Students in dark over loan payments

April 24, 1998

FIRST-year students will be "signing blind" to loan agreements this autumn because the government is still working out details for a repayment mechanism, it emerged this week.

Education minister Kim Howells told MPs at Tuesday's committee stage of the Teaching and Higher Education Bill that the first wave of students to take out the loans this autumn may have to wait until 2000 before they know precisely what their repayments will be and how the Inland Revenue will collect them.

Dr Howells was moving an amendment to the bill to give the government power to vary the terms and conditions of loans and income-contingent repayments as necessitated by tax changes. It means that the government will publish annual statements detailing the terms and conditions applying to loan collection.

Opposition MPs attacked the plans, saying it was like banks offering loans or mortgages andwithholding full repayment details.

Dr Howells maintained that students would know all they need to know. He said: "The information that students need on taking out loans is quite clear. Graduates with income less than Pounds 10,000 will pay nothing at all. Those with incomes over Pounds 10,000 will pay 9 per cent of their marginal income above that amount."

Education officials confirmed after committee that regulations for new entrants would be outlined in summer. These will enshrine the Pounds 10,000 starting point and income-contingent repayments. Further regulations will be in place by the end of the year for those students who graduate from two-year courses in 2000. By the end of 2000 regulations will be in place for those graduating from standard three-year bachelors courses that started this autumn.

A Conservative amendment intended to ringfence fee income for universities and exclude it from funding council grant calculations was rejected. Dr Howells said fees would be "on top of, rather than in substitution for, public funding".

But funding councils would need to take such income into account to ensure fairness in grant allocations. The government successfully reversed a Lords' amendment retaining grants for tuition fees. It also overturned an amendment to end the Scottish "anomaly" whereby English, Welsh and Northern Irish students pay for their fourth year at a Scots university while Scots and other Europeans are exempt.

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