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Background to figures in Sceptical.Scot article

March 15, 2015

This post provides the detailed information behind this piece on Sceptical.Scot.

Abolishing the graduate endowment has saved the students affected (not all had to pay it) just over £30 million a year.

  • In 2006-07, £15m of lending was used to pay for students’ liabilities under the graduate endowment and two-thirds of students used student loans to meet this cost, according to the Financial Memorandum to The Graduate Endowment Graduate Endowment Abolition (Scotland) Bill, Scottish Government, 22 October 2007.  The gross value of the GE was therefore around £22m in that year.  Uprated for inflation gives around £27m at current prices, but there has also been around a 12.5% rise in SAAS-supported students since 2006-07, suggesting the GE would  now be costing students just over £30 million in total. (This saving would be shared between Scottish and EU students, so the benefit to Scottish students will be a little lower: EU students are around 10% of all SAAS-supported students.)

However, in 2013-14 the Scottish government cut its spending on student grants by £35 million, or 40%

  • See here: in 2012-13, total spending on all non-repayable grants was  £100.6m; in 2013-14 it was £64.9m.

after freezing grant rates for several years.

  • See here: YSB rates were frozen from 2010, before being cut in 2013.

Total annual spending on all non-repayable grant is now £65 million, barely half what it was in real terms in 2006-07

  • See here: converted to 2013-14 prices, spending on all grants in 2006-07 was £120m.

and much less than in the period prior to the initial introduction of fees in 1998.

  • In 1997-98 – in effect the last year under the old-style student grant regime – the Scottish Office spent £156 million on non-repayable grants: see Table 5  here.  Uprated for inflation, this would now be worth £223 million.

To put that in context, the government finds almost £1 billion each year to support the cost of undergraduate teaching in full.

  • In 2013-14, SAAS spent £219 million on fees paid to universities and colleges in Scotland. The SFC main teaching grant for universities was worth £641 m.  The cost of funding higher education in FE colleges is not published separately, but on student numbers could be reasonably estimated at around one-third of the funds provided to FE colleges by the SFC, giving an estimate of £130 million.  Adding these together gives £990 million.

The benefits of abolishing the endowment were initially spread across students, with some bias towards the better off as those already exempt tended to be poorer.

  • The largest exempt group was mature students, who fall heavily into the lowest income categories, and “sub-degree” (ie HN- equivalent) students, who are concentrated in FE colleges.  Students at FE colleges are more likely than average to claim income-assessed grant.  Other exemptions included lone parents.  For a full list of exemptions, see here.  Around 40% of full-time, first-time students in HE were exempt.

For those from the lowest incomes the positive effect has since been more than wiped out by the large reductions in grant: many are thousands of pounds worse off overall.

  • See figures 19 and 20, pp 45-6 here. The drop in the real terms value of grant means that at low incomes HN students, who were unaffected by the abolition of the endowment, have lost  up to just under £2,000 (1year HNC) or £4,000 (2 year HND), depending on income. 4 year degree students have seen a net loss (ie grant loss off set by endowment gain) of up to £5,000, with all below an income of £28,000 at least £2,000 worse off.  Over the period mature students have gained, as they have become eligible for a £750 pa grant.  Students at higher incomes have also gained, as they have been saved endowment payments but been unaffected by grant cuts.

This year the maximum Young Students Bursary is worth £1,750. It falls quickly from that level in a single step to £1,000 and then to £500, at a “residual household income” of £24,000 (measured before tax). At an income of £34,000, it stops.  Mature students get a flat rate £750, provided their income is below £17,000.

  • See SAAS website, here.  Rates are for 2014-15 (2015-16 rates not available at time of writing).

Around one in seven students get that much [£1,750]. 

  • See PQ answer S4W-24400 here: 17,330 students received YSB in the categories eligible for the full amount in 2013-14, the latest year for which the data is available.  There were 123,745 Scottish domiciled students (see Table A2 here).  EU-domiciled students cannot claim grant.

Fewer than one-quarter of students on a grant borrow nothing.

