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Student debt and grants in Scotland: a summary

This post summarises the current position on grants and loans for full-time students in higher education in Scotland, and the background to it.

Background

(i)  Fees and other payments

The Scottish Government funds the whole tuition cost for almost all first-time, full-time Scottish and EU students in Scotland, from the government’s cash budget. Therefore no-one from any background has to borrow for part or all of their fees. Scottish students will only need a fee loan (as students in other parts of the UK get, to defer fee payments) if they go to study elsewhere in the UK.

Between 2001 and 2006, young students entering degree-level  HE full-time were liable to pay the graduate endowment, a single payment of £2,000 at 2001-01 prices, after finishing university. The income from the GE was in theory ring-fenced for student bursaries. Graduates could either pay it in cash or add the liability to their existing student loan (or take out a first-ever loan) to defer the payment. Because of exemptions for HNC/D students, including those on “2+2” models, mature students, disabled students and single parents, slightly under half of all the full-time students the SG supported were liable to pay the GE, which was bringing in around £23m p.a. by 2007 (more here).  When the current Scottish Government says it brought in free tuition, it is referring to its abolition of the endowment in 2007. It is also often, in practice, describing its decision not to use devolved powers to copy either of the fee regimes which have applied in England since 2007.

(ii) Living cost grants

Scotland has relatively low student maintenance grants (here called bursaries).  Most living cost support is offered instead as student loan.

Between 2010 and 2012 inclusive, the means-tested grant for younger students, Young Student Bursary, was frozen in cash terms (see here for more on how its value changed from 2001 onwards). In 2013, the Scottish Government cut its total spending on maintenance grants by around £35m, or one-third.  The maximum YSB was reduced from £2,640 to £1,750, and it was withdrawn more quickly as income rose.  The government lowered the income at which maximum YSB was payable from £19,300 to £16,999. Many students lost £900 a year and some much more. The Scottish Government argued they could make up the difference by borrowing to fill the gap. Older students get the lower-rate Independent Student Bursary. This was introduced as a lower-rate grant by the Scottish Government in 2010, and then also scaled back in 2013.

In 2015, the Scottish Government added £125 back on to some grants, costing it around £5m,  and in 2016 it reversed most of the  cut to the threshold for maximum grant, raising it to £18,999 (likely to have cost it a bit under £2m a year).

The current system

The resulting living cost model in 2016-17 is in the table below.

Young Independent (ie mature)
Bursary Loan Bursary Loan
0-18,999 1,875 5,750 875 6,750
19,000-23,999 1,125 5,750 6,750
24,000-33,9999 500 5,750 6,250
34,000 plus 4,750 4,750

A particular feature of this model is that it is built round those from the lowest incomes, especially mature students, taking out the highest loans.  Until grants were abolished in England in 2016, Scotland was the only part of the UK taking this approach. It means that someone at a low income who wishes to take out their full entitlement to living cost support over four years faces a debt of £23,000 plus interest if they are younger, and £27,000 plus interest if they are older. Grants are higher in Wales and Northern Ireland (where students also only have to borrow for the first £3,900 of their fees: true for Welsh students anywhere in the UK, for NI ones in NI).

Actual borrowing

Figures on annual borrowing by income are published annually by the Student Awards Agency Scotland (SAAS). The latest are here (see Table A6). They show that Scottish students borrowed a total of £0.5bn in 2015-16.

Around 70% of Scottish students take out a loan in any given year, and almost all those who borrow, borrow the whole amount they can.

The table below is adapted from the official statistics.  I’ve added two columns. One shows average borrowing across the group as a whole, i.e. including borrowers and non-borrowers.  The other shows the percentage who don’t borrow in each income group.   It’s reasonable to assume from other research that there are more non-borrowers in the higher income group because students’ access to family resources tends to rise as family income increases. It is likely that even within this group, non-borrowers are more prevalent at higher incomes:  it is quite plausible that at, say £60,000+, non-borrowers are in the majority.

The net effect of lower income students having higher loan amounts and making more use of loans is that students in the highest income range borrowed in practice around half as much per head (around £3,000) as those in the lowest income band (over £6,000). Another way to look at this is that Groups 1 to 4 below accounted for only 43% of all students, but took out 54% of all debt.

Borrowing by income band 2015-16

  Total students Borrowers Average borrowing (active borrowers) Average borrowing  (all) % Non-borrowers
1 No income details: receiving max bursary 10,055 9,360 6,660 6,201 7%
2 Up to £16,999 23,895 19,105 5,890 4,711 20%
3 £17,000 to £23,999 8,955 7,220 5,760 4,648 19%
4 £24,000 to £33,999 8,980 7,265 5,610 4,542 19%
5 £34,000 and above 2,965 1,850 4,650 2,901 38%
6 No income details: receiving no bursary 70,010 46,830 4,650 3,112 33%
Note:  I’ve removed EU students (14,705) from the figure for total students, as these students can’t borrow. I have assumed that they were contained in Group 6, as very few can claim means-tested support. That may not be exactly right, but it should be near enough. Most students with an income over £34,000 will be in Group 6, which covers those who chose not to submit income details, generally because they are above the threshold for bursary. Group 1 by contrast will be those who had no relevant income to declare and got the highest bursary level.  Group 5 is a small group whose income details SAAS knows, although they are over the bursary threshold. I have excluded here a very small group of low-income students separately shown in the SAAS table who anomalously have no income but don’t get full bursary: there’s something odd going on with this group (it may be that many don’t complete a full year).

Caution: final borrowing

Separate figures are published each year for students’ final borrowing. The most recent Scottish figure is £10,500. These figures are widely quoted but have to be handled with care. The average will be brought down by the large number of students in Scotland on one or two year courses, and – as shown above – any average will conceal variation by income. More on that here.

Conclusion

The Scottish system is not debt-free in the absence of fees: indeed Scottish students are borrowing a substantial amount as a group each year. The Scottish approach relies heavily on loans to cover the state’s role in providing low-income students, in particular, with living cost support. Grants are now so low that those from the lowest incomes are taking on the most of that living cost debt.  Equally, at high incomes, many students will be borrowing nothing.

Defending existing policy in Scotland means defending this outcome.

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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Modelling a different approach to fees and grants in Scotland

It seems common to assume that we’re faced with a straight choice on tuition fees, where the state either funds the whole of everyone’s tuition costs, or all students have to take out a loan for £9,250 a year.  It’s a perspective stuck in a binary choice between whatever-we-do-now-in-Scotland and whatever-they-do-now-in-England.  Other options are of course available. That’s what this post is about.

A starting point

The simplest alternatives for fees are:

  • setting the fee level at some number more than zero, but less than £9,250;
  • means-testing fees;  or
  • some combination of these two.

There’s a fairly common argument that any move away from free tuition inevitably means Scotland would end up where England is: the slippery slope perspective.  That puzzles me, because we would only end up there if that was what the politicians we elected chose.  It seems to assume we can trust them to keep it free, but not to maintain any alternative position. On this thinking, tuition fees are an addictive drug, from which governments must be kept away at all costs.  I’ll come back to that at the end.

If you reject this straitjacket, and believe that the Scottish political system is capable of managing other things, what might the alternatives be, and what would they mean for students?

Note:  I’m not advocating a specific model here, but demonstrating one different way things could work, as a starting point for a less constrained debate.  There are more radical ideas out there (here’s one), involving more fundamental change. All I want to show is the space  for alternative outcomes, just within the current broad general approach.

Living cost support matters

There’s no point designing a student funding system which only looks at one part of the story.

If you are only interested in thinking about fees in isolation, and don’t care much about living cost support, especially for low-income students, then look away now.  You and I are never going to have a mutually rewarding  conversation about this.

A lot of people in Scotland at this point suggest that living costs are a secondary (or even non-) issue, because students can always live with their parents and/or work their way through.  I disagree for the reasons set out in Footnote 1.

The modelling below assumes decisions on living costs are as important as fees, should be interlinked, and looks at combined effects.

Fees: upfront or deferred?

Even the most vigorously ideological advocates of tuition fees recognise that students tend not to have money at the moment.  It is very rare to find anyone, not even Milton Friedman, advocating unassisted upfront charges  (Footnote 2 describes the UK government’s short experiment with this).

Thus, in no part of the UK do first-time students now have to find the cost of their fees from their or their families’ existing resources.  With a few exceptions in Scotland and elsewhere, higher education is free at the point of entry for all  first-time undergraduate students in the UK, because at minimum they can take out a government-subsidised student loan to defer the full cost of their fees until they are earning above a certain level.

It’s hard to over-stress this point for readers in Scotland, where it still seems to be widely believed that students in England have had no choice but to find £9,000 a year from their families. Had that been the case, the system there would simply have collapsed. It is precisely because  fee costs are deferred that debt is so high in England.

So the model assumes that any fee is matched £ for £ by a government subsidised loan and that, as in other UK systems,  the fee loan (a)  would be repayable contingent on earnings, in the same way as maintenance borrowing is now, and (b)  is added to any maintenance loan to form a single debt, so that no-one is paying off two loans in parallel.

Debt aversion

Regardless of any evidence from England (Footnote 3),  it is possible that debt aversion should be a major concern for Scottish policy makers. In that case, however, we should already be worrying.

Living cost support for low-income Scottish students is now provided largely through loans, because grants are relatively low.  Here’s the figures for support from the Student Awards Agency Scotland (SAAS) for 2016-17.

Young student Independent student
Household income Bursary Loan Bursary Loan
£0 to £18,999 £1,875 £5,750 £875 £6,750
£19,000 to £23,999 £1,125 £5,750 £0 £6,750
£24,000 to £33,999 £500 £5,750 £0 £6,250
£34,000 and above £0 £4,750 £0 £4,750

The model below illustrates how in a system which includes some fee-paying,  low-income students can still have less debt than in one with free tuition, while protecting the value of their total living cost support.

The scale of student debt in Scotland and its distribution

Around £500 million is now borrowed each year by Scottish students.  At the moment, annual borrowing is skewed towards those from lower-income households, for two reasons:

  • they borrow more on average, and
  • they are more likely to make use of student loans.

As a result,  over half of all student loan is taken out each year by students declaring a household income below £34,000, although fewer than half of students fall into that group.

The current statistics don’t allow us to differentiate amongst those with incomes over £34,000.  But looking at earlier data, there’s a good chance that there’s a similar skewing of debt within the higher income group, towards middle-income households and away from the highest income ones.

The model removes the current built-in assumption that the highest debts should be taken on by those from the lowest incomes, again while protecting current total spending.

What could be different?

Put simply, we could move the debt around, so that more of this £500 million is taken out by students from higher-income backgrounds, and less by those from lower-income ones.

That means finding more to spend on grant, by spending less on fee subsidies, and expecting those at higher incomes to borrow some of their fee cost.

Mechanisms

There are in essence three ways to get this effect.

  1. Means-test the fee.
  2. Apply the fee to everyone, but then have a separate means-tested fee grant which immediately wipes it out for lower-income students.
  3. Apply the fee to everyone, but then build a means-tested off-setting amount into the  living cost grant, before making any other increases.

 

Different mechanisms would have different implications for practical administration, public understanding/presentation, student behaviour and the detail of public finances. But they would all provide an identical boost to the amount of grant provided at lower incomes for the same level of fee.

One basic model

The model below asks students from the highest income households to borrow one half of the average cost of a university place in Scotland. So students from these households would be offered a government-subsidised fee loan to cover a fee of £3,500 a year. The cash released from tuition fee subsidies would be put back into grants.

How much would a £3,500 fee raise?

SAAS currently supports around 140,000 students, of whom around 15,000 are from the EU.  I’ll concentrate for now on moving the public subsidy around between the 125,000 Scottish students.  A separate section below considers EU students.

If Scottish students from the highest quarter of student-providing households by income were liable for the fee, it would notionally release around £110m a year from tuition fee subsidies (125,000 x 25% x £3,500).

I can’t say what the income cut-off would be, because the Scottish data on students is now too aggregate to show that.  Looking at figures for years before 2013, when more detail was provided,  I’d guess it would be somewhere between £50,000 and £60,000 of household income (around the highest 15-20% of all households in Scotland by income, after equivalising for a family of 2 adults and 2 children).

How could the money saved on fee subsidies at high incomes be used to bring down debt at lower incomes?

I’ll spend the money on substantially increasing means-tested maintenance grants, on which  we now spend only £55m a year.

It would cost c£30m to switch £1,000 of living cost support from loan to grant for those on the Young Student Bursary.

I’ll spend a further c£40m on giving independent students (for example, those over 25, or who are parents, or married/in a partnership) the same  bursary as young ones, and bringing down their debt, because these students in Scotland are on a much less generous grant and a higher loan, and there’s really no good way to justify that.

I’ll also spend c£15m on  a new £1,000 grant for students from households between £34,000 and £45,000, because these families, who are not awash with cash, are expected to find much more out of pocket help for their children in Scotland than is the case in the rest of the UK and that’s a concern: more here.

The net annual effect on individual students at different incomes would be:

  • Young students with incomes below £34,000 would gain £1000 in grant and lose £1000 in debt, with no change in the total value of their living cost support.
  • Those with incomes between £34,000 and £45,000 would gain £1,000 in grant and therefore £1,000 in total living cost support, with no change in debt.
  • Nothing would change for those between £45,000 and the fee liability point.
  • Those liable for fees would have £3,500 more debt a year and no change to living cost support.
  • For mature students it’s a similar picture, except that they would gain more grant and lose more debt.

Using this approach, all students are now offered the same living cost loan (£4,750), with cash grant used to do any additional income-based targeting

I’ve spent approaching £90m. I assume that due to things I’ve failed to take into account, income wouldn’t be as high and expenditure would be  higher, so my spending plans may still be a bit ambitious on this level of fee.  But they will be in the right general area.  If students from the wealthiest quarter of households were expected to borrow £3,500 a year of their tuition cost, it seems likely that we could nearly treble our spending on maintenance grants.

The effect on the new fee payers

Total debt for those at high incomes would come to a maximum of £8,250 a year.  Two points about that. First, in practice many of these students would only have a £3,500 annual debt, because  living cost debt take-up is lower in this group, presumably because many have all their living costs met by their parents.

But the second is the more important. Low income mature students are already expected to incur £6,750 in living cost debt – and most do.  If you have managed in recent years not to be outraged at the reality of a £6,750 annual debt for most mature students with no income, you are not in strong position to be outraged now at a theoretical maximum debt of £8,250 a year for students from high income families which many won’t actually incur.

