MPs hear harsh loans truth

Student debt may be causing people to drop out of university, MPs heard this week.

Claire Callender, professor of social policy at South Bank University, told the education select committee on Wednesday that there was a strong link between student debt and hardship and people's perceptions of how well they were doing academically, which may lead to them quitting courses.

Professor Callender, author of a recent report on student finances, told the committee that changes in government policy, primarily scrapping the maintenance grant, may militate against the government's policy of encouraging poorer people to go to university.

"It is because of the move from grants to loans that students have built up that substantial debt. Thoughts about debt before going to university may deter some people," she said.

Professor Callender was asked whether she thought her report, which was commissioned by the Department for Education and Employment, had received fair treatment from the DFEE. She was asked whether she thought a DFEE press release announcing the report on December 20 last year had been more accurate in its summation of her findings than a South Bank release.

She said: "I think that it is fair to say that the DFEE perceives student loans to be income and not debt... there is enough evidence... to suggest that students view their loans as debt."

The committee, which is conducting an inquiry into higher education, heard evidence from the Higher Education Funding Council for England. The council's director of policy Bahram Bekhradnia was asked whether Hefce lacked urgency in tackling dropout rates, put at 17 per cent nationally.

Mr Bekhradnia pointed to the publication of the first higher education performance indicators. He said that more money would be required to produce more data.

Next week the committee will publish what promises to be a controversial report on access. Committee chairman Barry Sheerman said that the report's 28 recommendations would include suggestions for both universities and government.

But the report has split the committee. Nick St Aubyn, Conservative member and parliamentary private secretary to shadow chancellor Michael Portillo, has produced a minority report because the report fails to criticise chancellor Gordon Brown, who called Oxford University elitist after it rejected state-school pupil Laura Spence last year.

Meanwhile, Liberal Democrat member Evan Harris tabled a number of amendments on maintenance grants, which were defeated by the Labour-controlled committee. Dr Harris's amendments will be listed in the appendix to the report.