  •  See PQ above again: of the 32,9230 on YSB, 8,090 did not apply for a loan. Of the 17,400 on the Independent Student Bursary, 2,620 did not apply for a loan: S4W-24402, link as above. Altogether 21% of YSB and ISB claimants were non-borrowers in 2013-14.

Most who borrow, borrow the most they can.

  • See PQs above again: of those on YSB 23,065 applied for the full loan, while only 1,775 applied for a smaller amount.  Of those on the Independent Student Bursary, 14,780 applied for the full loan, with only 300 who borrowed taking out less.  This means that 94.5% of grant holders borrowed the maximum amount available to them.

and now face a government debt of between £23,000 and £27,000 for a four year degree.

  • The maximum loan for a young student is £5,750 x 4 = £23,000.  For a mature student it is £6,750 x 4 = £27,000.  These figures ignore interest, which adds about £1,000 to each over the four years.

At incomes above the threshold for grant, around two in five students borrow nothing.

  • 39,980 students took out the “non-income assessed” loan in 2013 (Table A11 here).  Some may have been from incomes below the cut-off for means-tested support (£34,000), so this figure could slightly over-estimate the number of higher-income borrowers. There were  50,330 grant claimants (PQs above) but there will also have been some mature students with incomes between £17,000 and £34,0000 who were ineligible for any grant: we don’t have a figure for them, but by looking at other data around 5,000 appears to be a good estimate, giving 55,000 total number of students below £34,000.  As there are 123,745 Scottish-domiciled students, just under 69,000 must be from incomes of £34,000 or more. The 39,980 borrowers at the lower rate are 58% of that figure. (EU students cannot take out living cost loans.)

Those who do are borrowing amounts which imply an average final debt of £16,500 after four years.

  • Table A11 above shows the average amount borrowed as non-income assessed loan is £4,140 x 4 =  £16,650 before interest.

Their lower figure is due in part to the government not allowing them to borrow quite so much

  • In 2014-15, the maximum loan at incomes of £34,000 or more is £4,750, reflecting an expectation of some parental (or partner) contribution above that level: the maximum this year at lower incomes is £5,750 (young) or £6,750 (mature).

but they are also less likely to use their full allowance.

  • If 94.5% – the same percentage as grant holders borrowing to the maximum – of the 39,980 non-means tested borrowers had taken out the full £4,500 available to them in 2013-14, they would have borrowed £170m: that would still have left around 2,000 further borrowers taking out smaller loans.  Only £165.5m was actually lent to this group.  It is not arithmetically possible for this group to be borrowing the maximum amount as frequently as those at lower incomes. The information available does not allow the proportion of those who are borrowing the maximum to be calculated.

As a result, a markedly unequal distribution of student loan is stacking up in the Scottish graduate population.

  • Table A11 above shows that £264.1m of the the total of £429.6 m total lending was to those claiming the means-tested loan.  That equals 61.5% of all borrowing.  From the calculations above, this group accounts for around 45% of Scottish students (55,000 out of 123,745).  The better-off 55% are taking out 38.5% of all loan.

And the total debt is large: this year, the Scottish government plans to lend students almost £0.5 billion, double the amount ten years ago.

  • The Scottish Government is budgeting for net lending  (ie after taking into account any repayments) of £468 million this year: see here.  In 2004-05, total lending was £208.4m (in cash: nearer ££0.25bn at current prices): Table A11 again.

The loan repayment rules used by the Scottish government also collect more from lower earning graduates compared to other parts of the UK.

  • Due to a lower earnings-related repayment threshold and a longer period before write-off: see here.

Scotland is the only UK nation to settle more government debt on its poorer students than its better off ones.

  • See  p27 onwards here for  how the different student support systems in the UK are designed: all other systems make more use of grant, so that students at lower incomes are compensated more for their lack of access to family support and therefore  not expected to borrow so much towards their living costs.  See here for actual borrowing patterns by income in 2012-13.

In Wales, where fees are less than half the English level and grants the highest in the UK, students from the lowest income homes end up with lower debt than everyone else.

