Background to my piece in The Scotsman examining the Scottish Government’s budget plans published in September 2013 and considering their potential impact on student support and the funding of teaching in higher education.
The tables referred to in the piece are here: Budget 2015-16 tables.
The Scottish Government budget plans up to 2015-16.
The previous plans from September 2012.
The estimate of tuition fees as approaching three-quarters of the budget line is based on the most recently available data for SAAS spending on fees, which are the figures for 2011-12 shown here. This gives £210m for full fees, and £222m for all fees. This is equal to 73% of the total of £302.4m in the relevant budget line for 2013-14. This is before taking into account that since 2011 student numbers have risen slightly and the government is providing more support for free tuition for part-time students.
An analysis of the reduction in student grants in Scotland is available elsewhere on this site.
A strong indication that demand is growing more than fast enough to compensate for falling numbers of 18 year olds comes from the most recently available UCAS data on acceptances rates for 18 year olds (see table 10). This shows that even though acceptances in absolute terms have been rising, the percentage of successful applicants in Scotland has fallen since 2009, meaning more applications are being made. The acceptance rate currently stands at around 5-6% below the 80% which held relatively steady over the middle of the decade. This data covers the period to 2012: the figures for 2013 will not be available until early next year.
For UCAS’s latest estimates of the year-on-year changes in the absolute number of acceptances, see table 1(c) in the document linked at the foot of this news release. It is worth noting that over a longer period – ie since 2010-11 – Scotland is still ahead of England and Wales in terms of the overall increase in acceptances. After a large dip in 2012, England has only just exceeded its 2010 levels, and in Wales the figures are still lower than in 2010 (Northern Ireland is well ahead of everywhere else on this measure). However, the immediate momentum in UK higher education is towards expansion and this would make the task of defending any contraction in places in Scotland more difficult – particularly if demand remains high.
GDP deflators used to calculate the value of 2012-13 spending in the real terms up to 2015-16.
The assessment that grants must be absorbing around two-thirds of the saving on this line between 2012-13 and 2015-16 comes from calculating how much of the £40.3 million would have been needed to keep the fee element at the same real terms value and ascribing the rest to grants. Assuming that the fee figure did not increase in 2012-13 and was still £222 million (see above), increasing this by expected inflation over the period gives £235.5m by 2015-16. Therefore, of the £40.3m reduction, £13.5 million, or one-third, is assumed to have been found by freezing the real terms value of the fee element, leaving the remaining two-thirds to fall on the grant component.
Data on the level of SAAS fee over the last 10 years is provided here. From 2006-7, when the fee rate for a degree was raised well above inflation, to £1700 pa, as part of the mechanism for controlling cross-border flows, inflation increases were then applied in 2007-08, 2008-09 and 2009-10. At that point the fee rate reached £1820, where it has remained for the subsequent 4 years. Using Treasury deflators, had its real terms value be maintained it would now be worth around £1970 (8% higher) and by 2015-16, its expected value would be just over £2050 (13% higher).
The estimate that SAAS fee payments appear to account for around one-quarter of universities’ income from the Scottish Government for teaching Scottish students (£1820 compared to an average £5359 in teaching grant per student provided by the Scottish Funding Council, produced by dividing the total teaching grant by the number of funded places: taken from Tables 2 and 5 here). To give a sense of the impact of this, the SFC average teaching grant per funded place rises by 1.6% in 2013-14, after adjusting for the removal of rUK students from the funding formula. Once the zero uprating of the SAAS component is added in, this falls to 1.2%.
The estimate for 40% of higher education being provided in colleges is drawn from Table 4 of Participation Rates for Entrants to Scottish Higher Education 2011-12
The summer saw a steady flow of references to tuition fees in the media. But while Alan Morrison in The Herald recalled once marching to defend student grants, there was generally little interest in these and only one reference to fact that they were about to fall sharply.
This was in The Herald’s personal finance pages, which noted “a significant re-weighting away from bursaries towards loans, with a typical £5500 package including £1500 of bursary last year, but in the year ahead only £500, with the loan component jumping from £4000 to £5000.”
Writing in The Ellon Times, The First Minister name-checked bursaries, noting: “Whilst Westminster is punishing students south of the border for their aspirations by trebling tuition fees, the SNP Government has abolished fees for Scots and with further assistance from student loans and bursaries, represents the best package of support available in the UK.” The Scottish Government’s pilot extension of its domestic funding package, including the standard bursary rates, to students traveling to study in Europe, initially announced and reported in January, was reported again, also accompanied by the usual description of the Scottish package as the best in the UK.
Student debt more generally received some attention. The Herald reported the Lloyds TSB survey, exposing concern about debt levels. These are UK-wide figures with no separate Scottish data released. The survey showed that having too little money to live on is an acute concern for 18% of students surveyed, with a further 48% “just managing”. However, perhaps the most interesting finding, in the context of the coming changes in Scotland, is that in this sample 44% of students were worried about the scale of debt they had. The average debt being predicted in the sample was £16,909, below the level Scottish students from low-income homes are now expected to take on for a standard honours degree.
