Questions remain over postgraduate loan figures

Uncertainty over how many students will apply for the loans and how much the scheme will cost

December 11, 2014

The government may have underestimated the number of students who will take out postgraduate loans, according to some in the sector, while questions remain over the policy’s funding.

The loans of up to £10,000 for students under the age of 30 taking taught master’s degrees, announced in George Osborne’s Autumn Statement on 3 December, will also be open to European Union students – another factor that could add to demand.

The Institute for Fiscal Studies has also suggested that including EU students could increase the cost of loan write-offs.

At private providers, only students at institutions with degree-awarding powers – numbering seven at present – would be able to access postgraduate loans.

The postgraduate loans policy, which the Treasury says addresses social mobility and the need for high-skilled labour, has been broadly welcomed by the sector.

The Autumn Statement document gives a £1.5 billion figure for total loan outlay over the first four years of the scheme, which will be introduced in 2016-17.

Some believe the government is planning to pay for the postgraduate loans using money that had been allocated to fund the abolition of undergraduate number controls. The number of extra undergraduates projected to take out loans has been revised downwards from an initial 60,000 to 45,000 a year.

However, the Treasury describes the postgraduate investment as new money. An Autumn Statement policy costing document estimates that 47,000 students will take out postgraduate loans in the first year of the scheme, falling to about 40,000 for the three years after.

The Treasury predicts that 10,000 of those 40,000 students will be those who would not otherwise have entered postgraduate study without the loans scheme.

Mick Fuller, chair of the UK Council for Graduate Education, said there was a question over whether the money allocated by the Treasury “is enough to match demand across the country”. He warned that if not, the government may still consider a “post hoc” restriction limiting the loans to science, technology, maths and engineering, and possibly business, subjects.

Nick Hillman, director of the Higher Education Policy Institute, who welcomed the scheme generally, said he was “surprised that the additionality is only 10,000”, particularly “given that EU students are entitled to loans as well”.

But he added that the repayment terms “may limit demand to a certain extent”.

The CentreForum thinktank had recommended that the government designate loans as being for maintenance, which would make EU students ineligible.

The IFS said in a 9 December briefing note that while the write-off rate on postgraduate loans could be between 0 and 3 per cent for domestic students, it would be as high as 12.6 per cent if EU students failed to repay.

Mr Hillman said that by designating the £10,000 loan as being for fees, the government had created the possibility of fee inflation, as it “gives a bit more of an incentive to institutions to set their prices according to what the available loan is”.

Concerns have also been raised about the fact that the postgraduate loans are to be repaid “concurrently” with undergraduate loans, at the same rate of 9 per cent on earnings above £21,000, leading the IFS to warn last week that those taking out postgraduate loans could in effect face a marginal tax rate of 50 per cent once income tax and National Insurance were included.

john.morgan@tesglobal.com

Times Higher Education free 30-day trial

You've reached your article limit

Register to continue

Registration is free and only takes a moment. Once registered you can read a total of 6 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments
Register

Have your say

Log in or register to post comments

Most Commented

question marks PhD study

Selecting the right doctorate is crucial for success. Robert MacIntosh and Kevin O'Gorman share top 10 tips on how to pick a PhD

Pencil lying on open diary

Requesting a log of daily activity means that trust between the institution and the scholar has broken down, says Toby Miller

India, UK, flag

Sir Keith Burnett reflects on what he learned about international students while in India with the UK prime minister

Application for graduate job
Universities producing the most employable graduates have been ranked by companies around the world in the Global University Employability Ranking 2016
Construction workers erecting barriers

Directly linking non-EU recruitment to award levels in teaching assessment has also been under consideration, sources suggest