Student loans system is sustainable, insists minister

Universities minister David Willetts has defended the student finance system against criticisms that it is unsustainable and will not bring in the amount of money required to fund the sector long term.

May 17, 2013

Student loans

Mr Willetts was responding to claims made in a Times Higher Education article by Steve Smith, vice-chancellor of the University of Exeter, in which he claimed that an increase in the estimated proportion of students loans that will eventually be written off – the so-called RAB charge - meant the current system would struggle to survive.

Currently, graduate salaries are lower than originally forecast when the new fees system was introduced, meaning that students are set to repay their loans more slowly than expected. Also, unless incomes start to rise, fewer students will earn the £21,000 required to trigger loan repayments on graduation.

Mr Willetts himself revealed in a speech this week that the RAB charge is currently “about 35 per cent and whilst earnings continue to grow less than forecast in 2010 it could rise further”.

Sir Steve wrote in his THE article that he expected “any incoming government in 2015 to look again at the student finance system and to try to reduce its costs” as a result of the rising RAB charge.

However, in a podcast interview with THE, Mr Willetts insisted that, over time, wages would rise and reduce the RAB figure. “I have enormous respect, bordering on reverence, for Professor Sir Steve Smith,” he said. “But on this one charge [I have to disagree with him].

“In the future, as and when earnings start to rise a bit more rapidly than forecasters assess…then there will be a period of time where the RAB charge is falling. The scheme is not unsustainable – the underlying logic is that…by and large going to university is good for [students], and good for the country.”

Mr Willetts was speaking after officially opening the Postgraduate and Continuing Professional Development (CPD) Centre at the University of Bedfordshire on 13 May. He told attendees that universities needed to do more to tap into the market for CPD training, saying that only 5 per cent of UK courses in this area were currently delivered in higher education institutions.

“I am sometimes amazed there are CPD sessions happening in anonymous hotels across the country and I think why on earth is this not happening in some kind of education or training environment? It is a great opportunity,” he said.

He challenged universities to improve their presence in the CPD market, but did acknowledge the difficulty of the task. “I know that there are pressures on the [education] sector – not least because of some reductions in CPD provision from public services. There may be less in the health or education sector than in the recent past.”

On postgraduate study, Mr Willetts said it was increasingly important for students to stay at university beyond their undergraduate degree.

“There are more and more jobs that expect you to have some kind of postgraduate qualification – sometimes as a precondition for looking at your CV. Postgraduate provision has become the new frontier in social mobility – it is very important that we have as many people as possible able to access postgraduate provision,” he said.

chris.parr@tsleducation.com

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