Universities could benefit from buying up their students' debts, David Willetts, the former universities and science minister, has said.
The idea is that universities would be able to take on some of the risk of their students repaying less of their student debt than expected. Universities could then make money if graduates go on to have higher earnings than expected.
At least half a dozen top universities have expressed support for the proposals according to BBC's Newsnight.
Willetts told Newsnight: "Why not give universities that wish it the opportunity of holding the loans belonging to their own graduates? So suddenly there's a direct connection between the university and the graduate."
The proposal has divided opinion and there are concerns that universities might want to have the option of raising the £9,000 cap on fees in exchange for taking on some of the risk of recouping loans. They might also seek to vary the terms of the loan scheme.
Sally Hunt, University and College Union general secretary, said: "Politicians should be prioritising ways to make it easier for people to afford university, not trying to squeeze even more money out of students.
"The new system of £9,000 fees is unsustainable, costly for students and bad value for the taxpayer and all parties need to look seriously at student funding. However, they need to consider better options than simply penalising students."
Professor Steve West, chair of University Alliance, said: "While there is of course merit in looking at ways of sorting out the unsustainability of higher education funding, making this policy would have unintended consequences. Firstly, it would reward universities that take low risk students, those from wealthy backgrounds, as they would more likely to get high-paying jobs and be able to repay their loans off more quickly. These students would create a safer and more lucrative loan book with higher rates of return.
"On the flip-side such a policy would penalise those universities that take students from non-traditional backgrounds who are more likely to stay within the region they study and go into lower-salaried graduate work."
Here's what a few of you've been saying on Twitter:
"@lizmorrish: Not even US universities have tried this. Universities educate; they are not debt/tax collectors."
"@marie_morley: Hang on...apart from the student, who benefits from Uni educated citizens? Oh yes, UK PLC. Free education should be a right."
Should universities share some of the risk? Do you think this policy would give universities a stronger incentive to focus on graduate jobs? What other alternatives are there?
Share your thoughts in the comments below or tweet us @gdnhighered.
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