Reporting on a separate survey, the Herald noted that “Overall, however, student debt for Scottish students is much lower than for those in England, Wales and Northern Ireland because they don’t pay tuition fees” – a claim which, by not distinguishing between the different systems in different parts of the UK, does not bring out that – particularly once the 3 year/4 year effect is factored in – those from lower income backgrounds in Wales will often have lower overall graduate debt than their Scottish peers, and that more generally Welsh graduate debt levels (and NI ones, for those who study at home) are well below those in England and at worst comparable with those for mature students in Scotland.
Students at Edinburgh College reported problems receiving their student loans on time. There was some coverage of the cost to students of calling the SLC for queries regarding loans. Concern that some students have not yet applied for support was recently reported in The Herald.
However, even in the absence of any substantial developments over the summer, tuition fees retained their news power.
The media reported how, presenting its legislative programme, the Scottish Government used free tuition as an example of how better decisions have been taken in Scotland. Joan McAlpine MSP writing in The Record noted: “At a conference I attended this weekend, one woman described herself as a sandwicher. Life had its challenges but she was grateful for two things. She didn’t have to worry about paying university or college tuition fees for her kids.”, going on to mention tuition fees twice more in a short article. Reporting of UCAS data also provided the government (and the NUS) with further opportunities to refer to free tuition policy.
Meantime, David Raffe in The Herald unpicked the differences in fee regimes in different parts of the UK, explaining the different choices made in Wales and Northern Ireland about fees, though not grants. Similarly, articles about student funding in the UK press over the summer understandably always mentioned free tuition, but tended to be silent on the different grant levels. This is a good example – grant rates for every part of the UK but Scotland are provided. The different fee regimes were sometimes discussed from the perspective of English students. The wider political ramifications of decisions about tuition fees and the West Lothian question got some attention.
Some attention was paid to what would happen to tuition fees if Scotland votes for independence. The Institute for Fiscal Studies reportedly estimated that “Scotland would also have to find an extra £100 million per year after independence to pay the tuition fees of university students from the remainder of the UK” (this sort of assumption has been contested by Ministers in the past, to note).
But it was perhaps at least as interesting to learn from this report that “spending on education and training was broadly the same per person as in the UK as a whole, despite a notably more generous policy on higher education tuition fees.” That merits more unpicking, but provides an interesting piece of context for Alan Cochrane’s criticism of “the SNP’s rob-Peter-to-pay-Paul system of cutting back on college funding to help them pay for their “til the rocks melt with the sun” free university tuition fee policy”, when discussing Sir Ian Wood’s call for a greater focus on vocational education.
Absent from all the reporting was any sign that existing students were being publicly critical of reductions in their grant. That may be a sign that in the short term students are generally not very concerned about switching grant to loan and more interested in the general increase to the value of the total package. Or it may be indicative of other things – from the absence of an organised focus for any discontent through the student union movement, to it still being too soon in the year for the effect of change to have fully registered. It will be interesting to see if any more clues to student attitudes emerge as the new academic year starts in earnest.
This IFS site is a useful resource for anyone interested in student financing. It focuses on understanding changes which have applied in England. The IFS study discussed elsewhere this blog is one product of this project. But there is other useful material, including here, an analysis that concludes that for the 27% of lowest earning graduates, the system will mean lower repayments than the previous system in England, due to changes in the loan threshold and eventual write-off meaning much debt is not repaid, while the highest earning graduates will pay back more (due to the higher initial borrowing required) and indeed more than they borrowed (due to real terms interest). The new English system is in effect working more like a progressive graduate tax than its predecessor.
The 2013 UK government spending round was announced on 26 June. Maintenance grants in England will be frozen in cash terms in 2015-16, representing a £60m loss to students, and the national scholarship programme in England cut from £150m to £50m, with that funding to be switched entirely to post-graduates.
Strikingly, the reductions to student funding were more clearly described, and further in advance, in the official UK budget documents than was the case for this autumn’s grant reductions in the Scottish budget process, enabling the media immediately to report the precise effect with technical accuracy 2 years in advance, and to criticise it – as in this Guardian editorial.
The NUS has expressed concern that institutions will withdraw their match funding for student support: “the funding was due to be matched by universities, leading to a total cut in support for undergraduate students of £300 million a year”. The UK budget does not withdraw the matching £150 million from institutions, although they appear to be facing a general reduction in teaching grant of £45m. So the concern is presumably that without the incentive to put this funding into student support, institutions will channel it elsewhere. That will presumably depend on how this feeds through into the regulatory system run by the the Office of Fair Access (OFFA).
This OFFA document suggests that prior to the 2013 spending round, total planned expenditure of access related work by 2016 had been £809m, of which £298m would be on bursaries and £241m on fee waivers. So the NSP cut, plus the cash freeze in grants, will have a significant impact, though the change is less sudden and, bearing in mind that these figures exclude non-repayable grants paid through the Student Loans Company for English students, less in proportionate terms than the reduction in non repayable support in Scotland this year (likely to be around 25%, although the published documents for Scotland do not allow a precise figure for grant reductions to be calculated).
