Education must remain free up to age 18 or 19 but thereafter it really is a luxury good and must be paid for by the person benefiting from a life-enhancing and earnings-boosting privilege. It's too hard to test who is genuinely capable of performing satisfactorily on any particular degree course (and institutions now allow people onto courses with nothing more than a flimsy foundation qualification, particularly overseas students, often with limited English) therefore the only way of ensuring that unsuitable candidates don't apply is to make sure they know they will have to pay in full. This is likely to make people think more than twice about whether it's worth it and therefore deter many of those who see a spell in HE as a rite of passage and a way of putting off the need to get a proper job, pay rent etc.
In a previous era, a publicly-funded HE sector was sustainable and simple. There were relatively few degree courses to monitor and therefore it was possible for government to make sure the public funding was spent wisely. Institutions were allowed to earn extra cash from corporations or from govt in return for doing research and other work.
Now, the landscape is very different. There is a vast and growing array of courses and institutions. A huge number of them might be entirely worthless but this could be hidden for years or even decades. The government cannot possibly be expected to monitor such a diverse provision - and therefore it must not fund it. The Open University should be kept publicly funded and it should teach few enough courses to allow the govt to monitor it properly; every other institution should pay its own way, without ANY govt subsidy.
That leaves just the question as to how people pay for their courses and for their subsistence.
1. It is monstrous that scottish universities are free to scottish residents but not to others.
2. The student loans administration seems to be beyond dysfunctional.
3. Many will evade repayment of student loans - either through guile or genuine poverty. Therefore the easily-traced and easily-means-tested (= UK residents earning a fixed salary from steady employment) will bear an unfair share of the burden. A bit like general taxation really!
Given all the above, what should be changed:
1. OU to stay public; everywhere else 100% self-funding with no govt subsidy (but govt can still pay for research etc)
2. You want a degree? Pay in cash, month by month. So you either save up the money, or you borrow it commercially (if anyone will lend it to you).
3. You think the above is cruel and unfair? Apply to the OU.
Not difficult, really. We just need politicians who are prepared to put simplicity and uncorruptibility above popularity.
Are the institutions overcharging for undergraduate degrees? At £27000, you bet they are! Only when people pay the full whack out of their own pockets will the institutions be forced to become more efficient and competitive. If this makes them lose quality, the OU will remain a beacon of state-sponsored quality.