1. Student support, loans and allowances in England – addressing equity of access Ruth Thompson, Director of Higher Education Strategy and Implementation Department for Education and Skills Wellington, New Zealand 17 March 2006

2. Rationale for student support shared benefits for society and individual – co- financing HE splits costs between taxpayer, parents and graduate aim of widening participation – low income, and other under-represented groups addressing constraints for individuals Liquidity constraint Credit constraint Risk constraint efficiency and equity arguments both in play

3. Key features: maximum tuition charges (£) Students living in England and studying in 2006/072007/082008/092009/10 England3000 Wales12003000 Scotland1700 Medicine in Scotland 2700 Northern Ireland 3000

4. Full time undergraduate student support for living costs – all elements targeted: Means tested grants - up to £2,700 pa for low income students Loans – to cover median expenditure; parental contribution to loan up to 25% for higher income families bursaries – min £300 pa if on max grant (typically £1,000) also Access to Learning Fund and other support for disadvantaged students

5. Variable fees and tuition fee loans flat rate £1,200 tuition fee replaced by variable fee of up to £3,000 pa for new full time undergraduate students from 2006-07 over 90% of fees set at £3,000 30% recycled to students in bursaries loans for all to meet full fee repaid through tax repayment linked to income (9% of income above £15,000 pa) zero real interest rate outstanding loans written off after 25 years

6. 0£17.5k£26.5k£37.5k GRANT – additional to loan GRANT - £1,200 of grant substitutes for loan MAINTENANCE LOAN FEE LOAN 1.Maintenance Loan size shown is for students living away from home and studying outside London 2.Fee Loan assumes student is charged maximum £3,000 fee. Student Support by level of parents’ income Between £1,200 and none of the maintenance loan lost by substitution 0-25% of the maintenance loan means tested £50k Parents’ income 0 £3,000 Paid to university £3,200 £4,400 £5,900 Assumed parental contribution Paid to student Minimum £300 bursary Access to Learning Fund for hardship

7. Reforms benefit the least well off…

8. Bursaries and scholarships access agreement required to charge £3000 fee all low income students get £300 bursary 20-30% of additional fee income recycled into bursaries, to support access to university and widen participation all universities have access agreements typical bursary for low income student is £1,000 per year – but varies from £300 to £3,000 or more unclear as yet how market for bursaries and scholarships will develop information for prospective students

9. Further support for disadvantaged students Disabled Students’ Allowance – grant for additional costs arising from disability for students with child dependants: Childcare Grant Parents’ Learning Allowance for students with adult dependants: Adult Dependants’ Grant Access to Learning Fund – help for students in ‘hardship’ (discretionary grants or loans - managed by universities)

10. Cost to students and to government income, expenditure and debt average debt on graduation currently around £9,700 no up-front payments under new system expect to rise to approx £15,000 under new system – will take average of 13 years to repay

11. Summary of key reforms 2006-07 tuition fee loans – no ‘up front’ cost to students living costs met by blend of grants, loans and parental contribution – with higher state support for students from low income backgrounds maximum maintenance loan rate raised to match median basic expenditure enhanced bursaries and scholarships also support low income students extra grants continue for disadvantaged students all loans continue income contingent, with zero real rate of interest, and repayment threshold raised from £10,000 to £15,000