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The review of student support #2: its consideration of grants vs loans

November 21, 2017

The report of the SG’s student support review was published yesterday: it is available here This post looks at its treatment of grant and loan, and says the last rites over bullet point 2 of recommendation 19 of the Commission on Widening Access.


It’s difficult to over-state how far this review was constrained by the remit the government set it (see page 15 in the link above).

It could not be the Diamond Review (although there are signs it aspired to be something of a Diamond for Scotland), because in Wales Diamond was given free range to look at whole of higher education student finance and its complete effect on students.  This review was specifically told  not to look at fees. So though the review describes itself as aiming to be “holistic”, it had no choice but to be holistic with a large hole.

The group stuck carefully to the prohibition on looking at fees, and it’s not clear there was any appetite to do otherwise. As the chair said at the launch yesterday:

We really support, I’m sure everyone does, the Scottish government’s focus on funding tuition fees. We commend that.

The odd effect of this remit restriction was well-illustrated earlier this year, when the Scottish government invited tenders on behalf of the review  for comparative research into systems in other countries. Bidders were specifically asked to exclude fees from the comparison, but still to draw conclusions on the relationship between student funding and participation.  (The final report is available here, by Anna Round and Russell Gunson of IPPR Scotland, the latter also being a member of the review group.)

On top of this, the government told the review not to come up with anything expensive. As the report puts it:

But the Scottish Government also made it clear in the remit that any recommendations from the Review should be made in full awareness “of the evident constraint on the public finances”.

Or as the chair, Jayne-Anne Gadhia, put it at the report’s launch (I hope I was writing fast enough to get her exact words).

in other words, could we do this and not cost the government very much more money

Grants versus loans

The review kicked a bit more against the funding restriction, but only a bit, listing a further option which would mean increasing means-tested grants, at a cost of £123m. NUS Scotland strongly pushed for that (supported by Unison). But this “50/50 bursary to loan balance” option is described only as “an aspiration of most of the board”. It’s not the review’s recommendation.

The review more generally says

how should levels of loans and bursaries be balanced? This was arguably the hardest question we considered. The Board found it helpful to view the costs landscape as a journey to be achieved over time. However, the rate of progress to fair funding and parity is for the Scottish Government to determine based on the public funding they wish to allocate in any particular year

That feels a rather jargon-heavy (“view the costs landscape”?) and non-commital position. It is certainly well short of strong arguments made for targeted grants  as a progressive intervention in the Diamond review, and previous ones in Wales: those however were free to switch resources from fee subsidies to grants, to make their recommendations affordable.

The recommendation

The review recommends a “hybrid approach” which is will keep HE grants at their current low level (especially low for mature students), and put a little more into FE bursaries, but rely on loans to give everyone, at all incomes £8,100 of total support (copying from the Diamond Review’s flat-rate model, but ignoring its arguments for the substantial use of grant to achieve this).

Surprisingly perhaps, the report only shows what its recommended option would mean for the lowest income young students in HE, and the lowest income FE students, and no others.

But given it assumes no new grant spending in HE, it seems reasonable to fill the gaps using the existing HE grant levels: see below.  I think it’s untransparent of the review not to include this table (or whatever equivalent it has used to produce its costings). It suggests wariness of making clear how much loan its package would involve for most students, if they wanted to make the £8,100 reality. But that’s the consequence of living with the existing level of HE grants.

In passing, I’m disappointed the review doesn’t comment on the lack of justification for giving mature students less grant than young students.

Young Independent (mature)
Household income Young Student Bursary Loan: new (old) Independent

Student Bursary

Loan: new (old)
0-£18,999 1875 6225


875 7225


£19,000-£23,999 1125 6975


0 8100


£24,000-£33,999 500 7600


0 8100


£34,000+ 0 8100


0 8100


This change does address the complaint from people like me that the previous system was designed round higher debt at lower incomes. Whether in practice it translates into a distribution of borrowing no longer skewed towards the lowest incomes will depend on whether higher income families withdraw from providing living cost support on any scale (or their children borrow the money on top of that). That is, a less regressive pattern of borrowing by income will depend on a significant rise in student indebtedness at high incomes, rather than a reduction in it at lower ones.

Around one-quarter of students on YSB don’t take out a loan: the review report disappointingly does not discuss the implication of that for its proposals, although it does discuss the need to encourage a more positive view of student loans, especially as an alternative to commercial debt.

I can’t repeat this table for FE students, as the review recommends an increase in grant, but only says what this would mean at the highest rate (an increase from around £3200 to £4050) and not how it might then taper. The cut off for FE grant is much higher, at £45,000. The review really ought to have shared in more detail its assumptions about FE grant and loan at different incomes. It says its planned increases in FE bursary would cost £16m (+25%) on current spending.

We know that YSB students in college are less likely to borrow than those in university (30% in college do not vs 20% in university). That raises further questions about what sort of take-up  of loans there might be among FE students in practice. The review confirmed yesterday that it had not tried to estimate this. Its costings assume 100% loan take-up.

Conclusion: an Access Commission recommendation quietly buried

It’s worth remembering that some of the origin of this review was Recommendation 19 from the Commission on Widening Access. Emphasis added.

Recommendation 19: The Commissioner for Fair Access should commission research, within three months of appointment, to assess how student finance impacts on the participation of disadvantaged learners in higher education. This research should consider in particular:

  • Whether, and to what extent, levels of student finance impact upon access, retention and choice of institution.

  • Whether, and to what extent, the balance between loan and bursary impacts upon access, retention and choice of institution.

  • International practice on student finance and the impact this has on access and retention.

As “Implementing a Blueprint for Fairness” puts it (emphasis added):

Further and Higher Education Student Support Review

This independent review, chaired by Jayne-Anne Gadhia, CEO of Virgin Money, has a remit to thoroughly review student support and ensure that the entire system is firmly focused on meeting the needs of all students in further and higher education. The review was launched in October 2016 and is scheduled to report to Ministers by autumn 2017. The Chair met with the Commissioner for Fair Access in May to discuss the links between the Student Support Review’s work and the findings of the Commission. Work to deliver Recommendation 19 (Research on student finance) and Recommendation 20 (Better information on student finance) will be considered in the context of this review.

In terms of addressing the second point of Recommendation 19, this review just didn’t. With no substantial analysis of alternatives and their possible implications, it simply embeds the cuts in HE grants made in 2013,  doesn’t challenge the longer standing placing of mature students on a lower grant rate, and increases the use of loan substantially. But that can be traced directly to the constrained remit the review was set by ministers. The chance to look seriously at the balance of loan and grant was removed by government before it started.  Recommendation 19 will now be marked as ticked off, I suspect, but an important part won’t have been done. Point 2 has been quietly killed. There’s presumably absolutely no political appetite for stimulating any debate on how loans compare to grants as a way of funding living costs.




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