The new fees announcement will mean that the Open University, which provides degree courses by distance learning, will have among the lowest fees in England, writes Sean Coughlan at the BBC.

Vice chancellor Martin Bean promised “high-quality, flexible and great value-for-money education for all”.

The Open University has always had a long history of encouraging part-time study, and this demographic makes up more than two-thirds of their distance-learning student-base. The university will be also expecting to benefit from the introduction of loans for part-time students. For a typical part-time Open University student, studying at the level of half of full-time, the fees will be £2,500 per year.

Mr Bean said that the extension of the loan system represented the “beginning of a new era for part-time students”.

The university currently has 264,000 student in over 600 undergraduate and postgraduate courses and professional qualifications. The Open University says makes it the largest single higher education institution operating in the UK, writes Coughlan.

The university has reported a surge in younger students taking its degrees – increasing by a third last year.

This still represents a substantial increase, despite the Open University’s fees being among the cheapest. The current full-time equivalent for an Open University course is in the region of £1,800 per year.

Mr Bean said the fees had been set at the lowest affordable level.

The Open University, created in 1969, claims the world record for the highest number of downloads from any university on the iTunes U service. This service provides a free distribution of university lectures and course material.

The Open University has also developed services overseas, operating in more than 20 countries. A pilot scheme means funding for this includes support from the United States, in an attempt to cut drop-out rates. 10 US colleges have joined into this scheme. This includes funding from the United States to support a project to cut drop-out rates from higher education, in a pilot scheme with 10 US colleges.

The proposals for greater competition are also expected to bring more overseas providers into England’s higher education market, including those offering online degrees.

“We’re clearly going to see a lot more diversity in the landscape,” said Mr Bean.

He says it will be more important than ever that students’ choices about courses are based on “quality rather than price”.

A spokesman for the Department for Business, Skills and Innovation said:

“Our reforms extend tuition loan support to part-time students for the first time because we want a more diverse higher education sector that is open to all those with the ability and desire to study at a higher level.”

The fee level of £5,000 per year applies to students from England. The Open University says that it expects students in Scotland to pay a similar amount to the current fees of £1,400 per year, writes Coughlan.

The university says that in Wales, the cost is “likely to be lower than in England as a result of additional support from the Welsh Government”.

There has yet to be a decision on future fees for Northern Ireland.