Could the Conservatives be planning to follow in the SNP’s footsteps on student funding?

[Update: this was written before the announcement that grants would be phased out completely from 2016 – a  more up-to-date comparison now posted here.]

Discussing the announcement of a £450m cut to the BIS budget, Andrew McGettigan argues persuasively that the government may be about to reduce student grants in England and replace an element of them with loan.  He estimates that £1,000 cut in grant would save over £350m – a large part of the saving needed.

If this happens, the Conservative Government at Westminster will be adopting a model pioneered by the Scottish Government, which implemented exactly this policy in 2013, reducing grants for young students by some 40%, meaning cuts of over £1,000 a year for many, and replacing that funding with loan,  as analysed here.  In a twist on the poll tax, a Conservative policy for England would have been tried out first in Scotland, but by an SNP government.

Of course, Scotland’s grant cuts were not on top of the high fees which apply in England.  But that’s doubled-edged in effect.

Adding £3,000 to a debt of £40,000+ at first sight looks a lot worse than increasing debt by £4,000 or a bit more,  to something between £20,000 and £30,000.

But it is likely that for many of the English students affected, this increase will have no effect on what they pay back – because they already won’t be paying back this very large loan as it stands.  The last, unpaid part of their debt will be written off – the grant cuts will simply mean the write-off is larger. It’s the Macbeth scenario  (“I am in blood stepped in so far that should I wade no more, Returning were as tedious as to go o’er”) – students can get to a point where they are so steeped in debt that borrowing more probably won’t make things any worse in practice, as long as the government continues to write-off unpaid amounts at a certain point (30 years in England).

By contrast, it is much more likely that Scottish borrowers will pay back their whole debt, at its new level as well as its old one, particularly if Scotland persists in having a  lower loan repayment threshold (just over £17,000 in Scotland: £21,000 in England) and a longer period before write off (35 years in Scotland).

So – ironically and counter-intuitively – the grant-to-loan switch in Scotland is much more likely to have a real effect on poorer students than the same manoeuvre in England.

That doesn’t mean cuts in England should just be shrugged off – some students from poorer backgrounds will end up paying back more.  Also, as has happened in Scotland,  there may be students who simply won’t take out more living cost loan to compensate and so suffer more immediate hardship.  It’s also unknowable whether a further increase debt – however likely or not to be paid – may deter certain people from applying or increase drop-out.  For all that higher fees in England have coincided with an increase in applicants from disadvantaged backgrounds, we still don’t really understand  very well exactly how  changes in student funding affect behaviour (and we have this limited evidence about grant).  Last of all,  though a £1,000 pa cut wouldn’t mean that England would join Scotland in expecting its poorest students  to have the highest debt,  the debt position  of those poorer students would still worsen relative to some of their better-off peers.

Still,  Scotland’s own recent history and the counter-intuitive effect of pre-existing high debt for fees will present a challenge to anyone who wants to criticise grant cuts in England from a  perspective which seeks to put Scotland in a more flattering light, whether from within the ranks of Scotland’s new MPs or elsewhere.

It will be interesting also to compare what sort of reaction any cuts in England get, in the media or from student representatives.  The cuts in Scotland, of course, passed with almost no media comment and have never been criticised by NUS Scotland.  They have never even been announced, or even acknowledged, by the Scottish Government, whose relevant Minister just last month managed to suggest they hadn’t happened – even if she later corrected herself.  Even if the policy content turns out to be similar, it seems very unlikely that the UK Government will be able to get away with the same sort of presentational free pass as its counterpart in Edinburgh has enjoyed, in Scotland’s less rigorous environment of government scrutiny.