New year wishes... Diana Warwick

With one wave of the Good Shephard's crook, we could move to a better deal in three ways for students in higher education. A new loan scheme with an extended repayment method: would reduce students' anxiety about how they can finance their way through university; provide the means for improving the services that universities offer them; and provide a boost to lifelong learning.

The income contingent loan scheme recently endorsed by the Committee of Vice Chancellors and Principals would enable graduates to pay according to their incomes for as long as it takes to cancel their debt, and simply in the form of an addition to their National Insurance contributions. This scheme, with government underwriting, would also be more attractive to the banks.

Students would benefit from reduced anxiety, and better teaching and learning facilities, as the loans would be available for a contribution to the costs of tuition. If the Good Shephard got it right, this contribution would go back to universities to increase the unit of funding.

Universities would be able to modernise buildings, re-equip laboratories, buy new books and update their information technology capacity for new teaching and learning methods, something that the recent dangerous 7 per cent cuts will make a thing of the past.

Because the loans would be available to all students, regardless of whether they are full-time or part-time, undergraduate or postgraduate, the scheme would enable a much greater proportion of the workforce to contemplate improving their skills and expertise by taking the university education that they missed out on earlier in life.

As for the Good Shephard, I wish her well in banishing the Treasury's almighty dread of hypothecated taxation.

Diana Warwick is chief executive of the Committee of Vice Chancellors and Principals.