Is this a good model?

This would be a pretty clunky way to do things.  The Scottish system already incorporates large step changes in entitlement, and it’s not an ideal approach. However, because the data comes packaged that way, it’s hard to model anything without copying that.

The point of this model is not to advocate it in this precise form, but to bring out what scale of change would be possible for a particular form of fee liability.

A more radical, and carefully argued and well-evidenced, rearrangement of fee and grant subsidies has been proposed for Wales by the Diamond Committee. The Welsh Government has accepted the recommendations and recently finished consulting on the detail of implementing it. The change has cross-party support, and support from the NUS Wales and Universities Wales. Anyone interested in this debate should read that report (here),  as a further example of the range of possibilities.

What about other objections to fees?

If your objection to fees is that higher education is a public good and therefore students shouldn’t have to contribute on principle, I have bad news. Scotland crossed that ideological bridge a long time ago and is now £500m a year into that territory, because all student loan debt is a form of student contribution, whether it’s for living costs or fees.  Moreover,  there is no realistic chance that the Scottish Government is going to reduce its reliance on student loans to underwrite the higher education system.  £500m is roughly the annual cost of the whole FE system, or 1p on the basic rate of income tax.

A separate objection to fees is that they create a “weakest to the wall” market in higher education.   That’s not a necessary effect in the model above, in which the SFC continues to decide where the funded places are, and fully funds the fees of three-quarters of Scottish undergraduate students and half the cost of the rest.  It is entirely possible to seek a fee contribution from some students (or even all) in a system as planned as the current one, without moving to a quasi-voucher market.

Another objection is that fees change the nature of higher education, converting what should be a purely educational relationship into a purchase, and positioning students as consumers (some people are for this, but many are not). Around half of students in Scottish universities already pay fees, including many on full-time undergraduate courses (overseas students, rUK students).  Many others are already taking out large loans to pay  for their living costs. Would asking some, or even all, Scottish undergraduate students to borrow to cover some of the cost of tuition create a dramatic cultural shift from where we already are?  That’s debatable at best, I think.

But even if  you believe that all the things above would be unavoidable and undesirable,  is the price now being paid to avoid them defensible? In order to shelter everyone from any fee at all, we have designed a system which means student debt has to be shouldered disproportionately by those from lower incomes, while people from the most well-off backgrounds are routinely leaving university debt free.  It’s the least well-off students bearing most of the cost of these principles.

Investing in grants vs other things

One of the arguments often made for fees is that access to HE remains socially skewed and it would be better, and fairer, to subsidise HE students less and spend more on levels of education which everyone uses.  The model above doesn’t address that, because it doesn’t release any cash, it just moves it around between existing students.

The model also therefore doesn’t deal with the relative under-supply of places in Scotland compared to other parts of the UK.  A thousand extra places fully funded for fees and grant would cost around £10m. Nor does the model offer universities any additional funding per student: increasing university spending has often (though not always) been behind fee rises.

To deal with these issues as well in any serious way would mean a higher fee, and/or one which was less heavily means-tested, and/or ceasing to provide EU students with free tuition (recalling that none of the sums above included them).

SAAS funds just under 15,000 EU students. The total current spending on them is around £100m a year (15,000 x £7,000: they cannot claim maintenance grant). We don’t know yet what the Scottish Government will decide to do about this group.

In 2010-11, the SG was actively seeking ways to charge these students at least something (here). My assumption is that, once EU law ceases to apply and once the current commitment to the 2017 and 2018 entry cohorts has been met, the SG will return to the issue of how it can reduce its spending on this group in some way, so that some or all of the cash is available for other things. At a time other things are under pressure, the sum at stake simply looks too large at first sight to be affordable as a voluntary symbolic gesture.

Where next?

One of the great campaigning coups of the past 20 years has been the success with which  so many  people have been persuaded that free tuition is essential to widening access and that defending it must be given absolute priority over improving (or even just protecting) levels of student grant.   Thus grants in Scotland were cut by a third in 2013 with the support of NUS Scotland, and no outcry beyond the parliamentary opposition parties.   Grants are important too, it is sometimes conceded, but not so important we should give an inch on free tuition to spend more on them.  According to this view, the only proper way to increase grants is by finding the cash from some other budget, or more tax, and until that happens it is better to put up with what we have than to raid the fee budget.

I don’t expect any real shift in policy here or even in what people are prepared to debate. The SNP, the Scottish Greens, Scottish Labour and the Liberal Democrats all supported free tuition in the 2016 Holyrood elections (though at least the Conservatives, Labour and Liberal Democrats also mentioned increasing means-tested grants, and the SNP said it would “work to improve” them). The Conservative offering on fees was much more cautious than the model above, limited to something like the old graduate endowment, and would have raised a relatively small amount, and not for several years.

The appearance of any proposal like the one discussed here tends to trigger Spanish Inquisition-like questioning of Scottish opposition politicians about whether they will rule out tuition fees (grants don’t get a look in), with a moment’s hesitancy being taken as political death.  This – for the avoidance of doubt – is an absolutely brilliant state of affairs for people whose parents can fund them through university but much worse news for people whose parents can’t.

This positioning of tuition fees as a box which must never be opened even a crack benefits one section of society. It’s the one I know best, and it has always been good at identifying high-minded arguments in defence of its own interests. But rarely so successful as in this case at persuading other people that they must leave their barricade neglected, and come and defend its one instead.  It’s been a rather one-sided vision of solidarity so far.

But here we are. The maths of a more even sharing debt among students in Scotland is really pretty easy. The politics look as impossible as ever.

 

 

Footnote 1: Living costs don’t matter as much as fees because …

Students can live at home: (a) no, they can’t all do that,  (b) even for those who can, it will not always be a particularly good idea and (c) even when it’s a good option, those students still need to be fed, to travel (especially, often, travel) and to have clothes, books and so on, and it’s not reasonable to expect families on low incomes to absorb these costs unaided.

Also, that students can work is not a killer argument against the equal importance of living cost support.  There’s a growing literature on the impact of working, especially in term-time.  It’s not all discouraging: some types of working, at some level, for some people, appear to be fine. But the overwhelming message is that those students who don’t take on paid employment, especially in term, will tend to get more out of higher education, academically and in other ways.

But there’s a more fundamental problem with saying that fee loans are a problem, but maintenance loans aren’t, because people can work. It confuses the income and expenditure sides of the equation.   Logically, you might as well say fee loans wouldn’t be an issue, given a high enough level of grant, because people could work to pay their fees. Unless you accept the second of these arguments, you can’t use the first.

Footnote 2: Actual upfront fees – the 1998 reforms

In 1998, the UK government introduced an upfront yearly fee of £1,000. It was means-tested (this is generally forgotten), so that – roughly – the top third by income paid the whole amount, the middle third some of it, and the lowest third by income, nothing.  The dedicated fee loan had not yet been invented (though living cost loans were boosted with the idea people might choose to use some of the extra amount borrowed to cover the cost). The change was very unpopular with those who had to pay, and the way it was discussed obscured that many paid nothing or only part.  It was also accompanied by the abolition of grants, but that attracted much less fuss, as did their reintroduction in 2004.

The 1999 Scottish elections were dominated by 1998 fee regime and the sense that fees must be an immediate cost to families persists in Scotland still. However, when fees ceased to be means-tested in 2006, the UK government also enabled them to be deferred using a government subsidised loan. In passing, this means that nowhere in the UK since 1962 have first-time full-time low-income students been expected to find the cost of an upfront fee with no form of government help. But you could be forgiven for not knowing that, from the political rhetoric.

Footnote 3: Debt effects in England

Researchers looking at the statistics, and interviewing students, have discovered a high degree of willingness  (not necesssarily enthusiasm, just willingness) to borrow among young students of all backgrounds in England.  Participation rates there, including for those from disadvantaged backgrounds,  have increased at least as quickly as in Scotland.  This is not the same as saying no-one, anywhere has ever been deterred, and there’s more evidence that older, especially part-time, students are more debt averse.  But the last 20 years of data from England (and comparisons with Scotland) on participation levels and access have generally not been as helpful to advocates of free tuition as they might have hoped.

 

Student support review #5: changes to loan scheme – welcome, but there’s a dislocation between claims and evidence

The review of student funding was asked to look at changes to the student loan scheme in Scotland.

Its recommendations are:

  • an increase in the loan repayment threshold to £22,000. But it adds “The Scottish Government should consider increasing this to £25,000 based on current proposals in England. This additional increase would cost around £27m per year.”
  • remaining on the current Plan 1 interest rate (lowest of RPI, or 1% over base rate)
  • reducing the period after which debts are written off to 30 years.

These are all welcome steps, very much in line with suggestions which have been floating round in Scotland for some time (here are mine from more than three years ago): all parties but the Greens promised a higher threshold and short write-off period at the last Holyrood elections.

Specifically, the recommendations do not go beyond what was in the SNP manifesto and translated into the current Programme for Government. The only difference is that it is not specific about the timing of the introducing the new threshold, which in PfG and the manifesto was described as being achieved by the end of the current Parliament (2021).

The review makes one new loan-related suggestion, which is to write-off its suggested new FE living cost loans if students move into HE.

Thus the added value of the review to this process has been limited, given this is largely existing policy. But it is useful to have the £27m estimate: I am surprised it is so low, but that may reflect that fewer students here borrow large enough amounts for write-offs to come into play.

Comparative claiming

The review claims that:

should our recommendations be implemented, student loans in Scotland would offer the best terms that are available anywhere in the United Kingdom. (emphasis added)

In similar vein the report says elsewhere that

the Board took a fresh look at the terms of student loans available in Scotland, and worked on enhancements that can be made to ensure that students in Scotland can be offered the best lending terms that are available anywhere in the United Kingdom  (emphasis added)

At Monday’s launch, Scotland having the best loan scheme in the UK was a strong theme. The lower interest rate than England or Wales was quoted several times: this seems to have strongly captured the imagination of the review.  The review does not acknowledge the findings of bodies such as the IFS or economists like Nicholas Barr that interest rate subsidies are most helpful to the highest earners.  But that perhaps is reasonable, given that even with higher borrowing levels the review proposes, more people will continue to fall within the range where their loans are likely to be repaid in full, compared to south of the border.

The argument about loan terms

The report argues the combined effect of the system changes above and lower total amounts of borrowing in Scotland in the absence of fees justify this claim.  However, there is a difficulty with including the last of these. “Terms” (especially “lending terms”) has a specific meaning in relation to loans, of any kind: it refers to the rules under which repayments are calculated, irrespective of the amount borrowed.

Existing terms

The report goes further at one point and claims “Loan terms will remain the best in the United Kingdom” (page 32, emphasis added). But Scotland clearly does not currently have the best loan terms in the UK.

The table at the foot of this post shows that Scotland at present has a combination of the lowest repayment threshold and longest repayment period of any UK nation. At minimum, it logically has to be worse at present than Northern Ireland, which has the same threshold and interest, but writes off sooner.

So “Loan terms will remain the best in the United Kingdom”? You can’t remain being what you aren’t already.  An independent review should not be suggesting what is not true.

Future repayment terms compared

Here the “best in UK” claim needs back-up that the report does not provide.

The comparison with Northern Ireland is easy: Scotland would now be the same for interest and write-off period, but with a higher repayment threshold. Definitely better terms.

The comparison with England and Wales however relies on the trade-off between the impact of a lower interest rate (mostly, but not always, see footnote below) in Scotland against starting repayment £3,000 sooner. Welsh graduates will also have the first £1,500 of the loan written off when they start repayments, which takes a lot of the edge off the extra interest acquired over the period of study. For lower earning graduates, the English or Welsh systems could still be better.  To make the “best” loan terms claim stand up, you need to do some modelling to prove your statement. But none is provided. It is my understanding none has been done.

Most crudely, someone who spends their working life earning more than £22,000 and less than £25,000 would be unambiguously better off in England or Wales. That’s too specific an example to rebut the whole claim: but we need to know how the threshold interacts with the interest rate across earnings deciles more generally for the “best terms” claim to mean anything.  Ideally, the models would be compared using a number of different notional initial debt amounts, to check how sensitive the general comparison is to the total amount borrowed.

In other words, the report makes an assertion for which it fails to provide the necessary evidence. Indeed, it is not clear that the authors realise they need to produce this sort of evidence to back up this sort of assertion.

How about total repayments?

Even if including differences in total debt levels is a red herring in the comparison of repayment terms, it would of course be relevant to a comparison of actual total repayments. It would be a different point, but a perfectly valid one to make.

Again, this claim still needs detailed comparative modelling of the repayments associated with expected borrowing under each scheme. Averages are not very helpful, as there will be so much variation round them by income. So the obvious thing to do would be to compare each system a number of times, using the anticipated final debt for a range of comparable students, from different incomes and therefore with different support packages. An issue here is that though annual borrowing will generally still be lower in Scotland, degrees here are generally a year longer, and in comparing graduates’ likely total repayments it would be artificial to ignore that. For those from low incomes final debt for an honours degree could be very similar in Scotland and Wales: for them, the combined threshold/interest rate trade-off will be the deciding component.

Putting it all together, the review’s recommended option might still mean that Scottish honours graduates who started from low incomes would consistently face lower total lifetime repayments than their English, Welsh and NI counterparts,  but it’s not self-evident. I’ve not even mentioned yet Scottish Parliament modelling in 2013 which showed how, at that point, differences in the loan terms (conventional linguistic usage), including Scotland’s lower threshold, meant the lowest earning Scottish graduates could end up paying back more equivalents from England who had borrowed more than twice as much. Loan repayment comparisons are complicated things.

In other words, to make a robust comparative claim about the combined effect of total debt and new repayment terms needs … proper modelling. And again none is offered and it is my understanding none has been done. At the moment all we have is an unproved assertion.

Conclusion

The apparent muddle between loan terms and total repayments is unhelpful. But my understanding may be wrong, and the review may have seen analysis which backs up it comparative claim in relation to either (though it is plain wrong about the status quo). However, it then needs to show its workings (it still could, of course).  Or it may have jumped to conclusions without having commissioned the necessary analysis: that would be something worse.  It would mean a high-profile claim of the review was built on the sand of an untested assumption of superiority.

There were already signs (see here) from the handling of the launch that review members may be susceptible to falling into a “Scotland The Best” trap – the assumption that one prominent difference in Scotland’s favour simply must mean it is generally better than everyone else at the whole of something.  The one part of the review report where it makes a superiority claim about a specific element of student funding was an opportunity to reassure on this point. But close reading of that section fails to provide that reassurance.

