More than two months after their unveiling, the government’s changes to student loans have now been scrutinized and analyzed in detail, with experts concluding that they will be a game-changer for higher education in England – but not in the way that ministers hope so.
The long-awaited response to Augar’s post-18 education and funding review, released in February, included 40-year payback periods and higher repayment terms. While this is unlikely to stop middle-class teenagers from aiming for a degree, those from less advantaged backgrounds could hold back, jeopardizing the supply of graduates in key sectors such as teaching and care. nurses, the experts concluded.
Analysis by the Institute for Fiscal Studies (IFS) think tank found middle and lower middle income graduates would be hardest hit, paying £30,000 more than current graduates, with repayments spread over 40 years. But graduates in the highest income brackets will pay £20,000 less as the graduated elements of the existing loan scheme are scrapped.
The IFS also found that proposals under consideration to restrict loans to those with minimum exam scores could have a dramatic effect on who goes to college.
Imposing a requirement to pass the GCSE in English and Maths might have prevented 10% of recent undergraduates from accessing loans – in fact, prohibiting most of them from leaving the campus. The IFS found that the majority would come from disadvantaged families or ethnic minorities, precisely the groups that successive governments have encouraged to consider higher education.
Claire Crawford, of the Institute of Education at University College London, said the government and taxpayers would ‘massively reduce the amount of investment they provide’ by clawing back more from graduates. The proportion of graduates repaying their loan in full could rise from 25% to almost 75%, according to the IFS.
But whether the new reimbursement scheme will deter prospective students in England depends on their calculations as to whether they will be better off or not.
“Those who might expect to go on and earn relatively well, you’d think they’d have even more of an incentive to go to college because of that, because their refunds are expected to go down,” Crawford said. “If you’re at the lower end of the spectrum, I guess it’s a more marginal decision. But it’s not totally obvious. »
Crawford noted that many students chose subjects and courses that had low earnings returns, suggesting that reasons other than income were behind their decision. “What we can conclude is that [existing] the sticker price didn’t seem to put people off. So whether they’re paying enough attention to those kinds of underlying changes, which affect future payouts, it’s not clear,” she said.
Sheffield Hallam University Vice-Chancellor Chris Husbands said there were two views among his colleagues on the potential effects. “The first view is that none of this will have an impact, that the cultural predisposition to go to college as a way to better oneself is so deeply ingrained, that changes to the loan regime will not will have no significant impact on the demand for places.
“Viewpoint 2 is that this cultural predisposition is much stronger among the middle classes than among the poorest households, and that while neither of these interventions is likely to be decisive in itself, the drip, drip, is likely to have an effect on families in places like East Barnsley [reinforcing historically low rates of participation].”
Husbands believe ministers are less interested in widening participation ‘because they think the job has been done’ and are more concerned about costs, with current forecasts of a 26 per cent increase in numbers students over the next decade. As a result, according to Husbands, policymakers are like hotel guests in an unfamiliar shower, alternating between getting too hot and too cold while nervously adjusting the taps.
“What worries me in all of this is that the deterioration of the terms of trade on student loans, the minimum conditions of eligibility, etc., constitute a whole series of interventions which have the effect of back to a world of the 1940s or 1950s, where basically the universities are full of middle-class people, and the poorest people don’t get in,” he said.
Husbands said he could accept the case for the minimum eligibility requirements, but said they could pose barriers for the most disadvantaged because of England’s very unequal educational achievement. “But I don’t think the industry has figured out his brains yet.”
While the government has improved its financial situation, it has done little to help students whose maintenance loans are shrinking in real terms. Funding for universities through tuition fees, stuck at £9,250 since 2016, has also been eroded by inflation despite increased government teaching grants in some high priority subjects such as health.
Robin Mason, pro-vice-chancellor of the University of Birmingham, said the prolonged fee freeze could lead to a rebalancing between more selective universities and the rest of the sector, reversing the trend of the past decade that has led to selective universities to take a larger proportion of students.
“I think you can bet on the most selective universities that aren’t looking to increase their national undergraduate count,” Mason said. “Part of the government policy limits the offer at the higher level and another part says they don’t want ‘lower value’ courses. And there is going to be a collision between these two, but it is a collision that is forced by different arms of politics.
A spokesperson for the Russell Group of Universities said frozen fees, rising costs and demand for places “would inevitably start to impact the quality and choice of students, particularly for subjects whose costs education are the highest” such as nursing and engineering.
“To protect the reservoir of high-level skills and jobs that will be essential to our economic recovery, we urge the government to work with the sector and find a long-term, financially viable approach to funding higher education that continues to expand access to college,” the spokesperson said.