The NUS criticises the reduction in grant support as likely to lead to an increasing reliance on commercial debt, suggesting there is no matching increase planned to student loans (although lost fee waivers will lead more or less automatically to increased student loan borrowing for fees). Certainly, the government document is silent on loans and the main narrative does not refer to an increased RAB charge. However, loan costs are noted as being included in the departmental figures in table A.10, where they rise by £1.5bn between 2014-15 and 2015-16. It is not immediately clear whether that is the same as previously planned or includes some compensation for lost grant. As loan levels are already higher in England, pushing them higher again may of course be regarded as untenable even if it was affordable.
Even allowing for the starting point of higher debt, an account in the Guardian offers an interesting contrast to the relaxed attitude in Scotland towards replacing grant with loan: “But Cable, who settled late, made clear to friends that he had to fight hard to see off some “horrid” Treasury ideas about six weeks ago. One source said: “It was a real list of horrors….They were wanting, in some places, to get rid of student grants and convert them all into loans.”
No mention of changes to grants in Scotland in this period.
Some local coverage (eg here, here and here) of the SAAS campaign encouraging students to submit their applications on time, repeating the established official lines about the changes due this autumn.
Brief mention by a few news outlets of the tuition fee cap for rUK students being introduced under the Post-16 Education Bill, which was approved by the Parliament on 26 June.
There was also coverage in the UK media of the spending review announcements, including criticism of a planned cash freeze on student grants – a separate post looks at this announcement.
Interesting article highlighting lack of proper research evaluation of various widening access programmes (with a link to further published work on this) and noting that funding for these, including for widening access bursaries, is likely to come under pressure in England following the recent spending review.
It has not been clear how far the Scottish Government is aware of the student support arrangements put in place by the Welsh Assembly. This table on the Scottish Government website describes the arrangements which apply for Welsh students (in the context of them coming to study in Scotland). It appears on a Google search as dated 13 June 2013, but that does not preclude it having been there longer.
On 13 June, a piece in The Scotsman carried a quote from Hugh Henry MSP drawing attention to the grant reductions.
On 15 June, The Herald ran a piece in its personal finance section on a campaign encouraging students to submit their applications for support, including grants, on time. This included the standard government lines about the improvements represented by the package and how it compares with the rest of the UK, but with no reference to changes in grants. There was similar coverage in the local press.
By contrast, tuition fees continued to excite more media interest. On 14 June, a piece in The Herald picked up the coverage earlier in the week of the Raafe research on widening access and what it might or might mean for tuition fee policy. On 17 June, Holyrood Magazine ran a piece about the views of Labour Ministers in 1999 on Scottish policy on fees, on 19 June a piece highlighting how the debate on fees appears to be less settled than might have been expected by the NUS and on 20 June a piece analysing recent comments from the First Minister about the fee treatment of EU students in an independent Scotland. The last of these picked up on comments highlighted by the New Statesman, reporting an interview with the First Minister. On 19 June, The Scotsman ran a piece responding to recent legal advice on tuition fee policy and EU students commissioned by Universities Scotland.
An exceptional feature of the new system in Scotland is that substantial grant reductions will be experienced by those already in the system – some of whom could still have three or more years’ study ahead. As annual losses could be as high as £2000 in a few cases and well over £1000 in many more, this will mean substantially more debt (or, if they decline the option of more borrowing, less income) than students will have expected when they first decided to go into higher education.
There is precedent for reductions in smaller, non-core elements of student support in Scotland (such as travel grants, abolished in 2011-12 and replaced with £350 additional loan for those at the lowest incomes; and the abolition of EMA bonus payments) being introduced at the same time both for new and continuing students. However, it has been normal practice to phase in gradually any changes which would otherwise cause individuals a significant, unexpected loss part-way through their studies.
The closest precedent comes from 1998, when student grants were cut by £1000 to be replaced by loan. In 1999, grants were completely replaced by loan. The new system was applied only to new students (along with the introduction of means-tested fees, which had a limited impact, if any, on grant recipients). As well as leaving existing students under the old rules, additional measures were included to shelter a number of new starts (eg those with deferred places) from the change. The change was widely publicised in advance and subject to detailed parliamentary scrutiny.
The original introduction of student loans in 1990 was as a top-up to existing grant. Real terms increases in support were thereafter provided through loans: but, as far as I can make out, loan was not substituted for existing grant.
Other examples of applying major detrimental change only to new starts include the graduate endowment in Scotland and increases in the fee cap elsewhere in the UK. The £20 and £10 rates for Education Maintenance Allowance in Scotland were also phased out from 2009 for new students only. Further afield, a grant to loan switch in Australia is also being phased in for new students only.
