Did the former First Minister cut grants and increase debt for poorer students without noticing? Some hard evidence.

It’s exactly once month since Alex Salmond unveiled the now-famous stone outside Heriot-Watt University on his last day in office.  In doing so, he revealed not just a splendidly unmelted piece of rock, but also a startlingly loose grasp of the effects of policy over his period in government and particularly in the budget he and his Cabinet colleagues agreed for 2013-14.

After declaring that free tuition was now “a commitment writ in stane”, he told one newspaper:

As somebody who had a modest upbringing in a council scheme in Linlithgow, whose parents in an atmosphere of both free education and full grant, scrimped and saved to send four children to university, I know what a challenge and what would have happened with the imposition of large debt to people like myself.

Yet over the past seven years, in real terms student borrowing  has doubled, including for poorer students, while spending on grants has almost halved.

Alex Salmond’s full grant would have been worth a little over £5,000 at current prices. As a result of changes introduced in 2013, those young Scottish students who are entitled to the full grant now receive just  one-third of that, £1,750.  They are expected to borrow the rest of their living cost support, which means taking out an annual loan of £5,750 to gain access to the Scottish government’s “minimum income guarantee”, implying a debt of £23,000 over four years.  For mature students, with their lower grant, it’s £6,750/£27,000.  That’s around half what applies in England but not very different to the figures for Wales or Northern Ireland – indeed, in practice, new data strongly suggests that at low incomes Welsh students are now borrowing substantially less than Scots over the course of a typical degree (despite paying fees).

If the former First Minister  still believes, as he did in 2007,  that “10, 15, 20,000 pounds of student debt” is an “enormous debt burden”,  his comment suggests that he did not understand, or at best had forgotten by last month, the impact of his own government’s 2013-14 budget.  That saw a large shift towards reliance on student loans to provide assistance with living costs, driven in part by a 40% reduction in spending on grants.  Student borrowing rose by 69%  between 2012-13 and 2013-14.

If the rocks will melt with the sun before Scotland introduces tuition fees,  it seems equally possible that a’ the seas will gang dry before the architects of Scotland’s current system for student funding will acknowledge, perhaps even to themselves, that like those in the rest of the UK it too is built on a rapidly growing amount of student debt. In our case, uniquely, this is being  shouldered disproportionately by the poorest, because we make so much less use of means-tested grants than elsewhere, not just in the UK but in Europe.

Perhaps, in the spirit of science, a member of the University Court will propose a companion stone to the one Heriot-Watt now has,  with the most recently-issued statistics on actual grant and debt for the former First Minister’s term in office, which are, all at 2013-14 prices:

Meantime, Heriot Watt’s new monument surely deserves a name, so it can take its proper place amongst Scotland’s growing collection of politically important rocks, real and metaphorical.

The Stone of  Turning A Blind Eye To The Way Student Debt Has Doubled And Is Skewed Towards The Poor  isn’t very catchy.

Maybe it could just be the Stane O’ Debt Denied, for short.

Further notes to table

Actual student borrowing shown is the amount students borrowed from the Student Loans Company in each year.

Total grant spending covers all forms of grant.  Over the period,  the separate grant for travel (£20.6m cash value in its final year, 2010-11) was abolished, while a new national grant for mature students (the Independent Student Bursary, worth £12.6m last year) was introduced. YSB values were reduced significantly in 2013-14.

Average borrowing shown is the average amount per active borrower.  The figure shown here will underestimate average borrowing at the lowest incomes, as it excludes figures for the majority of mature students, assessed as nil income.  These have been combined in the latest figures into a single category with a much lower-debt group seeking no means-tested support.

Comparing maximum grant obscures that grant is now withdrawn more quickly as income rises, falling in a single step to £1,000 at incomes of £17,000 and again to £500 at  £24,000.   In 2006-07, at an income of £21,400 (worth £25,000 at current prices)  YSB would have been worth around £2,100, four times what it is worth now.

The falling number of students receiving YSB has occurred in the context of the total number of Scottish domiciled students supported by SAAS rising by 10% over the period.   Also, YSB numbers should have been boosted in 2013 by the transfer into YSB of young students previously on the Student Outside Scotland and Health Directorate bursary schemes, which were abolished last year.  Progress in widening access might also have been expected to have increased the numbers claiming YSB.  The reasons behind the fall in YSB claimants would bear further investigation.

Including the current year 2014-15,  the maximum total value of support available to students at the  lowest incomes has increased in real terms over the period by just under 30% in 2014-15 prices, from around £5,800 to £7,500.   However,  these students now need to borrow  twice as much as before in real terms to obtain that support, while the grant component of the package has fallen in real terms by 60%, from £2,940 in 2006-07 at current prices to £1,750 now.   The increase in spending power has therefore come at the cost of a much sharper increase in debt, because grant has been not just frozen, but cut.

Table A6 in the most recent statistics allows loan take up to be calculated  as 78% for those with a known income between £0 and £33,999.  This however excludes take-up by those deemed to be “exempt from contributions” (mainly mature students): these are now counted with a better-off group who provide no income details because they are not interested in seeking any means-tested support.  In 2012-13 the exempt group had 88% loan take up.  Average take-up is 70%, implying that students from homes with incomes at £34,000 and above are not only borrowing less on average, but also significantly less likely to borrow than those from lower-income homes.

Sources

Grant rates in 1970’s from this House of Commons briefing note (figures are provided for England, but the systems across the UK were very similar at that point).  Information on the income threshold for the full grant at that time is not available.  It is now £16,999 in Scotland, the lowest figure in the UK.

2006-07 borrowing and grant spending totals from the official statistics for that year.  Average figures for YSB claims and borrowing derived by author.

2006-07 grant rates from the official guide to students for that year.

Conversion of 2006-07 figures to 2013-14 prices using GDP deflators

2013-14 figures from most recent official statistics.  Figure for average grant claim derived by author.    Entitlements to YSB from the SAAS website.  Figures for actual spending and borrowing not available for 2014-15.