The UK's university vice chancellors are to hear that making graduates pay more is the best way to ensure future funding for higher education. Universities minister David Willetts is expected to make the argument during a speech this morning. He will say the approach is better than cutting student numbers or reducing the standard of courses. In the past his Lib Dem partners in the coalition government pledged to abolish tuition fees in England. In England, students pay fees of £3,225 a year, for which they take out loans, repayable after their income reaches £15,000. There are no fees for Scottish students studying in Scotland, and they are capped at £1,285 for Welsh students studying in Wales. Graduate tax alternative Mr Willetts's speech is taking place as university vice chancellors meet for the annual Universities UK conference at Cranfield University in Bedfordshire. Universities in England are waiting for two major announcements - the result of the government spending review, which could cut higher education budgets by 20% or more - and the outcome of the review by Lord Browne of long term university funding. Both are due this autumn. The university minister's speech is expected to discuss three options open to the government - stepping back from the rapid rise in student numbers, allowing funding cuts to decrease the standard of university teaching, and higher fees. It is understood the universities minister will suggest asking graduates to pay more is the best option. Business Secretary Vince Cable has suggested a graduate tax linked to postgraduate salaries as an alternative to raising tuition fees. Under a graduate tax, the amount the student pays would be a percentage of his or her income, rather than a fixed amount linked to a specific university fee - so some students could end up paying more than the fees for their own degree. However, the idea has not received strong support in the Conservative part of government. Senior Tory sources have said the coalition government wanted to maintain the direct payment from the individual to the university, and that ministers believed it would be unfair for high-earning graduates to pay back more than the cost of their degrees. Labour have accused the two coalition partners of squabbling over the issue. Cost-cutting suggestions It has also been reported that Lord Browne will reject a graduate tax and instead recommend raising fees to around £7,000. Higher university fees are also opposed by the National Union of Students which has supported proposals for a variable graduate tax. Other moves to cut costs have also been mooted in the past, such as two-year degrees, more students studying part-time, by distance learning or living at home, and expanding the role of private institutions. In the UK as a whole, income from fees - including fees paid directly by students such as postgraduates and overseas students - makes up about 29% of universities' total funding, which was £25.4bn in 2008/09. Another 35% comes from government funding bodies, while the rest comes from other sources such as research grants, endowments and financial investments. In addition, students are eligible for loans towards their maintenance costs, which they pay back in the same way as their fees. Credit: BBC