 

 

Table:  Current and proposed loan terms in the UK

 

Scotland now Scotland proposed England and Wales now England and Wales proposed NI now (no changes publicly proposed)
Interest Lowest of RPI or 1% above the BoE rate RPI plus 3% while studying.

After leaving, variable rate dependent upon income.

RPI where income is below repayment threshold.

Rises on a sliding scale up to RPI plus 3% where income is £41,000 or more

As Scotland
Unpaid debt written off after 35 30 30 30 30
Repayment threshold 17,775 22,000 21,000 25,000 17,775

 

 

Footnote

For those earning below the repayment threshold used in England or Wales (£25,000 from next year), the interest is RPI. For Scottish and Northern Irish ex-students the interest rate is RPI unless the bank base rate falls to more than 1% below that. In that case (as now: when the 2017-18 rates were set, the base rate was 0.25%, RPI 3.1%) interest is lower for Scots and the Northern Irish. But if the base rate and RPI become closer again, low earning English and Welsh students could be on the same interest rate as Scots and the Northern Irish. There is not a guaranteed lower rate for the latter groups.

 

Student support review #4: the diminishing return(s) of spin

“The louder he talked of his honor, the faster we counted our spoons”   Ralph Waldo Emerson

This is how I feel about claims of policy superiority between the different UK nations.

At Monday’s launch of the student support review, in her opening remarks the chair drew attention to criticism of a line run in pre-briefing, that the review proposals would offer the best support for students available in the UK. I presume the criticism in question was mine, here.  She denied its use was inappropriate and repeated the claim on behalf of the review group, saying it would be “the best student package available in the UK”. The claim does not appear in the actual report.

I was kindly given the chance to ask a question, so I asked how they felt the review’s recommended outcome compared specifically with the proposals for Wales, from which their headline suggestion, a flat-rate support entitlement, borrows.

Replying on behalf of the review, Russell Gunson of IPPR Scotland, and previously of NUS Scotland, identified three things which were better. Here is what I noted he mentioned, with some comments:

  • The inclusion of FE students

In Wales, at very low incomes full-time students (unless on EMA) are entitled to a grant of £1,500 and part-timers half of that. The review’s proposals suggest a maximum grant of £4,050 and access to a loan topping the total up to £8,100. The review has however kicked part-time support into the long grass, and over the following day it became clear EMA students were not included in its recommendations (see here): Wales also still has EMA, at the same rate (£30/week). So the Scottish proposals are much better for full-time students in FE who are not on EMA.

  • The loan repayment terms, referring to the interest rate and the threshold

The interest rate on loans in Wales is higher than the Scottish one (though it may not always be by very much, depending on a person’s earnings level and the relationship  at any given time between RPI and the Bank of England base rate: bear with me here). But the Welsh government will continue to write off £1,500 of debt at the start of repayment, which in practice will wipe out much of the effect of the higher interest rate during study, especially for those whose borrowing is kept down by access to a reasonable level of maintenance grant.  Meantime, the threshold is an odd thing to cite.  In Wales, it will be £25,000, from next year, compared to £22,000 in Scotland, from a year which the review does not specify. The Programme for Government suggests it will rise to that level by the end of this parliament. So it’s the interest which is (in most cases) more favourable under the review proposals: the repayment threshold is actually worse.

  • The treatment of those on benefits.

I have to accept this claim at face value. The interaction of benefits and student support is a very specialist topic where I don’t pretend to be able to be able to make comparisons. Let’s assume this claim would withstand further scrutiny. 

To be best in the UK, the package by definition has to be better than the one in Wales. That claim rests on the things in bold above. Not mentioned, but could have been, was the total value of combined bursary and loan support for HE students living at home, which would be £8,100 in Scotland, but will be £7,650 in Wales.

There are areas where the Welsh arrangements will be more favourable, which weren’t mentioned:

The total value of support for those living away from home, who make up the majority of HE students in both nations and who by common agreement face the greatest cost pressures: this will be £9,000 (£11,250 in London) for students from Wales, compared to the review’s £8,100.

The inclusion of part-time students, who will get support pro rata in Wales, but remain unaided for living costs under the review’s package. The review makes general statements about the desirability of funding part-timers, but remits the issue back to the SG and its recommendation’s costing is for full-time students only.

Much (much) greater use of non-repayable means-tested bursary to provide this living cost support in Wales, so that living cost loans will be much lower at low and middle incomes.

The extension to taught post-graduate students in Wales, who will get a similar package to undergraduates, although the implementation of that in full will take longer. The review did not look at taught post-graduates: Scottish ones can now borrow something towards fees and living costs, but the Welsh arrangements for this group will be much better.

The opening video presentation for the launch emphasised the problem of student hardship, i.e. students not having enough to live on. This is also a strong theme in the report. So how systems compare on total living cost support, especially for the people facing the highest costs, feels like it should weigh pretty heavily in any objective comparison, on the review’s own terms.  As might how far that support is offered at low and middle incomes on terms which are more likely to actually be taken up – that is, how much is grant. The Welsh plan is substantially better on both those counts.

The inclusion of full-time non-EMA FE students is balanced by the exclusion of all part-timers, in HE and FE, and post-graduates. I’m going to write elsewhere about specific comparative claims made in the report about the loan scheme, but in brief the interest rate difference does not self-evidently outweigh a £3k difference in the repayment threshold, particularly for low earners.   Clearly, benefit interaction is a very serious issue for those who are affected, and they will tend to be particularly financially vulnerable, but the review does not say what proportion of students are affected by this, or how much money may be involved. I think one, ideally both, figures would have to be reasonably high to justify a claim this mattered more than differences in general support, especially grant support.

What about fees?

The review made its claim specifically about its own proposals, from which fees were excluded. But if fee debt and funding is regarded as relevant then other comparisons would apply.

In Scotland debt for those who study in-country will be lower per annum, which for many people may be the be-all-and-end-all.  However, the difference with Wales will be pretty small at low incomes, and in a few cases the extra year of study in Scotland for an honours degree may more than wipe it out. Those who leave Scotland to study will have higher debt at low and middle incomes, compared to counterparts from Wales, because they will pay the same fees, but get little or no maintenance grant by comparison.

As well as applying to all Welsh students, not only those who stay in-country to study, the Welsh package concentrates non-repayable cash funding far more on those from households with the lowest incomes, protecting them more from debt relative to those from higher income families. That’s only arguably better: it depends on your thinking this matters. But that is the whole point about my complaint about these general comparisons. Perspective matters and needs to be made explicit.

“A” for effort?

The chair also seemed to be offering one further argument for the UK comparative claim, which was to do with how hard the group had

“tried to create the best in Scotland”

The argument sounded to be that in doing the best they could, the group must have come up with the best package in the UK.

If that was the implication, then there’s a huge logical leap. I don’t doubt at all that the review members feel they did the best they could within the terms they were given. When I run in the school parents’ race I try to do the best I can, within my own considerable constraints. It doesn’t mean I win.

In any case, the review itself identifies that there was a better, higher grant, package that is not their recommendation because it was beyond their remit. Moreover, the Diamond review no doubt also felt they did they best they could for Wales. So on this logic theirs must be best in the UK, too.

Best in what way? Best for whom?

It clearly bears repeating that student support systems have many different elements, some of which matter more to some people than others, and which will affect people differently depending on their circumstances. Then there are people like me who worry about system-wide effects, like how students are treated relative to one another. The chance of finding one which is best on every conceivable important measure in most, let alone all, cases is low. No UK scheme achieves that now or in the near future will manage that. Assertions of “bestness” become increasingly meaningless and value-laden, the more general they are.

Even narrowing it down to students from particular backgrounds, it is rare to find a system which is “best” on every obviously important measure.  When I compared UK systems in detail a couple of years ago, there was only one group of students for whom one system came close to being objectively “best”. For students from families earning at least £54,000 who stayed in-country to study, and were not later low earners, Scotland clearly offered the best terms. I think that will remain true under these proposals, but I haven’t re-run the sums.

Conclusion

There was no need to run this line.  There was no need to double-down and repeat it unprompted. It was not included in the report: it appears to have been developed in the final stages of deciding the presentational approach. Student support is not a cross-UK beauty contest or an arms-race: comparisons are enlightening and thought-provoking, but the primary focus should be on the policy choices being made within the boundaries of each home nation, and who benefits (and who does not).

The benefit of a review such as this should be that it lifts the debate above the political stramash which typifies the discussion of student funding in Scotland. It was a chance to concentrate on the mechanics free of the more questionable rhetoric. So it has been simply disappointing to see this highly rhetorical distraction device being brought out again. At least this time, unlike in 2012, it has been possible to test the basis. Readers can judge the answer offered for themselves. To me, it sounded more like an explanation hastily reached for after the line was decided, than the conclusion of a piece of careful analysis and deliberation, from which the line was drawn.

I think the review is a little diminished by its association with this claim. It was so central to the line run by the government, and echoed by NUS, in 2012 that it is hard to believe it has appeared spontaneously. In any event, its use was ill-advised. There’s nothing wrong with any review trying to get the most favourable hearing it can, for all the hard work it has done.  It may even sometimes be judged that that requires paying for professional PR advice, as is happening here (two senior partners of Charlotte Street Partners, Kevin Pringle and Andrew Wilson, were present at the launch).  But for an exercise like this, there’s no price that can be put on being perceived to be above spin.

Student support review #3: further issues – a run through/aide memoire

There are a few other issues which stand out as deserving more attention, in no particular order.

The benefits of the new flat rate entitlement to  those just above to grant cut off, where family contributions are currently high relative to income, and to those at higher incomes whose parents cannot or will not support them, as long as they are willing to borrow.

The movement of FE bursaries onto an entitlement basis – a generally good thing, although the report’s references to increased interaction with the benefit system may hint at why this has not been done before. It’s not clear if this needs legislation.

The extension of loans to FE as an issue of principle: that raises some interesting questions. The ground has been partly broken by FE fee loans in England.  The report doesn’t mention whether the review looked into any potential for lessons from that. I think this might need legislation: the report does not address that point.

The review’s claims that loans terms here are and will be superior to those in other parts of the UK: one of these is wrong, others don’t have the supporting analysis that appears to be required required to back them up (more on that to follow). Generally, from the repeated references to it at the launch, the fact of lower interest rates in Scotland than England and Wales (though not Northern Ireland) seem to loom large in the review’s worldview. At the launch, it was implied that the proposals in the report go beyond the existing SNP manifesto commitment to improve loan repayment terms: I don’t immediately see that, beyond a gentle nudge to consider following the English and Welsh rise to a £25,000 repayment threshold, but need to check again.

The review’s discussion of attitudes towards loans. It suggests a negative press for loans is more of an issue in other parts of the UK. But Scottish government ministers are extensively on record themselves talking in very negative terms about loans, where they are used for fees, without any apparent concern about how that might affect attitudes to borrowing here for living costs, and the SG has not actively promoted loans as a funding source in Scotland, despite promises to the parliament during the autumn 2012 that it would do so.  However negative the media, there’s been quite strong official promotion of loans in other parts of the UK, by contrast, for obvious reasons.

The further discussion at the launch about the basis for a more general claim of the recommended system being best in the UK: a short post on that will follow.

The suggestion student support should be calculated only to cover 25 hours a week of study for full-time students, to allow up to 10 hours of paid employment within a 35 hour week: that compares to 35 hours  assumed in Diamond. The views of university and college teachers on this would be interesting.

The lack of any discussion of the fall in numbers taking a grant in recent years, the possible reasons for that and its implications for a Scottish funding model: that’s very disappointing.

The review’s recommendations about the relationship between benefits and student finance. The report shows that for reasons that are not at all clear, Scotland is the only part of the UK which has not adopted a way of labelling/packaging support to reduce its impact on benefits. The review makes recommendations it hopes will more than catch that position up: but it appears to suggest that for quite a few years Scottish policy has failed to spot a relatively simple way to provide practical help to at least some student on benefits. That’s quite a finding, if I am reading it right.

The general evidence base and presentation of supporting figures in the report: on a first read, it feels much thinner than others on this general theme here and elsewhere in the UK over the past two decades. There’s more to say on that, and the resourcing of the review, probably.

There are various recommendation about system administration and information, which look sensible, particularly for a large improvement in on-line resources. They are probably more for others to comment on.

The review of student support #2: its consideration of grants vs loans

The report of the SG’s student support review was published yesterday: it is available here http://www.gov.scot/Publications/2017/11/3884. This post looks at its treatment of grant and loan, and says the last rites over bullet point 2 of recommendation 19 of the Commission on Widening Access.

Remit

It’s difficult to over-state how far this review was constrained by the remit the government set it (see page 15 in the link above).

It could not be the Diamond Review (although there are signs it aspired to be something of a Diamond for Scotland), because in Wales Diamond was given free range to look at whole of higher education student finance and its complete effect on students.  This review was specifically told  not to look at fees. So though the review describes itself as aiming to be “holistic”, it had no choice but to be holistic with a large hole.

The group stuck carefully to the prohibition on looking at fees, and it’s not clear there was any appetite to do otherwise. As the chair said at the launch yesterday:

We really support, I’m sure everyone does, the Scottish government’s focus on funding tuition fees. We commend that.

The odd effect of this remit restriction was well-illustrated earlier this year, when the Scottish government invited tenders on behalf of the review  for comparative research into systems in other countries. Bidders were specifically asked to exclude fees from the comparison, but still to draw conclusions on the relationship between student funding and participation.  (The final report is available here, by Anna Round and Russell Gunson of IPPR Scotland, the latter also being a member of the review group.)

On top of this, the government told the review not to come up with anything expensive. As the report puts it:

But the Scottish Government also made it clear in the remit that any recommendations from the Review should be made in full awareness “of the evident constraint on the public finances”.

Or as the chair, Jayne-Anne Gadhia, put it at the report’s launch (I hope I was writing fast enough to get her exact words).

in other words, could we do this and not cost the government very much more money

Grants versus loans

The review kicked a bit more against the funding restriction, but only a bit, listing a further option which would mean increasing means-tested grants, at a cost of £123m. NUS Scotland strongly pushed for that (supported by Unison). But this “50/50 bursary to loan balance” option is described only as “an aspiration of most of the board”. It’s not the review’s recommendation.