A recently released report to the UK government suggesting, among other things, that the interest rate guarantee made to earlier generations of students could be revoked and a higher rate of interest applied retrospectively has been criticised for as subjecting “all but those from the wealthiest circumstances to an indebtedness that they neither anticipated nor consented to” and “undermining trust in the loans system and the entire university application process”. At a practical level, this proposal would be no different in effect to the Scottish grant reductions, in terms of increasing the period graduates from low-income backgrounds spend in repayment: potentially, the move in Scotland could have a higher actual cash impact in the most affected cases. The only difference is that Scottish students have the alternative options of either taking a significant unplanned hit on income or dropping out of their course.
The departure by the Scottish Government from established practice therefore also raises some interesting questions about trust, the nature of the moral contract between students and the state and the predictability of funding for those considering higher education. It may also raise issues of law.
A central principle in administrative law is “legitimate expectation”. In broad terms this deals with situations where a public authority has led certain people to have a firm expectation that something would or would not happen. (Another is “Wednesbury reasonableness” which deals with situations where a public authority has acted unreasonably: but this is very steep test – it takes a lot to be Wednesbury unreasonable.)
The UK government initially proposed to abolish Educational Maintenance Allowances in England for all recipients, including those already receiving payments, and to replace these with a different, cheaper scheme. Campaigners threatened judicial review of the planned withdrawal of EMA from existing recipients, apparently on the basis of thwarted expectation. It is not clear how far that threat was taken. However, the policy was changed and EMAs were eventually phased out more gradually, although still with some reductions for certain students already in receipt.
Supported by the Union of Students in Ireland, students in the Republic of Ireland recently took their government to judicial review over a rule change which led to reduced grant for some continuing students, with legitimate expectation as one element. They lost the case – but the decision was tightly tied to the specific circumstances, including that the cut applied to a particular change in eligibility rules, the precise terms of the law and process by which the change had been announced and implemented (the court commented that it had been “signalled” in advance), the exact nature of commitments made by the government and – centrally – in the words of the judge, “the dire financial circumstances facing this country”, which the court held to be on such a scale that they had to be weighed against any legitimate expectation. This is the judgement.
Is it possible a similar challenge could be brought in Scotland and what chance might it have? Some issues to consider might include:
- what was originally said about grant in formal government literature for students when they first applied and how far the government can insist that this should have been viewed as a form of completely variable annual contract.
- other official government statements which the students affected might have taken as indicative of its intentions eg: “the current average graduate debt for Scottish borrowers is £6,480, and we are working to reduce that further” (this figure relates specifically to student loan debt: the quote is from September 2011).
- the lack of precedent for a mid-course reduction in student grants on this scale.
- that the fact of reductions in grant levels, including for continuing students, had to be inferred from other information published, particularly the 2013-14 grant tables on the SAAS website, and was never explicitly announced (no parliamentary process was required to approve the change).
- specific advice from SAAS for continuing students appears to have been limited to: “Q: I am currently a student in Higher Education. Will I keep the same funding next year? A: No, we will fund you under the new arrangements. However, providing your circumstances do not change, the level of funding you will receive will be the same or higher than the amount you will receive this year”.
- whether other, more explicit information may have been provided direct to continuing students about reductions in bursaries. The NUS did contact all those students in its membership specifically drawing attention to the new grant and loan rates (grateful to NUS for providing a copy of this: NUS note to members 22 August 2012), clearly explaining that the new arrangements applied to all students. However, there is no specific reference to grant rates being lower: the bulletin refers to “financial increases” which would “benefit every single student continuing in higher education through September 2013”.
- the availability of loan to replace grant. This would no doubt be central to any defence. Loan deals with the immediate cash-flow effect but is still a fundamentally different form of funding. It is not a like-for-like replacement for grant, given it creates an additional charge on future earnings. An IFS study (see here) provides some comfort to those who argue that loan and grant have interchangeable effects on applications in general, at least among young students. Prima facie evidence that students regard grant and loan as different might be argued if there was a clearly lower percentage take-up of loan compared to grant. This House of Commons Research Note gives the most recent available figures for maintenance loan take-up in England as around 85%, adding that “the main reasons for not taking out loans were that students felt they did not need the money (45%), a dislike/concern about borrowing (36%) and concern about repayments (23%). Concern about debt and repayments were more prevalent among students under the new support system [ie the £9000 fee regime] and those receiving a Maintenance Grant.” The Scottish budget assumption for loan take-up under the new system appears to be around 70% (see full analysis). I can’t immediately identify actual or assumed take-up rates for grant: it would be surprising if they were as low as 70%, but that possibility can’t be ruled out.
- the absence of public consultation specifically proposing cuts to grants.
- how far there was explicit consultation on the bursary reduction with NUS in private prior to the decision. There is certainly evidence that the NUS can at best only have become aware of the decision relatively late in the process – see the quote at the end of this story, which ran two months before the government announcement, at which point the NUS was clearly not expecting the new package to increase debt.
- the absence of any transitional safety-netting, such as the capping of grant losses over a certain amount, which means that the range of detriments suffered is very variable and arguably somewhat arbitrary: students affected by the drop in threshold for maximum (or for mature students, any) entitlement, combined with the move from a tapered to a stepped scheme, tend to be particularly vulnerable to sharp effects.
