The government’s drive to create lifelong eligibility for student loans could end up leaving a heavy long-term legacy for the university sector, with the Treasury seeing the policy as pretext to cutting wider loan costs and “spatchcocking a good idea”, sector figures fear.
While some in the sector think the Department for Education believes the new lifelong loans can be introduced initially as a separate “product”, others think the government is planning to use a unified system, running across further and higher education.
A unified system would leave the Treasury anxious about the increased costs of opening to adult learners a loans system it regards as too porous.
That is seen as a driver behind the Treasury’s desire to cut costs in the loans system by measures such as lowering the university tuition fee cap, capping student numbers?or changing loan terms to increase repayments. However, other factors – such as the Office for National Statistics’ reclassification of a portion of loan outlay as spending – are also key in the pressure for funding changes.
One figure with knowledge of Whitehall said the DfE would “almost certainly trade off a fee cut” if that ensured the flexible Lifelong Loan Entitlement for modular study – included in the department’s Skills and?Post-16 Education Bill – could be established.
“I am sure that the only resource for lifelong learning loans is the existing Student Loans Company money,” one vice-chancellor said.
“It does look as though they are spatchcocking a good idea – lifelong learning – on to a Tory obsession – loans – and doing it through lifting a system [the loans system] designed for another purpose.”
A complicating factor is that the skills bill does not yet offer any detail on the design of lifelong loans or on eligibility rules, such as whether funding will be available to those who already have degrees – factors that will determine the cost of the loans. The DfE has said in explanatory notes for the bill that it “intends to bring forward amendments” on the lifelong loans “by committee stage” – relatively late in the legislative process.
Gavin Williamson, the education secretary, told an event hosted by the Lifelong Education Commission on 26 May that the government?would “consult on the detail and the scope of the Lifelong Loan Entitlement this year”.
Claire Callender, professor of higher education studies at?Birkbeck, University of London and the UCL Institute of Education, highlighted some key questions on lifelong loans for modular study: “What really is the demand among potential students for these qualifications? We do have skills shortages in some technical and more vocational areas and these new qualifications could help with these shortages.”
But, she added, “my concern is whether there will be a long-term cost to the whole of the higher education sector for what is potentially a short-term political gain”.
Professor Callender stressed her “complete and utter support” for the aim to create more flexibility in funding.
However, she pointed out that long-term earnings for older students taking vocational qualifications are likely to be less than those for younger students taking degrees, so the new loans are “going to be costly”, with there being a question over the point at which it is “cheaper for a highly subsidised loan to be a grant”.
She added: “If you really want to encourage low-income groups to take certain subjects, then the best incentive is a grant, not loans – and that may be as cost effective as a loan [for the government].”