  • See here.  Student borrowing for fees in Wales is limited to £3,685 this year (£3,810 next year) and the maximum grant is £5,161.

At low incomes, the Welsh system can sometimes even mean lower debt in absolute terms compared to Scotland, even before taking into account the availability of shorter degree courses.  

  • See here for detailed comparisons.  Welsh students also receive a £1,500 write-off of their loan on commencing repayment.

Nor can we even show that the system adopted here has given Scotland the edge in widening access, despite the frequent claim that free tuition is essential to achieving this. Scotland does not stand out in the UK for progress made on access.

  • How widening access is measured is controversial and cross-UK comparisons are complicated.  However, no-one has yet produced clear evidence of Scotland clearly out-performing the UK on widening access over the period tuition fee policy has diverged. Sometimes Scotland appears to be performing less well.
  • See for example Table 4 here which covers the period 2002-3 to 2011-12, over which fees rose in England, Wales and Northern Ireland but the graduate endowment was abolished in Scotland. This shows the proportion of students from lower socio-economic groups fell in Scotland over this period but rose in England.  The same figure also fell, but less sharply, in Wales and fell more in Northern Ireland.
  • UCAS data which includes more recent years also shows that improvements in Scotland in access to university by the “POLAR2” quintile 1 group (another measure of social deprivation) were no better between 2006 and 2014 than those in England: see figure 71 here. The percentage increase in  the entry rate for students in this group in each part of the UK over the period  2006 to 2014 are shown below.  UCAS has  placed a caveat on the 2014 figures for Scotland, however, due to some changes in reporting practice, so the change from 2006 to 2013 is also shown. UCAS data excludes a minority of students in Scotland who study on sub-degree courses in colleges: however the size of this group means that even if it has shown larger increases, it would be very difficult for Scotland to open up a gap with the rest of the UK – and it would still leave Scotland as an average performer  in relation to degree-level entrance, which accounts for most of the results in all four countries.
Change in entry rates through UCAS POLAR2 Q1
2006-14 2006-13
England 61% 45%
Northern Ireland 49% 34%
Scotland 49% 31%
Wales 39% 14%
  • The Scottish Government itself has not managed to tell an evidence-based story about the link between free tuition and access: it was required by law to produce an annual report on this theme for the first few years after 2007.  The only one I have been able to find on-line is the last of these: it does not appear to have been publicised beyond a footnote to a written PQ answer.  It is discussed here. Notably it makes no evidence-based claim for stronger performance in Scotland and makes some other statements which are not so often reflected in official government lines:

 When asked about fees, costs and the Graduate Endowment Fee in 2007-08 students said that costs for books/ equipment, rent/ housing, food/drink, entertainment, travel, and commercial loans were of greater concern to students than the Graduate Endowment Fees. This suggests, as noted in previous reports laid in Parliament, that while the Fee could have been a factor in a student’s decision to study at the time, it would be more accurate to consider the Fee in the wider context of costs and debt generally, and how both the fear of, and actual debt, impacts on student behaviour and outcomes ….

While research from BIS has shown that the tuition fees introduced in England in 2006-07 did not impact on participation levels (even by those from deprived backgrounds), they seemed to have an impact on people’s choices of where to study. The research showed that people from more deprived backgrounds tended to choose a university closer to home, often a less prestigious institution. As such those from disadvantaged backgrounds are at risk, unless counterbalancing policies (such as loans and grants) are available to them.

The OECD reports similar findings. In OECD countries where students are required to pay tuition fees, and can benefit from public subsidies, there are not lower levels of access to university-level education than the OECD average. (Scottish Government, April 2013)

The  Scottish Government has sometimes drawn attention to the effect of £9,000 fees in England, but (a) that is evidence for the effect of £9,000 loan-funded fees, but not for the difference between free tuition and all forms of fee regime and (b) as the immediate impact in 2012 has been overtaken in later years, the figures for applications and acceptances in England have become less useful to the Scottish government case and less quoted in this respect.


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