The review more generally says

how should levels of loans and bursaries be balanced? This was arguably the hardest question we considered. The Board found it helpful to view the costs landscape as a journey to be achieved over time. However, the rate of progress to fair funding and parity is for the Scottish Government to determine based on the public funding they wish to allocate in any particular year

That feels a rather jargon-heavy (“view the costs landscape”?) and non-commital position. It is certainly well short of strong arguments made for targeted grants  as a progressive intervention in the Diamond review, and previous ones in Wales: those however were free to switch resources from fee subsidies to grants, to make their recommendations affordable.

The recommendation

The review recommends a “hybrid approach” which is will keep HE grants at their current low level (especially low for mature students), and put a little more into FE bursaries, but rely on loans to give everyone, at all incomes £8,100 of total support (copying from the Diamond Review’s flat-rate model, but ignoring its arguments for the substantial use of grant to achieve this).

Surprisingly perhaps, the report only shows what its recommended option would mean for the lowest income young students in HE, and the lowest income FE students, and no others.

But given it assumes no new grant spending in HE, it seems reasonable to fill the gaps using the existing HE grant levels: see below.  I think it’s untransparent of the review not to include this table (or whatever equivalent it has used to produce its costings). It suggests wariness of making clear how much loan its package would involve for most students, if they wanted to make the £8,100 reality. But that’s the consequence of living with the existing level of HE grants.

In passing, I’m disappointed the review doesn’t comment on the lack of justification for giving mature students less grant than young students.

Young Independent (mature)
Household income Young Student Bursary Loan: new (old) Independent

Student Bursary

Loan: new (old)
0-£18,999 1875 6225

(5750)

875 7225

(6750)

£19,000-£23,999 1125 6975

(5750)

0 8100

(6750)

£24,000-£33,999 500 7600

(5750)

0 8100

(6250)

£34,000+ 0 8100

(4750)

0 8100

(4750)

This change does address the complaint from people like me that the previous system was designed round higher debt at lower incomes. Whether in practice it translates into a distribution of borrowing no longer skewed towards the lowest incomes will depend on whether higher income families withdraw from providing living cost support on any scale (or their children borrow the money on top of that). That is, a less regressive pattern of borrowing by income will depend on a significant rise in student indebtedness at high incomes, rather than a reduction in it at lower ones.

Around one-quarter of students on YSB don’t take out a loan: the review report disappointingly does not discuss the implication of that for its proposals, although it does discuss the need to encourage a more positive view of student loans, especially as an alternative to commercial debt.

I can’t repeat this table for FE students, as the review recommends an increase in grant, but only says what this would mean at the highest rate (an increase from around £3200 to £4050) and not how it might then taper. The cut off for FE grant is much higher, at £45,000. The review really ought to have shared in more detail its assumptions about FE grant and loan at different incomes. It says its planned increases in FE bursary would cost £16m (+25%) on current spending.

We know that YSB students in college are less likely to borrow than those in university (30% in college do not vs 20% in university). That raises further questions about what sort of take-up  of loans there might be among FE students in practice. The review confirmed yesterday that it had not tried to estimate this. Its costings assume 100% loan take-up.

Conclusion: an Access Commission recommendation quietly buried

It’s worth remembering that some of the origin of this review was Recommendation 19 from the Commission on Widening Access. Emphasis added.

Recommendation 19: The Commissioner for Fair Access should commission research, within three months of appointment, to assess how student finance impacts on the participation of disadvantaged learners in higher education. This research should consider in particular:

  • Whether, and to what extent, levels of student finance impact upon access, retention and choice of institution.

  • Whether, and to what extent, the balance between loan and bursary impacts upon access, retention and choice of institution.

  • International practice on student finance and the impact this has on access and retention.

As “Implementing a Blueprint for Fairness” puts it (emphasis added):

Further and Higher Education Student Support Review

This independent review, chaired by Jayne-Anne Gadhia, CEO of Virgin Money, has a remit to thoroughly review student support and ensure that the entire system is firmly focused on meeting the needs of all students in further and higher education. The review was launched in October 2016 and is scheduled to report to Ministers by autumn 2017. The Chair met with the Commissioner for Fair Access in May to discuss the links between the Student Support Review’s work and the findings of the Commission. Work to deliver Recommendation 19 (Research on student finance) and Recommendation 20 (Better information on student finance) will be considered in the context of this review.

In terms of addressing the second point of Recommendation 19, this review just didn’t. With no substantial analysis of alternatives and their possible implications, it simply embeds the cuts in HE grants made in 2013,  doesn’t challenge the longer standing placing of mature students on a lower grant rate, and increases the use of loan substantially. But that can be traced directly to the constrained remit the review was set by ministers. The chance to look seriously at the balance of loan and grant was removed by government before it started.  Recommendation 19 will now be marked as ticked off, I suspect, but an important part won’t have been done. Point 2 has been quietly killed. There’s presumably absolutely no political appetite for stimulating any debate on how loans compare to grants as a way of funding living costs.

 

 

The review of student support #1: the etiquette of being introduced

Towards the end of Through the Looking Glass. Alice, very hungry,  arrives at the final banquet.  However, just as she is about to dig into a leg of mutton, or a plum pudding, she is introduced to it. And, as the Red Queen says “It isn’t etiquette to cut anyone you’ve been introduced to”.  “I won’t be introduced to the pudding, please,” Alice says, “or we shall get no dinner at all.” “Pudding – Alice; Alice – Pudding” the Red Queen persists.

This has long struck me as explaining the tone of much public policy debate in the small policy community that is Scotland. Everyone has been introduced, repeatedly.

It came to me again today at the launch of the report of the Scottish Government’s Review of Student Funding.   First, it was good of them to invite me. Second, everyone was of course really lovely, and the staff who had supported it gave me their time at the end to deal with a whole lot of technical questions I had, which were dealt with patiently and straightforwardly. And now I feel as though I am standing over the plum pudding, with my cutlery in mid-air.

So before digging into the report, it’s important to acknowledge that whatever criticisms may be made of the report, or the process, or particular findings, or the presentation, the people involved deserve recognition for having put a lot of time, over and above their usual duties, over the better part of a year, to try to make sense of what was a very constraining remit. Within that, they have made some recommendations which have potential to have a lasting impact for the good.  I’ve read through the minutes and you cannot fault the earnestness with which the group approached all this. We should be grateful that people are willing to take on this sort of work.

The story of this review is above all the story of its remit. Limited by that, the review has made its case over 84 pages.   As the Red Queen says, after the pudding gamely chats despite having lost a slice (Alice finally loses patience with etiquette), “it’s ridiculous to leave all the conversation to the pudding”.

The next post will attempt a critical overview of the main recommendations.

An old government spin line comes out of retirement

The Scottish government’s review of student support will be published tomorrow.  Once the full report is available, it will be possible to analyse its proposals. This post only considers the spin being put on it today.

Today’s coverage: “best in UK” klaxon

Two papers have been given advance briefing about the report: the Sunday Times and the Sunday Herald (which labels it an “exclusive”).

The headline story in both is that all students in FE and HE will receive £8,100 of living cost support, composed of an unspecified mix of loan and grant which will left to Ministers to decide.  A “source” from the review is quoted in both papers as saying

Establishing a minimum student income would be a huge step forward and taken together our recommendations amount to the best student support package that would be available in the UK.

Long time observers of the Scottish Government’s handling of student support announcements will recognise the “best in UK” claim. It was the centrepiece of the SG’s August 2012 announcement, which managed not to mention at all that its plans included a £35m (30%) pa cut in spending in student grants.  In 2012, the basis for the favourable comparison was nowhere stated, or teased out by the media at the time. It was nevertheless reported widely: the “best in UK” headline appeared widely across the press unchallenged.

It was digging into this claim out of straightforward curiosity which accidentally set me off towards a new career as a specialist in comparative cross-UK student finance. My conclusion in that earlier work was:

no one system can be claimed as best in the UK, other than subjectively and on the basis of partial comparisons.

This remains true.

So seeing this line  was like meeting an old friend.  But in a rather surprising context, because this time it is not the SG briefing, but what the SG has officially labelled its “independent review of student support” (emphasis added).

Further, an “exclusive” Sunday briefing before a Monday launch is a longstanding professional PR tactic. Its aim is to manage coverage, by slipping out some conclusions ahead of the rest, accompanied by the preferred interpretation. It means initial reactions are based on imperfect information, selected for maximum favourable impact, plus spin which may go beyond what is actually in the report.  It also means that if the full story raises more difficult questions, by the time these emerge, it is old news, editors are more likely to spike coverage and thus criticisms are slightly less likely to get publicity. It was an unexpected tactic for an impartial independent review to adopt.

A partial claim?

“Best in the UK” is a surprising claim for an independent review to fasten on not only because of its resonant and not entirely respectable recent history as a Scottish government spin line, but because it’s unavoidably a subjective claim. There are a broad range of aspects of student funding systems you might compare, including:

  • how much students get to live on at the lowest incomes
  • how tightly “lowest income” is defined
  • how much students get at all other incomes
  • how that varies according to whether you live at home or away
  • how much of that has to be borrowed
  • which categories of students are in and out of scope
  • what final debt is at different incomes
  • who ends up with the most debt
  • the terms of your loan scheme
  • etc

There is no scheme which is “best” at all this as of today. The review proposals as revealed so far will not alter that fact.

Most obviously, from next year (the soonest any new Scottish proposals could come in), Welsh students living away from home will be able to claim £9,000 a year  (£11,250 in London), £900 more a year than the Scottish review proposes: more here.  Moreover, all but £900, ie. £8,100 [NB correction from initial post, which stated the whole amount would be grant] of Welsh living cost support will be provided entirely as non-repayable grant at the lowest incomes, and grant will be worth multiple thousands much further up the income scale, with everyone getting at least £1,000.  The Scottish review, we are, told, will leave the Scottish government to choose the grant/loan split.  The arrangements in Wales will also cover part-time students pro rata: minutes of review meetings suggest it has only looked at full-timers. In Wales,  borrowing is and will remain skewed away from those from the lowest incomes: in Scotland the way is being left open for the opposite to continue.  I recently heard the relevant Minister from Wales claiming Wales would have (wait for it) the best system in the UK, even after allowing that students will have to borrow up to £9,000 for fees alongside.

The point is, that claiming to be “best in the UK” means making judgements about what – and who – matters most.  If an independent review repeats this claim in its report, it needs to spell out precisely the basis for that claim, and justify why it is ignoring or counting as irrelevant certain areas where it does less well.  Otherwise it will sound like no more than the re-run of an old political spin line, which does not belong in this sort of document. And if someone has spun a line ahead of publication which members did not agree to include in the report, that would raise a different question, about who is in control of the review.

Who’s briefing?

It’s in the nature of this sort of story that the source is left vague. The Sunday Herald call him or her “a review group source”. the Sunday Times uses “a source from the review”.

We do know however that the review has engaged Charlotte Street Partners to do at least some of its media work.  Invitations to tomorrow’s launch sent to journalists this week came from CSP.  CSP is well-known in Scottish lobbying circles: it is one of the most high profile “strategic communications” firms north of the border .  Specifically the invitations (or at least the one I’ve seen) are from Kevin Pringle.  Pringle’s biography on CSP’s site says:

Kevin Pringle joined us as a Partner in 2015. He is one of our most experienced strategy and communications advisers and has a greater knowledge of Scottish politics than anybody we have ever met. He is widely regarded as one of the most respected strategic communications experts of his generation, having worked in frontline politics for many years, helping steer the SNP successfully from a small opposition party to one of the greatest political success stories of modern times.

Between 2004 and 2006, Kevin earned some valuable private sector experience with Centrica’s Scottish Gas business, before rejoining the SNP’s political machine. Following the 2007 Scottish elections, he was appointed senior special adviser to the first SNP First Minister of Scotland, Alex Salmond. Kevin went on to become director of strategic communications for the SNP, playing a central role in the cross-party Yes campaign. He is currently a columnist for The Sunday Times in Scotland.

From May 2011 until 31 August 2012 Pringle was the SG special adviser in charge of “strategic communications across all portfolios”, so the 2012 “best in UK” line was first developed, as it happens, on his watch in government.

Engaging Pringle to manage its media relations is without doubt therefore an interesting move by the review. Typically these bodies are supported in their activity by officials seconded from government.  This one has had a more complex support structure – a mixture of civil servants and staff from Virgin Money (a story for a different day), but invitations to the launch to people like me came from a civil service address.  Buying in outside top-end PR help (and as Pringle’s biography shows, you’d struggle go more top end in Scotland than him) specifically to deal with the media is, or used to be, less common for independent advisory bodies.  I don’t think it happened with the recent Commission for Widening Access or with the earlier Cubie Review, for example.

Looking past the spin

The real interest in this review will come with access to its full report tomorrow. From the early briefing, the review will not come out arguing unequivocally for extra investment in grant, but offer government a range of choices, which will include using loan to provide all or most extra support.  There’ll be plenty to discuss, therefore.  Playing games of airy and unexplained one upmanship with other UK nations will, however, be the least interesting way this debate could go, or be covered by the media.  Those seriously interested in the substance of policy-making here in Scotland might instead pay particular, careful attention to how decisions that may be made here would affect Scottish students from lower incomes, and what questions this raises for the continued commitment to sinking £1 billion annually in 100% universal cash subsidies for fees (clue: some loan could be deployed here instead, and cash extracted and used for grants).

In August 2012, Mr Pringle and/or his colleagues successfully obscured substantial grant cuts and debt increases for tens of thousands of students from lower income homes by offering a comfort blanket story of national superiority.  Let’s make the PR people work a bit harder for their money this time.

 

Footnote:  But … free tuition?

Some people will always feel that any system which is based on free tuition is automatically better than any other.

But on that argument, the review could have recommended the complete annihilation of all living cost support in Scotland and it would still be proposing the “best” system. Clearly (I hope) no-one would believe that.

So we need to get past playing the absence of tuition fee debt as a trump card. It’s something to include in the equation – but how that equation works out, not least across different incomes, then needs working through.

It’s also worth noting that the full comment was “taken together our recommendations amount to the best student support package that would be available in the UK” (emphasis added).  It’s a small point, perhaps, but fee support is specifically outside the review remit. It was not allowed to make recommendations about fees. Thus the source’s own words invite us to compare living cost support packages quite specifically.  So it’s a particularly bold claim, in any world where £9,000 is higher than £8,100.

A case study in the brutalism of small decisions: the changing threshold for maximum grant in Scotland

Over the past year, the Scottsh government has been very keen to celebrate its decision to increase the income up to which it provides maximum grant. It was doing so again yesterday:

The Scottish Government said almost 3,000 additional students qualified for a non-repayable bursary or saw their funding increase as a result of the income threshold being raised from £17,000 to £19,000 last year.

