University tuition is set to rise with inflation to £10,500 under the new Labour government, despite the party previously vowing to scrap them altogether.
Officials have put together plans that would see tuition fees, which have been frozen for the last seven years, increase by 13.5 per cent in the next five, the Times reports.
The current talks regarding university finances comes as a Whitehall source branded the current tuition system as unsustainable.
Noting that no decision would be made without Rachel Reeves approval, the source told the publication: The current system is unsustainable and we need to raise tuition fees
But at the same time we need to look at maintenance grants to help those who can least afford it.
Tuition is set to rise with inflation to £10,500 under the new Labour government, despite the party previously pledging to axe them altogether (File image)
A Whitehall insider has revealed that the current system is unsustainable (Pictured: Education secretary Bridget Phillipson in Purfleet on May 16)
The proposed plans will also see maintenance grants, which provided up to £3,500 to poorer students, restored after they were scrapped by the Conservatives in 2016.
It comes as education secretary Bridget Phillipson said that while she did not want fees to rise, the value of them had eroded.
Expressing her concern for the university sector, she told LBC: Its not something that I want to go to, but I do recognise that over time the value of the fee has eroded.
It hasnt gone up in a very long time. The system we have got overall is the worst of all worlds.
She added: We will deliver improvements on the system by the end of the parliament.
I would hope to do so as soon as I can because I recognise the challenge is big. What I would say is that its highly complex.
It is really complicated in terms of how we deliver a fairer system. And we are working through all the modelling around that to look at what the options might be.
Around 40 per cent of universities are predicted to be in a deficit for the most recent academic year, including some Russell Group universities.
Sir Keir Starmer (pictured, in Glasgow on Friday) previously confirmed his previous vow to axe university tuition fees had been dropped
However the insider confirmed no decisions would be made without Rachel Reeves approval, with Labour reportedly due to make the announcement ahead of the spending review in April
The University of York has reported a £24 million deficit, while Cardiff University anticipates a deficit of £35 million, according The Times.
This comes shortly after the Labour party pledged to scrap tuition fees altogether.
In May, the then-shadow education secretary acknowledged that raising fees from their current level of £9,250 a year was really unpalatable.
However she refused to rule out hikes at the time.
Sir Keir Starmer also confirmed his previous vow to axe university tuition fees had been dropped.
The pledge was one of ten made during his campaign for the Labour leadership in 2020, most of which have either been abandoned or watered down.
The Labour leader said it was a promise that he had believed in at the time, but said the huge damage to the economy caused by the Government had made it impossible to deliver.
We will only make commitments we know we can fulfil, he told BBC Radio 4s Today programme at the time.
Sir Keir said he still wanted to reform the tuition fee system to make it fairer, but gave no details as to how this might work.
In 2012, tuition fees tripled to £2,000, but have not increased since 2017 were they have stayed at 2017.
Research released this week indicated that, for the first time, the value of fees has fallen below £6,000 in 2012 terms.
The initial pledge to scrap tuition fees was one of ten made during his campaign for the Labour leadership in 2020, most of which have either been abandoned or watered down (pictured: Houses of Parliament)
The Institute for Fiscal Studies revealed in their June report that tuition fees should rise with inflation, and should be hiked to £9,450 from next Autom.
The research institute said fees should be at £10,500 by the end of this parliamentary term.
Paul Johnson, the institutes director, told the publication: Quite clearly you cant keep tuition fees fixed in cash terms forever because it means continual real-terms cuts in the resources available to universities.
At some point you end up with a combination of lower and lower-quality education and more reliance on international students, and something will have to give.
MailOnline has approached the Labour Party for comment.