Bridget Phillipson has announced an increase in university tuition fees for the first time in eight years.
The Education Secretary said the cost for new students will go up in line with inflation from April 2025 to £9,535 - a rise of £285-per-year. Tuition fees have been capped at £9,250 for domestic students in England since 2017.
She admitted the controversial move was "not an easy decision" but was needed to "secure the future of higher education".
Ms Phillipson said: "I want to be crystal clear that this will not cost graduates more each month as they start to repay their loans. Universities are responsible for managing their own finances and must act to remain sustainable.
"But members across this house will agree that it is no use keeping tuition fees down for future students if the universities are not there for them to attend."
The Cabinet minister also announced the maximum maintenance loans will go up by an extra £414 next year. And she told MPs she will "look at the issue" of restoring maintenance grants for the poorest students after they were scrapped by the Tories in 2016.
It comes amid a deepening financial crisis facing the university sector with inflation eroding fees and a fall in overseas students. Ms Phillipson said a succession of Tory ministers had "ducked" the difficult decisions "time and time again", blaming them for a "shameful abdication of responsibility".
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But the University and College Union (UCU) described the tuition fee hike as "economically and morally wrong". General secretary Jo Grady said: "Taking more money from debt ridden students and handing it to overpaid, underperforming vice-chancellors is ill-conceived and won't come close to addressing the sector's core issues.
"As Keir Starmer himself said last year, the current fees system doesn't work for students and doesn't work for universities."
The left-wing Labour MP Nadia Whittome added: "14 years of Conservative governments have left our universities in crisis. Education is a public good that benefits our society. To invest in our future, the government should restore grant funding and abolish fees, not add to students' debt."
In opposition Keir Starmer dropped his 2020 pledge to abolish tuition fees saying his priority was to cut record NHS waiting lists. He said at the time: “Looking at the costing for tuition fees or abolishing them, looking at the money we need to put into the NHS, I’ve taken the decision that we can’t do both. That’s a difficult decision, I’ll accept that."
In a break from Labour's previous manifestos under ex-leader Jeremy Corbyn, the party's 2024 election blueprint did not included the vow to abolish tuition fees.
Instead, it said: "The current higher education funding settlement does not work for the taxpayer, universities, staff, or students. Labour will act to create a secure future for higher education and the opportunities it creates across the UK. We will work with universities to deliver for students and our economy."