students in London will accumulate higher debts. Some institutions, such as the University of Central Lancashire and Manchester University, are starting bursary schemes in an attempt to attract more students and to create better access to higher education.