- the pressure on the Scottish Block, in particular how that compares with the scale of reduction required in the Irish budget.
- whether NUS Scotland would support a case, given its support for the changes as a package and that its involvement in developing the package might well be central to any government defence.
- the general reluctance of the courts to interfere with the ability of governments to make policy and manage budgets (to “fetter their discretion”): the cost of reversing the grant cut, or even just ameliorating it, for continuing students would have to be in the millions, albeit that the cost would diminish quickly.
- the limited remedies likely in the event of a successful case: a court will make comments about the process but is likely only to require that Ministers reconsider the decision. It could not be expected simply to order a restoration of lost grant.
Critically, the government might well argue that the bursary cut for continuing students goes hand in hand with their access to the new higher level of total spending power (“the minimum income”, which is underwritten by further additional loan). The Scottish Government has previously said that “as the RAB charge [the cost to the government of issuing student loans] is non-cash, according to HM Treasury rules it cannot be spent on bursaries”. If so, there is no necessary link between sheltering continuing students from the impact of bursary reductions and denying them the minimum income.
Still, the argument might be pressed and if so could discourage a challenge, as it would position the interests of any potential complainants against those of other students more concerned about spending power than debt. Alternatively, the government might with similar effect insist that any restored funding would have to come from some other specifically identified element of the budget, rather than being absorbed into general contingency as a declining liability.
Interestingly, there is precedent for allowing students to have a benefit without an associated liability in a period of transition. In 2000, tuition fees were abolished a year ahead of the introduction of the graduate endowment, even though the two had been closely tied together as a policy. One group of students therefore benefited from a reduced liability for fees, without acquiring any additional liability at graduation.
There is no sign so far of any legal challenge. However until it is clear that all continuing students fully understand how the changes affect them, it must remain possible that at least some of the most severely affected students may decide to bring the issue before the courts.
Either way, the precedent set here carries significant implications for future policy making, particularly in the area of student funding, and perhaps even more widely. If it stands, it leaves open the potential for governments in future to make significant further cuts to the cash benefits received by existing students – up to and including their abolition – and to substitute these with loans, without a specific public consultation on the proposal or, arguably, even a clear announcement prior to implementation.
Like the grant cuts themselves, if that precedent is absorbed into Scottish policy-making with minimal comment it would raise a more general question about how effectively checks and balances on the exercise of government power are currently functioning in Scotland.
Copyright Lucy Hunter 2013
Grateful to the NUS for the link to this study by the Institute for Fiscal Studies from 2010.
Taking advantage of the way different changes have been introduced at different times in England, Wales and Northern Ireland, the IFS used a complex model to disentangle the separate effects of changes in tuition fee rates, and the availability of grants and loans (whether for maintenance or fees), on participation rates among school leavers. It does not deal with the impact on older students – and everything below needs to carry a caveat about that. It also only examines the effect of fees up to levels of around £3000 a year: whether the findings would hold for higher amounts can’t be shown.
Looking at what impact each element would have if it was applied in complete isolation from any other, the researchers note: “Our main finding is that a £1,000 increase in upfront tuition fees reduces degree participation by 4.4 percentage points, while a £1,000 increase in loans increases participation by 3.2 percentage points and an increase in maintenance grants increases participation by 2.1 percentage points (though after further testing we find that the impact of loans is not significantly different from the impact of grants) .” The researchers note that variations in take-up (ie fees are compulsory, whereas applying for loans or grants is not) may explain why money out (fees) does not simply have an equal and opposite effect to money in.
It would be easy to seize on this finding by itself as an absolute argument against fees. But the conclusions are more complicated. The researchers went on to examine what has happened in practice and demonstrated that it is the combined effect of changes in all three elements which matters.
In 1998-99, at lower incomes grant was switched to loan, but no fees were applied. At higher incomes, the only change was the introduction of upfront fees, without specific fee loans (but access to more general loan, which appears to have been widely used in practice to off-set the immediate cost). A group in the middle lost smaller amounts of grant, became liable for smaller amounts of fee and gained access to more loan. Looking at the combined effect of all these things on the different groups, the study concludes “there was no significant impact on participation” for low or medium income students. In other words, the switch from grants to loans did not have any noticeable effect. But participation rates fell at higher incomes. They note: “In summary then, the increased costs of university participation imposed in 1998/99, while reducing participation of high income groups, did not appear to sacrifice the goal of widening participation of low income groups.”
In 2006, things were done differently. A package which offset new costs with new benefits was introduced for all students. All groups saw an increase in fees, of between £1800 and £3000, depending on whether they had been liable before. However, this time there was a dedicated system of fee loans. Grants were reintroduced for those at lower incomes. The report concludes: “In the case of the 2006 reforms, there was no overall change in participation for any of the groups. For the low income group, the large increase in grants and fee loans was sufficient to outweigh the impact of the £3000 deferred fee introduction, so that the net result was no significant change in participation. The same is true for medium and high income students though in each case the separate components of loans, grants and fees are themselves significant.”