I’ve been critical of this line, because it obscures that the celebrated increase simply reverses most of cut made by the same people in 2013. Up to 2012-13, maximum grant was available at household incomes below £19,300. In 2013-14 that was cut to £17,000. Even leaving aside that £19,300 in 2012-13 would now be somewhere above £20,000, the most recent increase isn’t therefore much to boast about. It’s like standing hard on someone’s foot and then expecting them to be grateful when after a while you stand on it a bit less hard.

The reason for highlighting this is not just as a failure of honesty in government communications (though that is partof it), but because the change in 2013 had such a serious negative impact on individuals. As the line quoted above shows, for the first time we can now say with some certainty how many.

The way the figures have been presented (nothing dubious, just how it’s been done)  have made it impossible to identify until now how many people fell into the £17,000-£19,300 band. This year, however, we have figures on the numbers with incomes up to £19,000 and we can compare that with earlier years, when the cut-off was lower.

The chart here shows how numbers in the lower and higher bands have changed: the higher band was £17,000 to £23,999 for the first three years and £19,000 to £23,999 last year.

Screenshot 2017-11-01 at 08.30.56

There were a pretty consistent 9,000 in this band between 2013-14 and 2015-16. The lower band fluctuates more, which is probably because it contains a large majority of low-income mature students, whose numbers have tended to be quite unstable.

On the basis of these numbers, the SG’s 3,000 looks like a fair estimate of the number caught by the threshold cut in 2013-14 (or a bit of an under-estimate, bearing in mind the new limit is still below the old one). The changes, down and up, have been applied to everyone, new and continuing. The original move probably saved the Scottish government around £4m a year in 2013-14 and 2014-15, and slightly less in 2015-16, when £125 was added to the grant reducing the saving by around 10%.

Here’s why the impact of the 2013 change on the group can properly be described as brutal.

Other data suggest it is likely most of those affected were younger students, eligible for YSB.  In 2012-13, every young student with a household income up to £19,300 was entitled to a grant of £2,640.  If they chose, they could top that up with loan of £3,740 to a total sum of £6,380   (living away from home; less loan was available to those living at home).

In 2013-14, their grant was cut to £1,000 and they were offered a loan of £5,750 (whether living at home or away), to bring total support to £6,750.  Thus they lost £1,640 of non-repayable cash funding every year.  Even if they were willing to take on the whole higher loan, and borrow £2,000 more a year, that only improved their overall support by £400.

Around a quarter of YSB takers don’t borrow: those in this group simply lost 62% of their income. Remember, this included students already in the system, who’d entered expecting this grant.

I think a real injustice was done to the people in this group, who experienced a clear, significant detriment. In regarding this as an acceptable penalty to apply to this small, vulnerable group, government did an archetypally bad bit of policy-making. In throwing its whole weight uncritically behind the 2013 changes (at the time: they no longer do) and not even insisting on a safety net for those already studying, NUS Scotland performed poorly.

Thus, every time ministers highlight the increase in the threshold in 2016-17, they are doing so on the back of these dramatic losses for two or three thousand young people from low-income homes every year from 2013-14 to 2015-16.  I’d not be so proud of that.

Latest Scottish student support statistics: claimants for YSB no longer falling but remain historically low

Some brief analysis of the annual Scottish student support statistics are published today: link here.

Last year, it was the accelerating fall in the numbers getting a means-tested grant which stood out: see here: https://adventuresinevidence.com/2016/10/26/the-mystery-of-scotlands-disappearing-low-income-students/

This year numbers are higher, but the absolute number on Young Student Bursary  and, even more, the number on YSB as a proportion of young students remains historically low and needs an explanation.

Means-tested grant claimants

Something really odd has happened to the number of younger students claiming a means-tested grant.

The figure below shows the trend in the number of students claiming YSB (plus the separate Young Student Outside Scotland Bursary from 2004-05 to 2010): YSB is available to students under 25.  The figure will understate the number of young students getting a means-tested grant prior to 2013-14: various small non-age specific means-tested grants existed prior to that, which were rolled into YSB (and Independent Student Bursary, for older students) at that point.

YSB change

Note: Rise in 2005-06 likely to be due to increased rates and thresholds that year.

While the numbers below the age of 25 have risen by 21% since 2004-05, the number of young students getting a means-tested grant in the last two years has fallen to its lowest level in over a decade.

The figure below shows YSB (and YSOSB) recipients as a percentage of all under 25. Some people on YSB may have been over 25, so the true proportion of the relevant age group getting a grant will have been lower in every year – but the trend is startling.

YSB as %

 

There may be some sort of technical explanation for the fall in the last two years (have some been moved onto the much lower Independent Student Bursary?), but even then the longer-term trend is a concern.  It clearly deserves explaining. If the student support review due to publish soon has nothing to say about this, it will be very disappointing.

The news on independent students is better. These have had a national means-tested grant since 2010. After a boost to numbers in 2013-14 (likely to be due to many students moving on to ISB who were previously on a separate grant for professions allied to medicine), the number here had been falling, but is now up. The number of older students over the period has grown, too, but only by 3.8%.  The potential for year-on-year volatility looks like the issue here.

ISB

Spending on means-tested grants

In 2015-16 £125 was added to YSB for most recipients, and in 2016-17 the income threshold for the maximum grant was put back almost to where it was in cash terms in 2012-13.

The combined effect of these is now visible: between 2014-15 (before either change) and 2016-17, total YSB spending rose by £3.5m (9%), and ISB by £2.7m (23%, reflecting not least the rise in numbers this year) .

Total spending on means-tested grants remained £31m/35% lower than in 2012-13, even so, and these comparisons are in cash terms and take no account of inflation.

The average YSB payment rose from to £1235 to £1391 over the same two-year period.  For ISB, the figures are £710 to £827.

Total borrowing

Total borrowing has exceeded £0.5 bn for the first time (we already knew this from an earlier data release by the Student Loans Company).

Borrowing

Average borrowing remains almost unchanged: it is £5,300 compared to £5,290 the year before.  The rise in the total is due to more students borrowing.

Debt distribution

Borrowing by income is hardly changed, so that borrowing continues to be skewed towards those at low incomes, as  the design of the system would predict. Nothing new here: Scotland’s particular use of student loans remains indefensibly regressive.

Conclusion

These figures contain no major new surprises, other perhaps than the large increase in ISB claimants. But what’s happening to the number of younger students receiving a means-tested grant really does demand attention.

 

 

 

 

 

 

Has the average grant payment fallen by £400 over the past decade?

Last week, the Scottish Labour Party highlighted recent cuts to grants with this tweet.

Labour £400

This post checks the £400 quoted and concludes that the real terms fall has been nearly double that (and as much as £899, if looking specifically at Young Student Bursary).  As well examining Labour’s claim, the figures here also provide some context for the current review of student funding, which is due to report towards the end of this year.

Sources

The last year before the SNP came into government was 2006-07. Data on student funding over the period is available here: 2015-16 is the latest year for which average payments can be calculated.  The relevant data and my calculations from it are here: Grants 2006-2015.

Total non-repayable funding (grants and bursaries)

The £400 looks to be a calculation of the cash value of the change in the average value of all forms of non-repayable SAAS support taken together: this fell from £1,757 to £1,328 (-£429).  However, these figures take no account of inflation. Given this comparison covers a decade, it would be more conventional to put figures into a common price base – to make them “real-terms”. At 2015-16 prices, the 2006-07 average would be worth £2,051, making the real terms fall over the decade larger (£-723).

total grantsYoung Student Bursary

Total awards is a useful figure, but looking at it masks larger falls in the grant targeted specifically on young low income students.  For Young Student Bursary, the cash fall was from £1,914 to £1,336 (-£579).  The real terms fall is larger. At 2015-16 prices, the average YBS payment was £2,235, so that the real terms fall in the average grant payment to a young student from a low income family was -£899.

YSB average

As the charts show, the drop is almost all accounted for by the unpublicised cut made to YSB rates in 2013.  The slight rise in 2015-16 reflects the addition of £125 to most but not all YSB entitlements.

Total numbers receiving non-repayable support and total spending

For the bigger picture, it’s also worth looking at changes in the total value of payments and number of recipients. The charts below show the real-terms value and number of claimants of (a) total non-repayable awards and (b) YSB alone.  This shows that as well as the average falling, so did total spending, as did the number of students receiving non-repayable grants, and YSB alone. Yet total student numbers have risen over the period, and in 2013 a number of smaller grants covering just over 2,500 students were rolled into YSB.

The spike in the total in 2010 is due to mature students being brought back into a national grant scheme (albeit at lower rate than YSB): the fall in 2011 is due largely to the abolition of travel grants the year after.

 

Total spendingTital claimants

 

 

 

 

 

 

 

 

 

Response to the consultation on student support

Here’s my final response to the consultation on student funding, run by the SG’s Student Support Review.

The  questions are still quite open ended, although the review is now in its final few weeks: it is due to report in the autumn. Where questions are asked about a specific proposal, a “minimum income guarantee”, what is meant by that is not defined. The SG uses this to mean “the maximum amount of support, available only to those at the lowest incomes”, but the questions make it sound like what’s envisaged is something more like the Welsh plan for a uniform support entitlement, provided in a different mix of grant and loan, depending on income.

It’s not clear whether the review is prepared to argue for increased cash investment in support for low -income students, or is asking its questions in the context of taking a zero-sum approach to non-repayable funding. That matters a great deal.  The difference between FE and HE support, in value and legal entitlement, is a critical issue for the review. But it’s had to see how that gets fixed with no new cash.

The concern about this review must be that, having been told that fees are outside its remit, if it is not looking at increased cash investment, it will be tempted to suggest that the SG makes much more use of student loans to plug holes in its living cost support, particularly for those from low incomes and those studying on FE-level courses (there’s  some overlap there).  In stacking up debt even more disproportionately among those from the lowest incomes, that would be a regressive move.

In theory, however, the review offers the chance to make some improvements, including to reverse some of the worse features of the 2013 changes: not just lower grants but also a lower income threshold for maximum support (only partially corrected last year), the introduction of very sharp stepped reductions in support at particular incomes, and the removal of any extra support for study in London.  It is also a chance to sort some longer-standing issues, such as the lower grant offered to independent (mature) students and the relatively poor levels of support available at incomes between £34,000 and around £45,000. There are new things to look at, such as whether students on 1+4, 2+3 or 2+4 models should have a year (or two) of their debt written off, so that the SG is putting its money where its mouth is, in regard to its increased emphasis on college entry to HE as a route to university.

It’s also a chance to remind everyone of the current government’s commitment in its manifesto to increasing the loan repayment threshold to £22,000 (it is currently around £17,500; it is £21,000 in England and in Wales) and reducing the write-off period from 35 years to the 30 years used in the rest of the UK.  Although this unqualified manifesto commitment was remitted to the review (not a common move for a single party government so soon after an election), surprisingly perhaps the consultation does not include questions asking specifically about it.  It would be the most effective way to help lower-earning graduates, and if the review does not hold the SG to making these changes, it will be very disappointing.

The consultation ran from the end of June to the end of August. That’s less than the SG’s standard 12 weeks, and coincided with the summer break.  If the review nevertheless gets a decent number of responses, it will be evidence that a consultation like this has been long overdue. If it doesn’t, then I suspect the timing will turn out to have been a large issue.

Sections in italics below are my responses.  I’ve only answered the ones where I felt I had something to say.

——————————————————

1 – Greater alignment of financial support for students across colleges and universities with increased fairness in what all students can access;

Rationale: to create parity for all students whatever the level of study

1.1 Should there be parity in funding levels available to all students, based more on need rather than the level of study?

This is a hard principle not to support. But if it would simply mean spreading the existing cash resources available for those in the greatest need even more thinly, it would be very problematic.  Taking already limited support from one low-income group to help another cannot be the right answer.

There is already some evidence (previously shared with the review team) that take-up of grant, particularly the £500 level of YSB, has fallen as grant has reduced in value: it is plausible that some students do not regard it as large enough to justify asking their families to go through means-testing. Cutting existing HE grants further therefore risks not only higher debt or reduced grant support at low incomes, but low income students falling out of means-tested support entirely.

What is meant by “need” also matters here. Underlying expectations of family support (cash and kind) at different ages and stages are especially important. Does a 17 year old studying at school have the same need for state help as a 19 year old from the same household who is entering post-school education?   There is a strong argument that post-school level young people need to be supported in having more choice over where they study and live, and that our expectations of direct family support should reduce at that stage.  The review could usefully take a view on this.

1.2 How could parity be achieved and how can we maximise the income available to students?

It is very important that grant and loan are not treated as inter-changeable forms of living cost support. Otherwise, it is very likely that those most dependent on state help with living costs will end up either with the most debt (particularly if they do not move directly from school to  university) or not taking out their full notional entitlement.

My MSc research (already discussed with the review team) showed that a significant minority of those entitled to YSB do not take out the loan required to top it up to obtain their maximum entitlement to support.  Those in college-level HE are particularly likely to be non-borrowers, especially in first year.  Any proposals here should take into account the evidence we already have of the lower propensity to borrow of those on sub-degree courses in college.  Grant-only HE students receive less support than those who receive an FE bursary.

It is not clear whether the review is prepared to argue for higher investment in non-repayable forms of targeted student support for those from lower incomes. This is however the only way to improve living cost support for those at low incomes which can be relied on to be largely taken up by that group, and which will clearly avoid them facing a later penalty for their lower-income starting point, in terms of having to repay a larger debt.

1.3 How can parity in funding be achieved without having a negative impact on benefits?

I cannot comment on the interaction with benefits, although I would hope the devolution of some benefit powers to the Scottish Parliament would give Ministers more flexibility to deal with the interaction with student support, for example by filling gaps where benefits are withdrawn. I am aware that the interaction with Carers’ Allowance can be particularly difficult for some students.

1.4 What is the most effective way to determine which students are most in need of bursary support?

The Rees Reviews in Wales noted that there was scope to refine the means-test and that some systems include wealth/assets in the assessment. 

The system could do more than it currently does to take into account the number of dependents there are in a household and the impact of that on family liquidity. Students from middle and higher income households which are supporting multiple children in post-school education could be given access to an additional loan entitlement, as a de facto way of enabling parents in this situation to spread their contributions to their children over a longer period.

