The government’s support for a postgraduate loan scheme is to be warmly welcomed. The Treasury and ministers at the Department for Business, Innovation and Skills also made the right call by opening the scheme to all subjects and all students whether they study part- or full-time (“How many and how much: questions remain over postgrad loan figures”, News, 11 December).
However, this is evolution not revolution. The proposal to limit the scheme to those under the age of 30 on the basis that the majority of self-funders are under this age may provide an objective justification under the equalities legislation, but it will undoubtedly limit access to the third of students who do not commence undergraduate study until they are over 21, and many people in their thirties and forties who do not appear in the statistics because they cannot currently afford to take out a commercial loan or pay up front.
There are also inherent risks in the proposal that the state-backed postgraduate loan will have to be repaid concurrently with undergraduate loans once the postgraduate course has been completed if graduates earn £21,000 or more per annum. This will require a student loan repayment rate of 18 per cent of earnings in excess of £21,000 in addition to deductions for tax and National Insurance.
The repayment scheme for part-time students at postgraduate and undergraduate level will also differ. According to the Treasury, one of the advantages of the proposals is that postgraduate students will not have to start repaying their loans while they are studying even if they earn £21,000 or more. This stands in sharp contrast to the fee loan repayments currently required from undergraduate part-time students, which are triggered on the third April after they have commenced their courses – even if they are still studying – if they reach the earnings threshold.
In another departure the government is proposing that students will be able to spend their £10,000 postgraduate loans on fees or maintenance with Student Loans Company payments in three tranches subject to institutional confirmation that the student is still on the course.
It is also surprising that the government has proposed a postgraduate loans scheme without reference to the recent BIS consultation on the introduction of a new Sharia-compliant scheme at undergraduate level, bearing in mind that the postgraduate proposals will also be interest bearing.
Even though the Treasury has placed no cap on postgraduate loan numbers, estimates about the gains in terms of numbers studying are modest. While 30,000 students who would have entered postgraduate study anyway are likely to benefit, according to the official analysis the net gain in terms of additional students per cohort is estimated to number no more than 10,000. The next government will have to think long and hard about these details prior to their implementation in 2016-17. Meanwhile, the postgraduate commission established by the Scottish government may have been provided with some helpful clues about the pros and cons of the proposals tabled in England.
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