As the researchers put it: “These results are highly relevant for policy makers, who ought to be aware of the negative impact of upfront fees – i.e. those not covered by a fee loan [my emphasis] – and the positive impact of aid on participation. Maintenance grants can potentially be used to offset the negative influence of fee increases, given their opposing influences on participation. Policy makers should also be aware of particularly vulnerable groups when setting levels of fees and grants, and may need to target specific groups with more generous aid to counteract any increases in tuition fees.”
As well as being a significant challenge to those who argue that fees will always be a problem, no matter what else is done alongside them, the study also provides some comfort to those who would argue that a switch from grant to loan for living costs is unlikely to have a significant impact on applications from those at lower incomes, despite what might be expected from other studies on the deterrent effect of debt. The study identifies that grant vs. loan is a far less significant factor in determining applications than “parental education and prior attainment” which are the “key drivers of participation”.
Should we care at all therefore about retaining student grants? This study provides some strong evidence against relying too much on an instrumental argument about widening access, at least in relation to younger students. But there are other arguments which also matter here.
Above all, as can now be seen by comparing Scotland with – say – Wales, grants are the main instrument available to avoid passing income inequality down the generations, particularly in a system where those from better-off homes incur no debt for fees and even in ones where fees are relatively low.
Even if those from lower incomes are willing to take on significantly more debt than before, and more debt than their better off peers, that does not mean it is right or indeed good social policy in the longer term to take advantage of that, and to let the ready availability of loan become a reason not to look at the overall use of cash resources within the system. This is money these graduates will not have later in life for pensions, housing, childcare or further training, compared to their classmates from wealthier homes. That may not be the most pressing concern for individuals at 18, but the wider community might be held to have some responsibility for thinking ahead about that – not least if the view is taken that entrenching economic advantage has wider damaging effects on society and the economy.
There are parallels here with the argument about fees, where the evidence is also mounting that the widening access argument does not stand up, and systems with fees can perform as well as those without, in terms of attracting applicants from lower-income homes. We might therefore expect now to be reminded more of other arguments (as demonstrated recently in The Herald: “the policy has always been much wider than this in its intentions, seeking to benefit all who are capable of going to university, regardless of social class, and allowing graduates to begin working life as free from debt as possible”). Indeed, just as with grants, even if the evidence suggests that fee debt, at least up to certain levels, is not a deterrent it is still reasonable to consider what absolute levels of debt graduates from any background should carry into later life.
Finally, this research also gives pause for thought about the continued use of “up-front fees” in Scottish debate as a way of describing the alternative to what currently happens in Scotland. Relevant in 1999, it has long since been overtaken by changes everywhere else in the UK. The explicit provision of fee loans since 2006 to enable the deferral of fee costs might have been regarded as simply formalising what was already widespread practice. However this study shows that it has in fact been an extremely important shift, with which the terms of the debate in Scotland – still so focussed on the issue of “ability to pay” upfront – have yet to catch up.
(c) Lucy Hunter 2013
Thanks to a contact who has identified what seems to be the earliest public reference to the grant reductions. This story – “Extra financial support for all Scottish students” – ran in The Herald on 23 August 2012 and may be the only coverage immediately after the announcement which referred to the grant reductions. After setting out the specific increases in maximum loan entitlements and overall spending power, it notes more generally that: “The change means students from the lowest-income families will get less money in grants, but their overall income will increase because of greater access to loans.” It also includes a quote from the President of NUS Scotland: “While we accept bursaries will decline a little, this is more than outweighed by increases in the total amount of money available and, overall, these announcements represent the best student support package in the UK.” There are no figures quoted for the overall fall in the budget for bursaries or in terms of the impact on individual students, so it’s not clear how much detail was available at that point to the media (or the NUS).
I also had not previously seen this comment column discussing the bursary reductions in The Scotsman from 5 October.
The parliamentary debate on 5 June attracted some attention to the issue of grant cuts. Pieces specifically mentioning that grants are due to fall ran in The Scotsman, The Times (Scottish edition), The Daily Record and The Daily Express (can’t find a link for the last one). This is the most coverage the issue has yet had, but it did not provoke substantial comment and the story has died down again quickly.
Among heavy-weight Scottish-based media organisations the tradition of covering stories about tuition fees, but not considering student grants as news- or comment- worthy, was continued by The Herald, STV and the BBC. All of these have regularly covered tuition fee stories but chose not to carry a story about the debate. Neither the BBC or STV appear to have run a story or opinion piece on the grant reductions at any point since last August (grateful however for any correction to that, in case my search has missed anything relevant). The only exception to this appears to be coverage of the debate on the BBC Democracy Live channel.
Non-traditional internet news sites are providing an increasingly important source of information on Scottish politics and their coverage of this issue is also therefore potentially interesting. Of two which are referred to relatively often in internet forums as alternative sources of news on Scottish affairs: Newnset carried a piece quoting one speaker in the debate at length but without giving the immediate context for the speech or making reference to grants; and Wings Over Scotland did not cover the debate. The Scottish Times included a piece picking up coverage of my piece in The Scotsman which included a direct reference to reductions in grant.
