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The squeezed almost-middle and ability to pay in Scotland

October 6, 2014

Most of the material on this site deals with the way student loan in Scotland is skewed towards the poorest students.

However, there is another group which also looks to be relatively disadvantaged by the structure of the Scottish student support system, from one important perspective.

This is students living away from home whose families have a total household income in the range £34,000 to around £45,000. This group gets substantially less upfront help with living costs in Scotland than in England or Wales: they are therefore more dependent on their families’ “ability to pay”.

As this post showed,  for a couple with two children, this level of pre-tax income places a household between the bottom third and and the median. People at these incomes will feel far from rich. As John Hills and colleagues have identified, they often suffer from high “marginal rates” of benefit withdrawal, being deemed not-quite-poor-enough

It turns out that this group also suffers from Scotland’s low-grant system. However, while those from lower incomes feel the effects long-term, in the form of higher debt, this group takes the pain in the short-term, in the form of relatively poor levels of support to cover the cost of living away from home.

In responding to criticism of grant cuts, the Scottish Government has emphasised the importance of total support, regardless of how it is provided.  So it’s worth  being aware that as soon as household income tips over £33,999, total support in Scotland now drops from £6,250 to £4,750 (all as loan).  That’s a big cliff to fall off.

It’s important to acknowledge that the new system in Scotland is better for these students than the one which went before, where support (again all loan) gradually declined from just under £4,400 at £34,000 to around £3,222 at £45,ooo, and then down to £940 at a household income of £62,000.

But for those away from home, it is a lot worse than what’s on offer for most such students in the rest of the UK.  At £34,000, the English system provides over £1,500 more to live on; in Wales, it’s £1,000. Even the relatively ungenerous Northern Irish system does slightly better for many of this group.  As the table below shows, Scotland has the lowest value “away from home” support in the UK for students from homes with a total income between £34,000 and £42,000.  These figures shown are the “away” rates for the other three countries, but exclude the extra funding available for those studying in London (Scotland, exceptionally, has a single home-and-away rate and no longer provides anything additional for study in London).

Total support (grant+loan)
Scotland England Wales NI
Household income
34,000 4,750 6,397 5,773 4,840
35,000 4,750 6,302 5,739 4,840
36,000 4,750 6,207 5,705 4,840
37,000 4,750 6,113 5,671 4,840
38,000 4,750 6,018 5,637 4,840
39,000 4,750 5,923 5,603 4,840
40,000 4,750 5,829 5,569 4,840
41,000 4,750 5,734 5,535 4,840
42,000 4,750 5,639 5,501 4,792
43,000 4,750 5,543 5,467 4,687
44,000 4,750 5,443 5,433 4,582
45,000 4,750 5,343 5,399 4,476
46,000 4,750 5,243 5,364 4,371
47,000 4,750 5,143 5,330 4,266
48,000 4,750 5,043 5,296 4,160
49,000 4,750 4,943 5,262 4,055
50,000 4,750 4,843 5,228 3,950
51,000 4,750 4,743 5,153 3,845

In all other parts of the UK, some student grant is available up to around £42,000 and up to around £50,000 in Wales.  The amount for those in the mid-£30,000’s can be into four figures.

Grant entitlement
Scotland England Wales NI
Household income
34,000 0 1,683 1,142 794
35,000 0 1,494 1,074 689
36,000 0 1,304 1,006 584
37,000 0 1,115 938 478
38,000 0 925 870 373
39,000 0 736 802 268
40,000 0 547 733 163
41,000 0 357 665 57
42,000 0 168 597 0
43,000 0 0 529 0
44,000 0 0 461 0
45,000 0 0 393 0
46,000 0 0 324 0
47,000 0 0 256 0
48,000 0 0 188 0
49,000 0 0 120 0
50,000 0 0 52 0
51,000 0 0 0 0

 

The Scottish Government emphasises that its system is not based on “ability to pay”.  But for students at these incomes, the immediate pressure on family budgets is pretty acute and more acute in Scotland than anywhere else. The exception is for students who can live at home: the other systems deduct around £1,000 from students’ borrowing entitlement if they live with their parents.  But the possibility of living at home to study is far from universal.

At £34,000 combined total earnings, take home pay (before any deductions for pensions) will be a bit over £2000 a month, depending on whether it’s a single or double earner household.   Paying substantially towards the rent and other bills for one or even two students at the same time  (more likely under a 4-year degree structure: the system does not make much allowance for this) will be pretty hard work for most.

The good news for this group is that at just under £20,000 over 4 years, their debt levels remain among the lowest in the UK. However, in comparison with the Welsh lower fee/higher grant system, the differences are not as large as might be expected, particularly if the extra year typically required for an honours degree in Scotland is taken into account.   The figures below include borrowing for fees in Wales and show Scottish borrowing at around 70% of the level in Wales for degree students.  (Also, it is worth stressing that Welsh debt at these incomes is no more what is already expected of the lowest-income mature degree students in Scotland, which is £28,000 for four years, including interest.)

 

Total debt (including fees for Wales)
1 year (raw) 1 year (adjusted) Degree length (4 yrs Scotland; 3 yrs Wales)
Household income Scotland Wales Scotland Wales Scotland Wales
34,000 4,750 8,197 4,798 7,041 19,760 26,941
35,000 4,750 8,316 4,798 7,165 19,760 27,057
36,000 4,750 8,350 4,798 7,201 19,760 27,173
37,000 4,750 8,384 4,798 7,236 19,760 27,290
38,000 4,750 8,418 4,798 7,272 19,760 27,406
39,000 4,750 8,452 4,798 7,307 19,760 27,522
40,000 4,750 8,486 4,798 7,342 19,760 27,642
41,000 4,750 8,521 4,798 7,379 19,760 27,758
42,000 4,750 8,555 4,798 7,414 19,760 27,874
43,000 4,750 8,589 4,798 7,450 19,760 27,991
44,000 4,750 8,623 4,798 7,485 19,760 28,107
45,000 4,750 8,657 4,798 7,521 19,760 28,223
46,000 4,750 8,691 4,798 7,556 19,760 28,340
47,000 4,750 8,725 4,798 7,591 19,760 28,456
48,000 4,750 8,759 4,798 7,627 19,760 28,572
49,000 4,750 8,793 4,798 7,662 19,760 28,688
50,000 4,750 8,827 4,798 7,698 19,760 28,805
51,000 4,750 8,861 4,798 7,733 19,760 28,726

Note: The “raw” 1 year figure is simply the borrowing required to gain access to the full student support package in each country. Both “1 year adjusted” and degree-length figures include interest accumulated over the period of study (interest rates are higher in Wales) and the one-off £1,500 debt write off applied by the Welsh Assembly Government on graduation.

 

It’s also the case that, as well as having lower debt than their Welsh opposite numbers, this group  avoids falling prey to Scotland’s regressive pattern of student debt, as they are among the borrowers assigned to the lowest Scottish loan rate rather than one of the higher ones.

But that saving in debt is coming in part at the price of what’s expected of their families in the short-term.  Unlike fees, for which 100% non-means-tested loan is available everywhere in the UK where they apply (see here), this is a real, upfront ability to pay issue, affecting a group who, though not the very poorest, are still relatively less well-off than the average.

Access to more loan and/or to some grant, as available in other parts of the UK for this group, are the only ways to address this.  Meantime, those in charge of institutional hardship funds across the UK should probably be aware of the particular  pressures facing this group.

 

 

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