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FoI and PQs shed some light on government claim about student borrowing

April 24, 2015

In the light of some recent PQ answers, this post revisits the only substantial point of rebuttal the Scottish Government has offered in response to evidence of a regressive distribution of student debt in Scotland, dating from last year in a statement to the Scottish Parliament by the then Cabinet Secretary for Education and Lifelong Learning.

The claim

On 29 April last year, the then Cabinet Secretary, Michael Russell MSP was asked  a question at the Education and Lifelong Learning Committee about the regressive distribution of student debt in Scotland.  The relevant part of the Official Report is included at the end of this post.

He made make a number of contestable observations (there was some precedent for this – as before, I wrote to the Committee with my comments on the Minister’s observations and the letter is available on their website, here).  Most of the points could be straightforwardly addressed, but there was one substantial point where it was possible the government had access to unpublished  information which might demonstrate regressive effects on paper were not translating into such effects in practice: at this point no data had yet been published for how the new arrangements brought in in 2013-14 were working in practice.

The Minister implied that it was a problem that the calculation of regressive effects “assume[d] that the accrual of debt loan uptake in 2014-15 will be the maximum of each individual Scottish student’s eligibility, which is not normally the case” [emphasis added].

What point was being made?

One reading of the point would be that not all students take out all their loan each year.  That’s certainly true: for years, around 30% of students haven’t borrowed anything at all. But if that was what was meant, it was an odd criticism.  The analysis of 2014-15 figures looked specifically at the different levels of debt  generated by the government’s package of support at different incomes assuming students take out their full entitlement to loan and grant – the same assumption the Scottish government itself routinely uses when referring to individual entitlements.  This assumption  underpinned its much-publicised changes to student support in 2013-14 and its estimates of the likely numbers receiving support under the new arrangements contained  in evidence the SG subsequently provided to the Committee.

Further, as it is evident from the official statistics that students from low incomes are  disproportionately likely to be borrowers,  the existence of non-borrowing  is in fact a substantial source of further regressive effects in itself, over and above the underlying design of the system.  Far from the existence of non-borrowing being an argument against the existence of regressive effects, the opposite is true.

That suggested the Minister might be seeking to make  another point, which could in theory have more substance  – that individual students don’t normally take out their whole loan entitlement.  That certainly could mean a less regressive the pattern of debt distribution in practice than predicted – although only if low income students were particularly likely to borrow less, and it would not alter the underlying regressive design of the system on paper.

How”normal” is it for students to take out their whole loan?

That was potentially a more substantial point,  so I wanted to look further at how normal it was for students to take out their maximum loan.  That couldn’t be tested directly from  the  full official statistics. So I submitted an FoI request to the Scottish Government, asking for sight of the data on which the Minister’s claim was based.

The response came that “We have completed our search for this information. The Scottish Government holds no tailored analysis of data linked directly to the specific comments you highlight, referenced at column 4087, on the transcript of the Education and Culture Committee’s meeting of 29 April 2014.  However, you may find it useful to note that the Higher Education Student Support in Scotland (2012-13) publication, http://www.scotland.gov.uk/Publications/2013/10/1120 , shows 60% of undergraduate students receiving any form of support from SAAS were authorised for a loan.”  [emphasis added]

There was no new relevant evidence. The reference to overall borrowing rates reinforced that borrowing in general was more “normal” than not.  Indeed, the 60% is obtained by including EU students in the sample, although they cannot take out loans: for Scottish-domiciled students only, the figure that year was just under 70%. That the government didn’t feel this figure was enough to count as “tailored analysis of data linked directly to the specific comments you highlight” tends to confirm that the initial claim was intended to be about something more than the fact that loan take-up was less than 100%.

I let the Committee know, but otherwise left it there.

Recently however PQ answers (see here) have shown  not only that the majority of low income students borrow (as we already knew), but also that most borrowers take out their whole entitlement.  Among those with low enough incomes to be entitled to grant, whose borrowing was my main concern, 75% take out their full loan entitlement (70% of young students and 85% of mature students): full figures shown in table at end.

Indeed, it turns out that in September 2012 the Minister had already celebrated  the large numbers of low income students receiving the MIG and therefore taking out their full loan: see here. I’d missed that until recently.

These figures don’t tell us what’s normal for those at higher incomes.  But from the numbers we have, it’s arithmetically inevitable that they are less likely to take out their whole (lower) loan, reinforcing  the regressive effects of the Scottish system in practice.

Why this matters

Mr Russell’s claim in April last year remains the nearest thing to a substantial government critique of the evidence gathered by this author about the way student debt is distributed in Scotland.

Depending on what was meant, it is either a puzzling criticism that the theoretical part of my analysis uses the same assumption as the government has made at important moments (and in doing so under-plays the degree to which debt is unequally distributed in practice), or else it is directly at odds with the fact  that it is “normally the case” that that low income students do borrow the maximum of their individual entitlement.

In an earlier context, Mr Russell had emphasised that those involved in policy debates should expect to have their contributions “scrutinised, considered, and even disagreed with”.  Leaving aside that that comment sits a little uncomfortably with his resistance at Committee a few months later  to any challenge to the government line on any aspect of student funding (see below),  scrutiny, consideration and disagreement are certainly justified here.

Extract from Official Report 29 April 2014, col 4087-88.

Liam McArthur MSP: … I would welcome his observations on comments made by Lucy Hunter Blackburn, the former head of education in the Scottish Government, who has said that with the increasing move from grants to loans in Scotland, “In Scotland, uniquely in the UK, graduates who started from poorer backgrounds are now expected to leave university with a higher debt, and therefore face a higher de facto tax on their future earnings”…

Michael Russell MSP:   “I want to make two points about the latest analysis that has been provided
by Lucy Hunter Blackburn, who seems to return to this issue again and again. First of all, it makes a
number of very broad assumptions. For example, it assumes that the accrual of debt loan uptake in
2014-15 will be the maximum of each individual Scottish student’s eligibility, which is not normally
the case [Note: see above]. More seriously, the analysis fails to properly recognise the existence of free tuition [Note: this is not correct – see response to the Committee linked above]. That is a very considerable issue, because it saves all Scottish-domiciled students having to pay sums of up to £9,000 per annum, unlike their counterparts in England, who must pay. That is a debt burden, and with free tuition there is a real saving that does not become a debt. That needs to be factored in. I note that, in August 2012, the NUS called this “the best support package in the whole of the UK”, but Lucy Hunter Blackburn seems to find it difficult to cope with that view. When you take into account the fact that, as part of that package, student fees are not being borrowed, you suddenly realise that it is “the best support package in the … UK”. You cannot get round that, and I do not know why some people spend so much time trying to do so. It is a fact.” [Note: these points are dealt with in the response to the Committee linked above.]
Footnote on borrowing figures: figures from S4W-24400 and S4W-24402:   here
Young Student Bursary Independent Student Bursary Combined
Total claimants 32930 17400 50330
of which taking full loan entitlement 23065 14780 37845
70% 85% 75%
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