The move in 2013 from tapers to large losses in entitlements at three particular incomes (especially £34,000) should be reviewed: it results in disproportionate loss of support for minor changes in income.

The age discrimination in HE grants should be removed, so that students no longer receive a lower grant (and higher loan) because they are classed as “independent”. The original justification for the different treatment of young and independent students was that independent students had access to a separate Mature Student Bursary Fund and were not liable for the graduate endowment. Neither of these is still true. Mature students are disproportionately from disadvantaged backgrounds, and have historically received additional support in recognition of their great financial liabilities: yet in Scotland at present are expected to borrow more.

2 – A simplification and clarification of the systems used to provide financial support to students in Scotland today;

Rationale: to remove some of the unnecessary complexities and enhance the student experience

2.1 What are the key features of the current system that may deter or make it more difficult for students to access, or stay in college or university?

The heavy reliance on loans for living cost support at lower-incomes risks deterring some students from taking out their full support, increasing the risk of excessive term-time employment and/or dropping out.

The sharp drop in total support available as soon as income reaches £34,000 and relatively low total support to those from households with incomes between this and around £45,000-£50,000 carries the same risk.  The total support for those in this income range is unusually low, and therefore the expectation of family contributions unusually high, within the UK. Scotland is also exceptional in the UK in withdrawing all grant support at £34,000. There is a strong case for using grant rather than loan to improve the support for this group.

2.2 Do any of the current rules and/or practices in place make it harder to access or maintain study?

2.3 How could the way in which financial support is delivered to students at college or university be improved?

3 – Better communication of the funding available, including a clear explanation of the repayment terms of student loans;

Rationale: to assist students and prospective students to understand what financial support is available and when and how they access it

3.1 What type of information on funding would be helpful to students – both prospective and continuing?

More information should be available in an easily absorbed form similar to that developed by Sarah Minty of the University of Edinburgh (here).

The SAAS website should be substantially improved, to be more intuitive and more easily navigable between sections.   An online calculator, as available for other parts of the UK, should be developed.

3.2 How and where should that information be made available? Would a particular format be more helpful?

Online, paper-based and face to face information all have a role.

3.3 When should potential students first be given information on financial packages of student support?

Young peoples’ concerns about funding as a barrier to future study should be explored early, possibly at the point when N5 subjects choices are being made, to make sure that serious misconceptions aren’t limiting choices. But detail on funding may be better left till later, not least as it can change. Decisions here should be guided by research, or further research should be commissioned, if it does not exist.

3.4 What role should colleges / universities/ schools play in providing information on student support?

They should all have staff able to provide reliable advice on this.

3.5 What more could be done to support parents/guardians to better understand the student support funding available?

This group should be specifically targeted with information, as there is emerging evidence that they are the single largest influence on young people’s understanding of their financial choices.

It is not clear why parental contribution expectations ceased to be published several years ago. Even if there are (legal?) reasons for this decision, some way has to be found to tell parents about their expected contribution, for as long as support decreases as income rises, and to make it clear that this is a very long-standing part of student support in Scotland at middle and high incomes.

3.6 What could be done to help students understand more about student loans, including how and when they are repaid?

Scottish Ministers’ negative rhetoric about student debt, used to make comparisons with other parts of the UK, risks feeding Scottish students’ reluctance to make use of student loans. The Scottish Government needs to consider whether it is sustainable to rely so heavily on student loans for living costs while being so generally critical of student debt elsewhere. The common implication that £27,000 of debt is unreasonable sits uneasily with that being around the amount a low-income student is expected to accumulate in Scotland over 4 years.

The leaflet produced by Sarah Minty, cited above, provides a very good summary of the loan system for students, which could be the basis of information provided in other media.

4 – Further consideration of the levels of funding required for all students and the funding mix.

Rationale: to provide more funding, particularly for students from the most deprived backgrounds, and funding choices for students

4.1 Should a ‘minimum income’ guarantee be introduced across all students?

Does this mean following the Diamond Review model of giving all students access to the same value of support, using a mixture of grant and loan? If so, two considerations are:

first, the more this is provided by loan at low incomes, the more likely it is that a substantial of minority of students will either not benefit in practice or will be relatively disadvantaged long-term by having larger debts (see above);

second, if loans to those at high incomes are made available at the current  highly-subsidised interest rate, it is more likely that this cash will be used not for immediate support needs, but to give these students additional long-term advantages, for example by  being used as low-cost funding towards buying property, funding unpaid or low-paid internships, or postgraduate study. The Rees Review found evidence of such practices in Wales when interest rates there were pegged to inflation, as here.  There is a strong argument that any loan support made available to those at higher incomes for living costs should be provided at a less subsidised interest rate, as a disincentive students from higher incomes using student loans to increase their relative  advantage.

4.2 What should the ‘minimum income’ guarantee be, and why? Should it be linked to the Living Wage?

4.3 Under what circumstances should a ‘minimum income’ apply?

A “minimum income” would imply that it is a minimum for everyone.  However, that label is currently used in Scotland to mean the value of the maximum support available to those at the lowest incomes, which may be confusing for students. 

If this question is intended to explore the income level up to which the maximum value of support should apply, in line with the meaning of the current Scottish MIG, then the current cut off is relatively low, particularly given that support then falls by £750 in a single step. It is lower in cash terms than applied in Scotland in 2012, and therefore now even lower in real terms. It is substantially lower than in England. It is closer to the Welsh and NI level but these systems do not then withdraw support so sharply.  There is a strong case for increasing the income threshold for maximum support, especially if a stepped system continues.

4.4 What is the appropriate balance of bursary / loans within a ‘minimum income’?

Bursary should provide the bulk of support for those at lower incomes.  It should at least be high enough to mean that they are not expected to rely more heavily on loans than those at higher income, as is currently the case.

4.5 Rather than only Higher Education students, should all students have the option to access student loans, regardless of their level of study at college or university (in addition to existing bursary entitlement)?

The rationale for the introduction of student loans in 1990 was that graduates are likely to have higher earnings from their participation in HE. There is already evidence that this is far less likely to be true for those on HN-level courses. It is very questionable whether this argument can be applied to FE students.  Unless the repayment threshold is set much higher, these students would face a significant risk of seeing a net financial loss from taking part in FE, if they take out student loans which they then have to repay.

At a more practical level, as already argued, it is very likely that many FE students would not take out a loan, so that the government might have addressed their living cost support needs on paper, but not in practice.

Loan support for FE is also likely to lead to a much greater accumulation of debt by low income students who later progress into HE, unless such students can have earlier years written off if they progress.

4.6 Are there ways that the terms and conditions attached to student loans ( e.g. interest rate or repayment threshold) could be reviewed to support consideration of extension to all students?

The present government undertook in its manifesto to substantially increase  the loan repayment threshold and bring the write-off period into line with the rest of the UK. As Barr et al have shown, these two changes would do the most to protect low earners and thus make the loan scheme more progressive. The review should strongly recommend that these commitments are honoured for all students.

5 – Any other comments, ideas and innovations

5.1 Please use this space to provide any other comments which you believe are relevant to the review. In addition, your ideas and innovative suggestions are welcomed to help inform our final report on how the student support system can be fit for the future.

The decision to remove the additional living cost allowance for those studying in London should be reversed. Scotland is the only UK jurisdiction not to provide such an allowance.  Only small numbers are affected: the cost would be small and would come from the loan not the cash budget, if models elsewhere are followed. 

 

Ways to limit the accumulation of additional debt by those at lower incomes in 2+3, 1+4 and 2+4 models of study should be explored, including debt write-offs for repeat years.  Although this might reduce the incentive for students to avoid repeat years, (a) these  students would still face a penalty of later labour market entry and (b) it would encourage these students to make post-college choices based on their best educational outcome, not on limiting debt. It would also increase the incentive for government to reduce the scale of repeat years.

 

 

 

Aside

Draft response to the Scottish Government’s student support review

Widening Access: A modest proposal

The University of Edinburgh recently announced that it would, for the first time,  be offering some places through clearing which would be reserved for students from Scotland from the most disadvantaged areas.  It’s an inventive response to the difficulty the university faces (I’m assuming) in getting more applicants from these parts of Scotland.

It made me think about what puts people off applying to certain universities, and something I’ve heard just often enough to think it’s worth some attention.  We need to talk about open days.

I think of the relative who visited St Andrews in the 1970s and felt so at odds with who they encountered that they didn’t go (to university at all, in the end). The friend who also went to a St Andrews open day (in the 1980s this time) and had the same reaction, spending four very happy years instead at Strathclyde.  Other much more recent anecdotes, from friends and Twitter contacts, about Edinburgh and (less often but also) Glasgow.  It seems possible that the experience of visiting certain universities as a potential applicant on a general open day can be specifically off-putting.

I have been around and about George Square in Edinburgh over a couple of recent open days, seeing young people with their parents. Poor things, is my immediate reaction: the choice seems so enormous, so life-determining. I’m happy never to face that again.   But I also notice the signs of social class. This is not a very mixed crowd.

There’s some relevant personal history here, too. In 1984, I went to an open day at Oxford. No-one else from my school, an average sort of local comprehensive,  was interested, so I did the 5-hour-each-way train trip solo, arriving blurry from an early start in a strange city much bigger than the place I lived, its station on the edge of the centre, pre-Google maps and smart phones. Two colleges were being open that day. At the first, very old and distinguished, I arrived late and stressed: the benches in the lovely medieval dining hall were already full. It felt as though most people there had come in gangs, buses even, from the big public schools of southern England. With their teachers. I did the tour that followed the welcome speech, half of which I’d missed, but it was agony. I felt like a gatecrasher the whole time, awkward and scruffy and excluded. Then I bolted for the other college on my list, a 1970’s concrete thing on the fringes. I remember it was raining hard.  They were surprised to be reminded it was still their open day, but dug me out a friendly undergraduate who wandered me round, and dropped in on a couple of friends, who made me a coffee, cracked jokes and were brilliantly normal. My day improved.  Maybe Oxford might be alright.

Reader, here’s my confession. Both my parents went to Oxford. It’s where they met and they remembered it with huge affection.  Yes, they were first generation university students and entirely dependent on scholarships.  But  my father was a university professor. He’d been to one of those big public schools (more scholarships). The very old college was his old college.  But that open day nearly torpedoed my application to the entire university, because I felt so out of place among the other potential applicants I met there. It certainly took college number one off my list.  And yet I was someone whose family background should have put me at the top end of the feeling-entitled-to-be-there scale. So if I felt like that, I wonder where that leaves so many others.

So here’s my modest proposal.  People from fee-paying schools should be contained in a separate open day. That’s it.  Everyone else should be able to come on the other days without being confronted with that extraordinary, overwhelming  wall of outward confidence and upper-middle-classness which can be so daunting and alienating, particularly when you meet it for the first time.  Now anxious parents are involved, it must surely, if anything, be worse.

I don’t mean here that there should be special open days for “access students”, but for once applying the thinking of quotas etc to the other end of the spectrum: putting the “difference” badge on someone else for a change.  Not because I have anything against any of these young people individually, but because en masse they are so bloody daunting. They can’t help it. They may not even like it. I know now that cultivating that outward air of self-possession is a fundamental part of what private schools do, and that it can conceal plenty of insecurity and confusion.  But at 17 that wasn’t at all obvious.

Indeed this could be taken a step further.  Some state schools are also conveyor belts to the ancients; maybe they should be separated out too.  The criterion could be schools which have sent more than x% of their leavers to ancient or Russell Group universities.

Most access initiatives target the people identified as disadvantaged. We remain less comfortable curtailing the effects of privilege.  This proposal indeed barely does that: these young people still get their open day.  I suspect it would be regarded as an unacceptable, even so: however radical we say we are willing to be, acknowledging the negative effects of advantage as well as disadvantage remains alien to most policy-making and practice.

 

Footnote

My mother only made it to university in 1947 because of the new system of scholarships introduced at the end of the second world war. I am literally a product of the post war student funding settlement.

 

 

 

Baby boxes: as the due date approaches, who’s in charge of delivery?

Baby boxes are due to be given out to all new mothers in Scotland who have a due date from 15 August onwards.

There’s not been much coverage of how this is being achieved in practice, but there’s some interesting points to make about that, ahead of the media coverage which can be expected round the launch.

Who is providing the boxes?

The Times reported back in April that the contract for all aspects of baby boxes – getting the box made, obtaining the contents, filling it, delivering it, dealing with questions about its delivery – had been given to APS Group (Scotland) Ltd. This is a firm which began as a print services company but has developed a more general publishing and marketing brief.  This is the main APS website, and here’s details on its Scottish armThe most recent accounts for the APS parent company mentions its business roots in printing.  APS (Scotland) is 75% owned by APS and its last filed accounts recorded a turnover of just over £9m: the baby box contract roughly doubles that.

A print and marketing firm is not perhaps the obvious body to be sourcing and distributing baby care goods to new parents nationwide out of the health budget (see the Level 4 health budget here). But there’s one strong reason for their having this contract.

Since 2014, APS has a “call off” contract with the Scottish Government for “publishing, printing, design and associated services”: here’s a piece from when they first won the contract. The call off contract is a product of the out-sourcing by government (a long time ago) of various publication services.  This particular call off contract means that officials don’t have to go looking for a designer/printer every time they produce something – they can just go straight to APS.  It’s a very useful arrangement once you no longer have in-house services, and has been around for ages.  The call-off contract was won via a competitive tendering process and in fact covers a range of Scottish public sector bodies, not just the SG (more on that here). This is part of a general efficiency drive: the Director of APS Scotland was a guest speaker at a McKay Hannah event in 2014 on managing public sector budgets.

The nature of the contract

A PQ answer to Elaine Smith MSP confirmed that

The [baby box] contract awarded to APS (Scotland) Group Ltd, takes the form of a call-off to the existing Publishing, Print, Design and Associated Services Scottish Government Procurement Framework. This is a single-supplier framework agreement to which APS Group (Scotland) Ltd were appointed in 2014 following an advertised procurement process.

 

This means no further specific competitive bidding process has been required for the baby box work. There is nonetheless a specific contract for the boxes on the SG site (link).  Here’s what it says:

boxes 1

boxes 2

All this means that

The provision and delivery of approximately 56,000 boxes (with contents including baby clothing and maternal and infant health products) per year. The provision of associated operational services including printing, claims processing, customer contact centre, warehousing and distribution.

has been interpreted as falling within “Publishing, Print, Design and Associated Services”.