Fees continued to attract comment. On 10 June, the Scotsman ran an editorial calling for the role of tuition fee policy in widening access to be debated again. The Herald ran a piece about comments by the Chair of the UK Social Mobility and Child Poverty Commission, noting: “The commission chairman noted that in Scotland the decision not to impose tuition fees had helped remove one barrier to higher education participation – fear of debt”.
On 5 June, the Scottish Parliament debated this opposition motion (at col 20747) drawing attention to reductions in grants and calling for the cuts to be restored. A brief overview of the debate is posted separately here.
Contributors from all sides in the debate drew on a range of figures to defend their positions and made a range of assertions about the financial, behavioural and cultural effects of current and potential policies in Scotland and the rest of the UK. As a contribution to monitoring how policy debate is conducted, this report examines some of the specific claims made in detail.
student support – parliamentary debate evidence use
This blog is mainly interested in how we are (or more often are not) discussing reductions in grants. However, in practice the strong emphasis of government-side speakers in particular on tuition fees rather than grants means that claims about fees (as ever in any attempt to talk about student funding in contemporary Scotland) take up much of the space.
On 5 June, the Scottish Parliament debated an opposition motion drawing attention to reductions in student grants and calling for these to be reversed. Speakers supporting the motion referred specifically also to the higher levels of debt facing students from lower-income backgrounds compared to those from higher incomes, to the situation of mature students, made comparisons with the rest of the UK (discussed in a separate post looking at the use of evidence in the debate) and noted the reversal of earlier SNP policy to reduce student debt. They referred to the recent report by Prof Sheila Riddell, the comments by Prof Ferdinand von Prondzynski at the close of the article linked here, as well as the analysis posted on this site.
Speakers defending the government position rested on the established lines relating to free tuition, increased spending power, UK comparisons and NUS support for the new arrangements. The increase in the minimum loan for those at higher incomes was also cited, as was increased grant for part-time fees and changes to arrangements for final year dental and medical students. No speakers defending the government position acknowledged that grant will be reducing in Scotland or referred to increases in student debt (with one exception, discussed in the separate post). Comparisons with the rest of the UK were confined to England (excepting one reference to Wales, also discussed in the separate post).
The trend in Scotland for tuition fees to be prioritised for attention over grants was well-evidenced, with several speakers using the opportunity to argue, without directly referring to grants, that the motion masked an intention by the Labour Party to introduce tuition fees, which were always discussed as meaning fees at English levels. The strong link made by defenders of the new arrangements (including the Cabinet Secretary) between the terms of the motion and introducing fees suggested an acceptance that grants and tuition fees are in direct competition for resources, with no contributor from the government benches pressing the opposition more generally on where any resources for implementing their motion would be found. Only the Conservatives, generally supporting the motion, noted in more general terms that Labour was not clear where the resources for increasing grant would come from.
In particular, the Cabinet Secretary argued that introducing fees [for the 40-45% of students in higher education currently funded for full fees by the Scottish Government] would mean “a massive erosion of the extraordinarily high standing and status of Scottish higher education …. [would] run the very substantial risk of undermining the whole of Scottish higher education… [and] will destroy Scottish higher education.” The arguments here included an assumption that fee charging at any level always removes a perception of education as a societal benefit rather than a private good, would be contrary to the norms of Scottish higher education and that fees must always be levied at a rate which transfers most or all of the cost to the student (as in England), rather than representing a more modest contribution (as in Wales or Northern Ireland).
There was criticism of the Labour Party for its position on the Post-16 Bill, and to which Labour responded, as well as reference by government supporters to the position being taken by the Labour Party at Westminster on benefits and, in one case, its housing policy in the London Borough of Newham. There was also some discussion about the availability of higher education places, including in further education colleges, and widening access initiatives at Glasgow University. No speakers from either side referred to the specific financial barriers faced by Scottish students wishing to study outside Scotland.
The Opposition motion was supported by Labour, the Liberal Democrats and the Conservatives (45 votes cast) and an amendment replacing the reference to grants with the customary lines defending the new package was supported by the SNP, the Green Party, plus 3 independents (Finnie, Urquhart and Walker) (65 votes cast). The government amendment was therefore carried.
The analysis notes that the Education Committee of the Scottish Parliament asked the government for a clarification of the impact of the new system on poorer students, especially in terms of overall debt levels. I had not been able to find the response to this query, so grateful to have had the link sent to me – it’s here.
- The repayment threshold is higher than the £15,795 quoted in my paper due to an inflation increase from April 2013. The repayment period quoted is 30 years rather than 35 (the SAAS website and the SLC site are both still using 35, so there is a difference here which needs explanation).
- The concept of “good debt” for student maintenance loans but not for fees is interestingly made explicit here.
