‘No easy answers’ on Covid disruption compensation for students

Higher education finance expert weighs up costs of options for government, amid calls for loan discounts and cash grants

January 19, 2021
A student leaves one of the accommodation blocks with a Covid sign on the window
Source: Alamy

The Westminster government was expected to find there is “no easy answer” on compensating students for Covid-related disruption, following suggestions that it was looking at using the loans system to do so for accommodation costs and as vice-chancellors warned ministers against making universities foot refund bills.

Student discontent at paying tuition fees and rent during an extended spell of online education is increasing, though some universities have waived rents.

Michelle Donelan, the universities minister, made an apparent attempt to pass responsibility for tuition fee refunds on to universities in a recent letter to the Office for Students.

Sector figures suggested that the Department for Education was looking into whether compensation on accommodation costs could be offered via the student loans system. But there were warnings that student pressure around tuition fees would mount, too.

Gavan Conlon, a partner at London Economics, has looked at the costs of some compensation options for the government.

“You could turn £1,000 of tuition fee loans into a non-means-tested tuition fee grant,” said Dr Conlon, who has previously written reports on higher education policy issues for the government.

“For the last £1,000 of loans, the RAB charge [estimated write-off] is approximately 75 per cent, so this approach is essentially writing off the last 25 per cent [on that final £1,000],” he added.

If this were applied for all English-domiciled undergraduates, studying anywhere in the UK, who started their studies in 2020-21 and for any EU-domiciled undergraduates studying in England, “the cost of that to the Exchequer would be about £86 million”, Dr Conlon said.

But, he added, “the problem with that is…the only beneficiaries are essentially those graduates who would have repaid that final 25 per cent of extra loan but now won’t have to do so”. That is “predominantly men in the top-earning deciles”.

If the government were to take the same approach on maintenance loans only – to compensate on accommodation – the Exchequer cost would be “approximately £76 million,” Dr Conlon said.

Alternatively, if the government were to give a cash grant of £1,000 to all undergraduates who started in 2020-21, that would cost it about £370 million, he continued. Though this would be more expensive for the government than acting via the loans system, “at least it would be getting into the pockets of the students”, he said.

Reducing individuals’ loan pots by a small amount “doesn’t really make any difference to most graduates – you still pay 9 per cent of your earnings over the repayment threshold” after graduation, Dr Conlon said.

“There’s no easy answer to this,” he added.

Nick Hillman, director of the Higher Education Policy Institute, said he did not think there were “strong grounds for an across-the-board tuition refund because good online learning is expensive”, predicting that “any movement is likely to be around maintenance”.

David Green, vice-chancellor of the University of Worcester, has called for student borrowers to “receive a fee credit of £4,675 for the 2020-21 academic year” and for “home” fee students at English universities to be given a £500 government “pandemic hardship grant” for each month of lockdown.

Cash grants “would be a more progressive thing to do [than compensation via the loans system], no doubt whatsoever”, he said.

But Professor Green added: “There are plenty of influential people arguing that universities should discount the fee and take the hit because of the lack of service they have provided…My point is that if there is to be any discounting, it is the government who should do the discounting, not the universities.”


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