That’s a surprisingly wide interpretation of those terms. The more detailed coverage, see here includes “promotional goods” and “warehousing and logistics”, which I suppose might have been felt to provide enough cover.   Still, procuring and delivering 56,000 large multi-item boxes to new parents is clearly a bit different from  producing a few campaign-specific lanyards or pens, and posting out documents.  So the decision not to submit this to competitive tendering must surely have to had to be put through the legal wringer, given how it stretches the interpretation of the terms of the existing call-off contract and that it is so large in value, at £35.3m. The legal implications of its size relative to APS Scotland’s existing scale must also presumably have had to be examined (“due diligence” is the fancy term here), as this contract would prima facie raise capacity issues well beyond any explored when the original call off contract was let.  This is pretty exceptional stuff, in other words, and worth noticing for that reason.

Costs

The contract formally runs from February 2017 to July 2019, suggesting around 6 months of preparation and then around two years’ worth of supplies boxes, with a “max extension option” of 24 months.  The Times established however that the £35.3m cost assigned to the contract covered the whole four years (this has also now been confirmed in a PQ response), up to summer 2021, so it’s not clear how “optional” the extra two years are, or why this wasn’t simply let as a four year contract.

The total implies a cost of £8.8m a year, compared to £6m a year originally quoted and the £7m in the most recent budget (which it becomes clear was only a part-year cost).   As the Times piece notes, the SG confirmed it was expecting each box to cost £160, rather than the £100 originally expected.  This does mean however that  it has managed not to get pulled to something close to the £500 or so which was the cost of the boxes in the pilot.

Answering a further PQ from Elaine Smith MSP on why costs had increased, the Minister said:

We considered the views of parents in determining the contents for the initial national roll-out of boxes.

Consequently, we have included more expensive items, including the digital thermometer and the baby wrap, which parents involved in the pilot have indicated that they found more useful than they originally anticipated. These are the sort of items that some families on low incomes might consider to be unaffordable, yet they are recommended by professionals as being helpful for babies’ wellbeing.

…We will keep the contents and costs of the box under constant review to ensure we continue to achieve effective value for money.

Asked by Monica Lennon MSP how much of the cost was specifically attributable to the box and the mattress (an important point, because doubts are being increasingly raised – not just in Scotland – about claims made about the boxes specifically: it might be a lot cheaper just to give everyone the contents in a jolly bag), the minister declined to provide a split of the costs due to commercial sensitivity.

The case for taking more time

One argument for by-passing a competitive process may have been lack of time.  The decision to go straight to a full national scheme this year is because of promises made by Scottish Ministers early on.  There are good reasons to argue that a more cautious approach would have been better.  Other places are running pilots which cover the whole of the expected period of use, and then allowing time for reflection on the experience before committing further: see here. Scotland is exceptional in making a political commitment to a national scheme, ahead of any piloting.  Here, the evaluation was conducted less than 5 months in, and while it was published in June, the contract for national implementation had already been let (without any announcement, as far as I can see) since February.

There was no external reason to rush. Finland has had these boxes since the 1930’s, we are often reminded.  Scotland could have taken a little longer to lay the ground for a scheme here. If the politically-set timetable was a significant factor in the decision not to hold a competitive tendering exercise, that would have been another good reason for taking longer.  A central purpose of competitive tenders is to help control spending, to protect the public purse (this money is, after all, coming out of the hard-pressed health budget). Instead, we have ended up in the odd position where lots of effort has gone into running a competition for the design on the box, but none at all into one to choose the particular commercial supplier handling £35m of public cash.

A competition will be run next year, according to this PQ answer.

Due to the imminent procurement exercise for year 2 of Scotland’s Baby Box, the itemised value/cost of any item is currently commercially sensitive. Once that exercise is concluded, we will review the efficacy and sensitivity of providing itemised costs and if appropriate, provide further information in due course.

As the SG has already done its bit by letting the main contract, this appears to be for the contents only, and it’s not clear whether this competition will be run directly by the SG, or on its behalf by APS Scotland, as the main contract holders (though I’m not sure how public procurement works if done at arm’s length by a commercial body).

Practicalities for parents

The SG has a website for new parents which has more about the arrangements for distributing baby boxes,  with detailed Q&A about the practicalities which anyone following this might find useful. The involvement of health professionals is limited – midwives are asked to fill in a registration card with mothers at around 20-24 weeks and send that off.  APS makes delivery arrangements direct with parents thereafter, on an Amazon-like model.  Anecdotally,  just in the last 2 days I’ve come across a couple of examples where women well past 24 weeks haven’t yet heard anything from their midwife about this, so it’s possible coverage may be a bit patchy to start with.  APS must be providing the forms, but it’s not clear who is responsible more generally for making sure all midwives are briefed and engaging with pregnant women.

Conclusion

Shortly there’s going to be a whole lot more PR about these boxes. So it makes sense at this point to stop to ask which organisation is actually running the project in practice, and is therefore immediately accountable for the practical side, and how they were chosen.

For me, this all feels like further evidence that it would have been better to  approach this idea with much more caution. That would have permitted more time to reflect on the pilot and do a proper cost-benefit analysis of this against other ways achieving particular aims with the same money (indeed, clarifying what those aims are, and the balance between them: SIDS reduction, symbolic gesture of welcome, practical support?).  It’s now also clear that standing up to the political impulse to go national, fast, would have enabled the costs to be pinned down better before the long-term commitment was made, and also allowed time for the government to run a proper competitive tendering process for any national scheme, thus avoiding the need for any special interpretation of the contracting rules.

 

Footnote 1

Ironic note. The managing director of APS (Scotland) is also the registered director of a firm of funeral directors, and so now literally provides cradle to grave services.

Footnote 2

I have a lot of sympathy with this piece from April in the BMJ by a Scottish GP: “The best health interventions may come without gift wrapping”.

Footnote 3

There’s been a lot of coverage today of an intervention by a cot death charity, the Lullaby Trust, on baby boxes. It’s not specifically aimed at Scotland but adds to general concerns about claims made by box suppliers about a link with reduced cot death. It echoes concerns expressed by others, which I picked up in this (warning: very long) piece a while back.  On a technical point raised by the Trust about baby boxes in general, it’s worth saying that the SG Minister has said that the Scottish box does have specific formal safety accreditation.  But the Trust’s global unease about the claims over cot death still stand.

boxes 3

Acknowledgements

Thanks to Suzanne Zeedyk, who asked me earlier in the week if I knew anything about the tendering process and set me off looking for all this, and to various others (none in government or the parliament, I feel I should add, to prevent anyone from having an unnecessarily bad day) who I subsequently contacted and helped me find various things linked here.

A less complete version of this first appeared on my site late yesterday, before I had seen all the various things quoted here,

 

Long-term and short-term trends in education spending in Scotland: who’s right?

There was some debate at First Minister’s Questions this week about trends in school spending.  This post looks at the claims made (labelled below for ease of reference).

In brief, the increase claimed by the FM for last year relies on ignoring inflation (and rising pupil numbers). Her claim of a real terms budgeted increase for the year just started depends on including in the calculation the new additional activity required under the terms of the Pupil Equity Fund: like-for-like spending will see a real terms fall.

The Labour leader’s claim of a fall in spending of 7% since 2010 if anything appears to slightly understate the position.  The claim of £1.23 billion fall needs more definition to be able to make sense of.

What was said

According to the First Minister:

I think that I am correct in saying that the outturn figures for local government spending will show that spending on education has gone up (A).

 Data published on 27 June shows that councils are planning to spend £144 million more on education this year than they planned to spend last year—that is 3 per cent in cash terms and 1.3 per cent in real terms (B). Of course, that includes the planned spend on the pupil equity fund of £120 million that I spoke about.

According to Kezia Dugdale:

Her own Government’s figures show that, this year, spending on education is going down again in real terms (C).

The SNP has cut spending by hundreds of pounds on every single pupil, and it has cut spending on each secondary school pupil by more than £1,000. That is a 7 per cent cut by this SNP Government since 2010 (D).

I have come to the chamber time and time again to tell the First Minister that her Government has taken £1 billion from our schools. I was wrong. New figures show us that it is at least £230 million more than that—£1.23 billion has been taken out of schools on the SNP’s watch (E).
Sources

 

The First Minister’s comments are based on this news release, which draws on financial information routinely collected from councils, usually issued at this time of year as only a statistical news release. The decision this year to have an accompanying ministerial quote is unusual and therefore worth noting: it has been used as a hook to publicise the SG’s planned school reforms. The year on year change in education spending was actually slightly better last year, when there was no ministerial comment.

The first substantive point in this year’s statistical news release is that “Scotland’s local authorities’ provisional outturn total net revenue expenditure is £11.875 billion. This is a decrease of £0.119 billion (-1.0%) compared with 2015-16.”  I don’t think this was reported anywhere. The highlighting of the education number appears to have distracted from the wider picture on local government finance.

Kezia Dugdale’s figures come mainly from research from SPICe, which doesn’t appear to have been published, but more detail has been released to the press, as reported by The Herald.  Some of the  Labout numbers can however be checked using the same data series as  was drawn on by the FM.

A

“Outturn” – what councils actually spent on education – rose between 2015-16 and 2016-17. The increase was £86m, or 1.76% in cash terms.  The Treasury GDP deflator for year on year change between 2015-16 and the FY2016-17 was 1.98%, implying that the cash increase last year was a little below inflation. Pupil numbers in publicly-funded schools rose by 0.6%.

Taking all these figures together the implication is that cash spending on education rose in 2016-17, but that spending per pupil in real terms fell by 0.8%. So claim A is correct, but less impressive than it sounds.

B

Planned spend is what councils budget to spend at the start of the year. The press release states that education budgets for 2017-18 are “£4.970 billion, an increase of £0.144 billion (+3.0%) from that budgeted in 2016-17”. The FM’s analysis of the change as 1.3% in real terms is correct: the Treasury inflation estimate for the year ahead is 1.63%. Compared to a 2.89% cash increase (the change in more detail) that gives 1.26% in real terms.

A further 0.6% rise in pupils numbers is projected. Real terms funding per pupil is therefore due to rise by 0.7%.

However, as the FM notes, the Pupil Equity Fund accounts for almost the whole rise (£120m out of £144m). This matters, because although the PEF is undoubtedly money for schools, it comes with clear guidance on its use: it is intended for new activity. As the SG’s operational guidance puts it (emphasis added by me):

The Pupil Equity Funding must enable schools to deliver activities, interventions or
resources which are clearly additional to those which were already planned

So the like-for-like change in budgeted spend – what schools can spend on what they were already doing – is low: just £24m. That is 0.5% in cash terms, or a real terms fall of 1.2%.  If I factor in the projected rise in pupils numbers, the real terms fall in like-for-like spending per pupil in the coming year is nearer 1.7%.

For claim B, a lot therefore hangs on the inclusion of the PEF in the year-on-year comparison.

C

Kezia Dugdale’s claim that education spending is going down this year therefore holds if looking at like-for-like, but not when including the money for additional PEF activity.  It holds for last year unambiguously for real-terms spending, though not for cash.

D

Labour hasn’t (as far as I can see) published from the Scottish Parliament Information Centre (SPICe) analysis on which Kezia Dugdale’s further figures are based.  However, the same outturn figures used above are published by the SG going back to 2008-09 and can be used to look at longer-term trends. Here’s what they look like, pulled together:

Untitled

So I get a real-terms fall in total spending over the period covered of nearer 8% rather than 7%. Taking the figures just from the high-point of 2009-10, as Labour seems likely to have done, gives me an 8.7% real terms fall.  It may be however that SPICe has picked up a nuance in the figures which affects the detailed calculation – the broad picture is similar.

I’ve included funding per pupil, as pupil numbers have increased slightly over the period: the percentage fall per pupil in real terms across the whole period above is 8.3%.

Labour have provided more detailed figures  to the press . The Herald  quotes a real terms fall per secondary pupil from £8,033 in 20101-11 to £6,892 in 2016-17 –  a 14% drop, at the same time as the exam system was being bumpily overhauled.  That might explain why secondary teachers have been particularly vocal in recent years about the pressure they feel under. The Herald reports that the funding per head in primary over the same period stayed steady in real terms, at £4,826.

E

All the figures above are for revenue (current) spending only. I make the reduction between 2010-11 and 2016-17 in revenue spending to be around £0.5 billion a year in real terms.  So I can’t make sense of the Labour figure of a £1.23 billion drop since 2010-11, unless

  • it includes capital, which these figures don’t cover, or
  • it is using the now-common device of adding up how much extra would have been spent over the whole period up to 2016-17, if the real terms figure in 2010-11 had been maintained. But in that case I get a cumulative “gap” figure closer to £2 billion.

I haven’t yet managed to find a more detailed explanation of this figure that’s available to the public, so I am at this point stuck.

 

Conclusion

Numbers will always get thrown around at FMQs and the FM is hardly the first politician to look for the most positive story. What matters more is that whatever they say in public, ministers understand in private what the reality is – and it is clearly of a non-trivial fall in education spending over the first part of the decade, a modest recovery in 2015, and then a continuing smaller underlying real terms fall, even still, on existing activities, as the graph below shows.

Education spending

It looks to me as though the Opposition could, if anything, have gone harder on the real terms fall in revenue spending, but there may be reasons for being more cautious than the figures above suggest.  It would however be easier to make sense of their claims if they showed more of their workings.

The rise, fall and rise of student debt in Scotland and the contribution of different administrations to debt gaps within the UK

Scottish students tend to leave higher education with lower levels of debt than those elsewhere in the UK.  Some of that will be due to the higher proportion of people here who only stay in the system for one or two years (mainly HNC/D students).  Some of it may be down to a higher proportion living at home.  But policy divergence has also evidently been a large part of the story.

Differences in debt are sometimes presented as specifically an achievement of the past decade, but the figures below suggest it’s been a function of devolution more generally.

The changing picture on final debt across the UK

Using this week’s figures on final student loan from the SLC, it’s possible to chart how debt has changed in Scotland over the past 17  years.  It turns out to be a tale in three parts: rise, fall and rise again. It’s also possible to unpick exactly how levels of student debt in Scotland have diverged from those in the other UK nations

Disclosure: I was working as a civil servant on policy in this area between 2000 and 2004, specifically the implementation of the graduate endowment and Young Student Bursary. Readers will want to be aware of  my background in reading this.

This chart shows the average final debt of students as they entered repayment in each year from 2000. There’s a time lag, so for example the 2017 figures relate largely to those who left HE in 2016. If they completed a degree, they will have entered no later than 2013.

