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Can the Access Commission convince the Scottish Government to stop playing Jekyll and Hyde on student loans?

July 4, 2015

Only two-thirds of the poorest young students in Scotland are benefiting from the Scottish Government’s flagship policy of a “minimum income guarantee”. Most of the rest are trying to get by on just £1,750 a year in grant.

My evidence to the Commission on Widening Access (in full here) highlights this as a critical issue for the Commission to consider.  In particular, the Commission is asked to take a view on whether the the Scottish Government has acted responsibly in shifting support for poorer students ever more heavily into the form of loan, while still trying to benefit politically from a negative rhetoric about the impact of borrowing on poorer students.

In 2013, Scotland moved to a system of funding students’ upfront living costs much more heavily reliant on loan than before, cutting grants and using additional loan to generate an real-terms increase in total support. It did so even though in a report to the Scottish Parliament in April of that year the Scottish Government argued that (emphasis added):

… evidence sources suggest that the fear of debt and cost of study can potentially dissuade prospective students to going to university. People from disadvantaged family backgrounds are especially vulnerable in this respect.

BIS research notes that most young people see debt as a normal part of life, but that those with the most negative attitudes to debt are among those least likely to apply to HE. It suggests that students from low income households see the costs of HE as a debt rather than an investment. Those from less privileged backgrounds were more likely to be concerned about debt, and those most averse to debt were among the less willing to participate in HE …

So it should not be a great surprise to learn that if low income students are offered support which looks like this (2014-15 figures):

Household income Bursary Loan Total % as loan Implied 4 yr debt
£0 to £16,999 (young) £1,750 £5,750 £7,500 77% £23,000
£0 to £16,999 (mature) £750 £6,750 £7,500 90% £27,000

.. against a government rhetoric about the unattractiveness of student loans which sounds like this ….

 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. (see here)

I would not have had that opportunity [to go to university] if there had been a policy of tuition fees in place, because even if there had been a policy of paying them back later, the prospect of accumulating that scale of debt would have been enough, I think, to lead me not to go to university. (see here)

… many students entitled to a maximum bursary appear to find the level of borrowing needed to obtain the “minimum income guarantee” unattractive.

Here are the figures in detail, obtained not from any analysis published by the government, but from further questions (they are for 2013-14, the only year under the new rules for which there are figures):

Actual on full grant Actual on maximum living cost support % take up of maximum living cost support
YSB claimants 17,330 11,485 66%
ISB claimants 17,340 13,645 79%
Total 34,670 25,130 72%

We can also tell that most of those on a grant who didn’t borrow the maximum, borrowed nothing at all – there are very few “partial borrowers”:

YSB % of all YSB takers ISB % of allISB takers Total % all YSB/ISB takers
Taking no loan 8,090 25 2,620 15 10,710 21
Taking part of loan 1,775 5 300 2 2,075 4
Taking whole loan 23,065 70 14,480 83 37,545 75
     
Total 32930 100 17,400 100 50,330 100

The unavoidable conclusion from these figures is that many students at the lowest incomes did not just reject the full “minimum income guarantee”, they limited their entire state support to an amount of grant that would barely cover their commuting costs, even if they tried to save money by living at home (in a household where money is by definition already tight).

The Scottish Government urgently needs to review a policy that evidently isn’t working for many of those it most needs to help.  At the very minimum, it needs to stop making political capital by talking down student loans, while shovelling these towards poorer students in large amounts, as their only alternative to derisory levels of state support. At the moment, the “minimum income guarantee” is a policy which is failing many of those it is intended to help  and something – the heavy reliance on loan, or the surrounding negative rhetoric about student borrowing, or probably both – needs to change.

Critics of government policy on student funding in Scotland have had no success in getting a hearing over the past two years. The government’s dismissal of figures just last week showing Scottish students making more contact with payday lenders than those from elsewhere in the UK, revealed more of the same Jekyll-and-Hyde attitude to loans – talking up its “minimum income” while invoking scary five-figure debt figures from south of the border.

Perhaps Ministers might listen to the Commission on Widening Access if it takes an interest in the situation described above.  Let’s hope it will.

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