- “those from poorer backgrounds will see a greater proportion of the support provided in the form of a bursary” must be intended to be read as being in comparison with students from better off backgrounds, rather than year-to-year, given that in 2013-14 the proportion of support provided to these students as grant will fall, compared to 2012-13.
- The certainty point is also interesting, although the position is not significantly different for those at lower incomes from previous years, as no parental contribution was previously required at incomes below £25,000 (young) or £21,000 (mature).
- The response does not provide any data on the impact of the switch to loan on overall debt levels for lower-income students, or possible effects on drop-out rates.
Drawn to my attention, a blog written in December that I’d not seen before, coming to similar conclusions about how the changes in Scotland will affect the level and distribution of debt, making some comparisons with England and with more than my piece on the long-term impact of the different repayment regimes.
Prof Sheila Riddell recently published this article on widening access, which is the one referred to in my Scotsman article. There was also a news piece and an editorial.
These were followed by a reported Scottish Government response and a piece published as a response by the President of NUS Scotland.
I did not set out to write 40 pages on student grants in Scotland, with graphs and footnotes.
Sometime in autumn 2012, I saw a reference to student support in Scotland which made me curious. It wasn’t any of the few stories that ran in the press around October about grant reductions. I missed those, despite taking a reasonable interest in news about Scottish politics. Whatever it was – and I now can’t remember, it didn’t seem that important at the time – prompted me to look up the government press notice from August announcing changes to student support – just for old times’ sake, because student support policy had once played a large part in my working life.
That announced some significant changes (though not to grants). In a spare moment I cross-checked the press release against the SAAS website, to see what more information there was there. I was struck by the grant rates for 2013-14, which were much lower than I would have expected, given the figures a decade before. But as the press release said nothing about these changing, I assumed these lower rates had been around for a while and I had missed them coming in. However, when I looked at the 2012-13 figures, to compare how other aspects of the system were changing, the grant amounts turned out to be more or less what I would have expected in the first place. The fall in grant was significant and was happening in the current year, even though it wasn’t mentioned in the press release, and I couldn’t remember seeing any particular coverage in the media. I stuck some figures in a spreadsheet. That confirmed that there were going to be large reductions for some students which were inevitably going to push up their debt.
Remembering how much political and media attention had been generated by the comparable (or indeed often smaller) amount of additional debt created by the graduate endowment – because as a civil servant I had been involved in dealing with that – I was curious that these changes seemed to have been absorbed into the Scottish political system far more easily and quietly by contrast. So I looked up what the NUS was saying. They highlighted increases in spending power for students, so out of curiosity I ran some calculations to see how these interacted with the grant reductions and the effect on overall debt. Both the government and the NUS had emphasised the favourable comparison with the rest of the UK. So out of further curiosity I ran some figures for England. Almost as an after-thought – I’m ashamed to say – I ran the figures for Wales. As the paper records, that produced some particularly surprising results. So I ran the figures for Northern Ireland as well. As I went along, I looked for other documents and sources which I thought might help explain what was happening and provide more context for it. When I looked at what had been said in the Scottish Parliament when the new arrangements had been looked at as part of the annual budget process, a research briefing for MSPs brought out that there were marked shifts going on within the higher education budget, which were an important part of the picture. In other words, just because I was interested, I started to look and just kept looking. No-one asked me to do this and no-one paid me to.
It became clear there was an interesting story here that wasn’t being told, not just about the effect of the grant reductions but also about how these had so far at least been relatively invisible in broader public debate. I started writing something without any particular idea about what I would do with it, although as it developed it became clear that the analysis would be relevant to the debate about universal vs means-tested benefits and that the findings were often at odds with some of the general debate about student support in Scotland.
I tested an earlier draft on a few friends who aren’t involved with politics or public life. I’m grateful to them for their comments, which were all helpful. They confirmed my feeling that this was worth sharing more widely. So I sought advice from someone who I thought might be able to identify a possible publisher. At some point this document or something extracted from it may get published more formally. But time is moving on and the application process for the new student support arrangements is already underway. So meantime, it is posted here, with a linked article in The Scotsman.
Everything I did was from sources openly available on the web and I have tried to ensure that references to those are all provided. The only exceptional thing I needed to do to obtain access to any of the information was to enter a Welsh and a Northern Irish postcode into the relevant student finance on-line calculators. I have posted with the analysis the underpinning data on grants and loans. The Scottish figures for 2012-13 are no longer available online, but all the others still are. These calculations could have been done by anyone else with access to an internet connection, a bit of confidence in dealing with the numbers and the ability to spend the time. I have tried throughout to ensure fair comparisons by erring on the side of caution: for example, assuming “rest of UK” fees are always at the maximum of £9000 and adjusting figures upwards to reflect the higher initial interest rate on student loans in England and Wales.
The figures are offered in good faith and have been checked and re-checked to the best of my abilities. Similarly, I have taken as much care as I can to represent other information in the paper accurately, using direct quotes from documents and individuals as much as possible. If anyone has difficulty reproducing the calculations or finds factual errors, I hope they will tell me.
Adventures In Evidence 