UK loan graph

The divergence between Scotland and other UK nations set in quickly after devolution in 1999.

It’s possible to identify three distinct phases in student loan change in Scotland.  First there was a phase where debt rose, then one where it fell or barely changed, and one last one where it rose again.

The chart below shows the annual change in debt each year in each nation, separating into the rise/fall/rise periods for Scotland. 2000 is the earliest year covered by the recent SLC data.

Loan graph UK 2

 

2000-05

From 2000 to 2005 final loan in Scotland rose each year.  In the early years most students leaving had studied under pre-devolution arrangements. As time passed, more leavers had been under the “Cubie” arrangements brought in for new entrants in 2001 by the Labour/Liberal Democrat coalition. This

  • reintroduced a grant for younger students called Young Student Bursary (grants were abolished UK wide just before devolution)
  • abolished a means-tested annual upfront fee of £1,000
  • introduced a single post-graduation payment (of around £3000 at current prices) for around half of students (in effect young students on courses of degree length: HNC/D students and all mature students were exempt).
  • reduced the amount of maintenance loan available to those from higher income families.

The first one-year HNC students under these rules appear in the chart above in 2003, HNDs in 2004, 3 year degree students in 2005 and 4 year students not until 2006.

Over 2000-05  Scotland peels quickly away from the position in the rest of the UK, finishing at about half the debt level. Debt in the other UK nations rose much more sharply between 2001 and 2003, before leveling off. At this stage, all three other nations are very similar: Wales and Northern Ireland were following the English model (Wales didn’t have powers to deviate, Northern Ireland had other pressing concerns).

2005-2011

Having begun to flatten out by 2005, average final debt levels in Scotland then fell every year until 2011 (except in 2009, when they rose very slightly).  In 2005, 2006 and 2007, those entering repayment were graduates of the Labour/Liberal Democrat scheme (or in a few cases, one of the pre-devolution ones).  Grants had also been increased in 2005, reducing debt.

In 2008, those entering repayment benefited from the incoming SNP administration’s abolition of the graduate endowment in 2007. Debt continued on its the falling trend (other than the modest rise in 2009) up to 2011.

Over the same period debt in the other UK nations pulled away further, particularly in England and Northern Ireland, which both moved to a higher £3,000 fees (plus grant) system for new entrants from 2006.  Most of these entered repayment in 2010.  By 2009, the use of new powers in Wales shows in its less quickly rising line (grants were increased and fees limited).

The abolition of the graduate endowment contributed to a continuing downward trend in Scotland. However, the effect wasn’t enormous: average final debt fell by just under £600 (-8%) between 2007 and 2011.  Most of the increased difference between Scotland and the UK by 2011 is accounted for by the decision by the Labour/Liberal Democrat coalition in Scotland in 2004 not to adopt the new £3,000  fee model brought in in England in 2006.

2011-2017

From 2011, final loan increased every year in Scotland. A finding that I hadn’t expected is that it rose by almost exactly the same absolute value in all three devolved nations (£5,150 in Scotland, £4,590 in Northern Ireland and £4,915 in Wales, though quite erratically). Only England, adopting a £9,000 fee for new entrants from 2012 broke away.

The rise here was due to the Scottish Government increasingly turning to loans to fund living costs, particularly after 2013, when substituted loan for one-third of grant and generally increased total loan entitlements.

 How did loan end up so much lower in Scotland?

These charts unpick the process by which average loan in Scotland has departed from the levels elsewhere in the UK.  It becomes clear that it has happened in these stages:

  • active policy-making by the Labour/Liberal Democrat coalition – introducing  the Cubie package – accounts for Scotland having around half the average debt of the the rest of the UK by 2005.
  • passive policy making by the Labour/Liberal Democrat coalition – declining to follow the example in England, Northern Ireland and Wales of £3,000 fees – accounts for a further widening of the gap after 2009.
  • active policy making by the SNP administration – abolishing the graduate endowment – has some effect but much less than the others here.
  • passive policy making by the SNP administration – declining to follow the example in England of £9,000 fees – has a large effect on the difference with England, but none with that for Wales and Northern Ireland.

The difference in final debt levels is generally claimed as an example of the success of the current government in Scotland. However, it becomes clear that much of that difference is due to the position it inherited from previous administrations and that its own active contribution to that difference is a relatively small part of the story.

Its most substantial contribution to differences in debt has been not to follow the £9,000 regime in England.  This is a wholly devolved area and no political party or civic Scotland body in Scotland has advocated this model, at least in public. So the main challenge facing the government in not following England has been in finding ways to pass to other parts of the budget any negative impact through Barnett of reduced spending on English universities. (It’s not clear how large a task this has been, however, as the SG is keen not place a cost of free tuition, some of the money saved in England may have been re-spent on other devolved areas, and no savings elsewhere have been specifically attributed to tuition fee policy).

Put briefly, these comparisons bring out that the difference in debt levels between Scotland and the other devolved nations is largely an achievement of governments elected in Scotland prior to 2007, and that the current government’s contribution to the difference with England is largely down to a decision not to use devolved powers to do something no-one here has ever asked it to do.

 

Footnote

Figures underlying the graphs here UK debt for blog

 

Student loan for Scottish 2016 leavers up 13%

The Student Loans Company has published the average final debt for students who left HE last year: link here.

The figure for Scotland is now £11,740, an increase of 13.3% on the previous year.  The longer term trend is more striking: see chart below. Average final debt has roughly doubled in cash terms (the real terms rise will be less dramatic, but still substantial) since the current Scottish Government entered office in 2007  promising students that it would “dump the debt”.

Screenshot 2017-06-15 at 09.36.39

Source: SLC

The rise since 2012 is due to the changes to student funding implemented in Scotland in 2013 still working their way through.  What’s pushing up debt is the substitution of loan for around one-third of grant, and the general use of loan to increase living cost support across the board, but especially at middle-to-high incomes.  There’s potential for a further step up next year, when the first cohort on four year courses who have studied wholly under the 2013 reforms will be included.

The figure for Scotland remains lower than elsewhere in the UK. That’s partly due to there being no fee debt for those staying here, but the size of the gap with other UK nations is exaggerated by the higher proportion here who leave after doing a one or two year HNC/D.   That will bring down the average.  Roughly, it appears to mean that the Scottish average doesn’t represent the average after 4 years (let alone the 1+4/2+3/2+4 models used by half of those moving from college to university). It’s closer to the average over 3 years.

The next nearest UK nations for debt levels are Wales (£19,280) and Northern Ireland (£20,990). With its £9,000 fee regime pretty much fully rolled out, England now sits £32,220: this figure will rise further, given grant cuts for new entrants from last autumun, but that won’t show until this group leaves in a few years’ time.

In comparing Scotland and Wales, in particular, it’s worth remembering that in Scotland low-income students borrow above average each year, while in Wales the opposite applies.

So there are a few reasons these figures don’t provide a good guide to the reality of final debt for low-income students leaving university in Scotland, or comparing with other parts of the UK.  That won’t stop them being quoted in support of the Scottish status quo.  But their limits shouldn’t be forgotten.

More here on the impact on the numbers of HNs and the skewing of debt towards lower incomes in Scotland.

 

 

 

Comparing entry rates to university: the (data) gap that could easily be reduced

The First Minister was interviewed yesterday by Andrew Neil. One journalist reported that “Sturgeon says difference in university access rates for poorer pupils between Scot & Eng down to different sets of figures.”

I didn’t see the interview, but this sounds plausible.  The Scottish Government has become increasingly confident and robust over the past year in dismissing UCAS figures as a basis for making cross-country comparisons in entry rates to university for young people from disadvantaged backgrounds. UCAS figures show 19.5% of 18 year olds from most disadvantaged 20% of areas in England entering university, and 10.9% for Scotland. It’s worth noting that this gap is not uniform across young people: it disappears as levels of disadvantage fall.  For those at the other end of scale, there’s hardly any cross-country difference in university entry rates at 18.

There are two possible problems being invoked by the FM here. One is a technical point about different ways of measuring area disadvantage. For England UCAS uses a measure called POLAR3, which looks particularly at education disadvantage: for Scotland, the figure above uses a different measure called SIMD. However, I haven’t seen an argument from the Scottish Government that specific differences between POLAR and SIMD explain the gap above.

It’s much more likely this argument is about the coverage of UCAS data.  UCAS doesn’t include all the 18 year olds who go to college and from there to university, which is a much more common route here than south of the border. The Scottish Government leans on this point increasingly hard, and it is an absolutely true observation about the coverage of the UCAS figures.

There’s a substantial argument to be had about how analogous college-to-university entry is with direct entry. In particular, slightly under half of those who do it (in total, at all ages) get full credit (“advanced standing”) for their time at college. The rest mostly go back to square one and into the first year of a degree.  A few get partial credit (“advanced progression”), such as doing two years at college and then starting in second year at university.  Anything other than full credit means repeating one or two years, depending if students have done an HNC or an HND. That means five or six years of full-time study to get an undergraduate degree which would have taken a direct entrant four years. That in turn carries extra living costs, and means later labour market entry, putting these entrants at a relative disadvantage.

These cases also raise a reasonable question whether their English analogues are 18 year old direct entrants, or those south of the border who also took a couple of years doing something else before starting their degree course, and who also are not in the age 18 UCAS figures there. Of course, we shouldn’t only be interested in school leavers.  But there are particular reasons to monitor how far access to starting a degree programme straight from school is socially biased.

Does the SG have the data on how many people entered college at 18, from the most disadvantaged 20% of areas (SIMD20), and how many of those got full credit? This information isn’t published, but other material suggests it could be calculated.

The SFC publishes how many college-to-university movers got full credit (Table 22 here): it was 3,999 in 2014-15.  The SFC notes that after 2014-15 numbers will have been rising: but it appears not very sharply. The “national ambition” for 2016-17 for those with full credit is 4,100.  Elsewhere it has published that 71% of all movers in 2013-14 were under 25, and 23% of them were from SIMD20 (para 10 here). So it feels like it should at  least be possible to isolate the number who moved at an age consistent with having entered college at 18, were from SIMD20 and got particular amounts of credit.

Without those particular figures being public, there is still a way to test how likely it is that the UCAS gap at 18 is closed by college-to-university movers who get full credit, from the figures we do have.

UCAS reported 1,345 SIMD20 age 18 Scottish entrants in 2016. To make that 10.9% into something like the 19.5% in England would require that figure to be a little over 1,000 higher.

1,000 19 and 20 year olds from SIMD20 areas getting full credit would equal around one-quarter of all those getting full credit from all ages and all backgrounds.  That feels high.

If I assume that those aged 19 or 20 make up one-third of all people at all ages moving with full credit, and that they are half as likely again to be SIMD20 as the entire college-to-university population (which isn’t an obvious assumption, given disadvantage tends to delay engagement with higher education), I can get this group to 11.5% of the full credit group (33% x (23% x1.5)). That only half closes the gap, and these to me feel like quite hopeful assumptions.

So it’s not immediately obvious from what we do know that “UCAS leaves out colleges” is necessarily a powerful rebuttal to concerns about how Scotland compares to the wider UK in giving young people from disadvantaged backgrounds access to university-level study on equal terms.

Including those who don’t get full credit would come close to closing the gap: although that would still be using the same optimisitic assumptions.  But in any case, as argued above, it’s open to question whether those who had to go back to the start of the process after a year or two at college should be included in any comparison of age 18 university entrants, even if they went straight to college at 18.

It’s frustrating that while the Scottish Government has been keen to stress what’s missing from the UCAS data, it hasn’t moved with equal speed to use the information it holds to fill that gap, even with a few footnotes and caveats. At the moment, “ignore this data, it doesn’t tell you the whole story, but we aren’t saying what whole story is” is being too easily played as a get out of jail free card.   It’s time to move from general dismissal to the actual numbers.

 

 

 

 

 

Scottish Government special advisers: a quiet re-jigging round HE, and expansion in number

The Scottish Government has quietly re-jigged its Special Advisers. Kate Higgins returns to the education brief for early years, and further and higher education.

Ms Higgins had a general education brief from April 2015 (more here) until  June 2016, after the last Scottish elections and John Swinney’s appointment as Cabinet Secretary for Education. At that point, she was moved to Rural Economy and Connectivity (see here). Education was passed back to Colin McAllister, one of senior special advisers, who had held the brief before her.  Mr McAllister retains a general education brief, and so must be assumed still to be the lead adviser on schools policy.

The changes also include the appointment of a new special adviser, giving 13 special advisers,  4 women and 9 men.

The new appointee is Stewart Maxwell, formerly Convenor of the Scottish Parliament’s Education Committee, who lost his seat in the 2016 Scottish Parliament elections. Back on 13 January he announced on Twitter that he was at end of his first week as a special adviser, implying he had started around 9 Janury.  I have been periodically checking for an official updated list ever since.

Searching  at the time, or indeed month later (I last recorded a search  on 8 February), only produced an old list from September 2016, under “Transparency data” on the SG site.  But doing so today has produced a new list (dated 17 January).  This shows that Mr Maxwell now has responsibility for “Business, the Economy, Skills and Fair Work. Business and Economy outreach”, some of which is responsibility transferred from Jeanette Campbell, who retains “Communities, Social Security, and Equalities”.

It took nearly a fortnight to update the government website to reflect the expansion in numbers and reallocation of roles and it then took several weeks more for the updated list to turn up on a search.   I am pretty sure that back in February I didn’t just Google, but also searched the SG site directly (if so, it would have been the SG’s  new “beta site”, where the January list can now be found), but in fairness to the SG,  I am not completely certain about that.

More importantly, searching “special advisers” in the PQ section of the Parliament’s website as of today still produces an answer on 23 September 2016 as the most recent.    So in a break with convention, the Parliament appears never to have been informed of the changes, including the new appointment. By contrast,  in April 2015, June 2016 and  September 2016, a written PQ was used to set out the revised SpAd team on or before the day the SG updated its website.

I don’t know what conventions now exist here but, whether or not any do, it would be desirable to get back to making Parliamentary announcements at the time changes are made to the team of special advisers, rather than relying on Twitter and quiet website updates.  Otherwise, what should be easily found and scrutinised public information about the location of power and influence in government becomes the currency of the grapevine and those in the know, reinforcing the sense of government as a game of insiders and outsiders.

The Scottish Government recently declared itself a “global leading light in the campaign for more open and accessible government”.  Going backwards in terms of openness and accessibility in relation to special advisers suggests that there’s still a bit of work to do making good that commitment.