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Three key questions on postgraduate loans

  • 3 December 2014

There are strong rumours that the Chancellor will announce a new system of postgraduate loans in his autumn statement today. This would tackle some access problems by making finance less of a barrier. It’s not clear if George Osborne will announce a fully worked-out scheme or (probably more likely) promise to consult on the details.

Among the key questions are the following three (all of which have a link to the cost of any new package of help):

1. Is any new loan classified as being for tuition or maintenance? This matters a lot because EU citizens can claim tuition help but not maintenance help. If it is classified as tuition, however, universities will be tempted to set their fees exactly in line with the loan cap, which could have a homogenising effect.

2. What are the loan repayment terms? They clearly need to be different to those for undergraduate loans, which have such generous terms that the majority of undergraduates will never repay their loans in full. The sorts of things to look out for are: the repayment threshold; the repayment rate; and the interest rate. (Intriguingly, the Australian Government have just had to reverse their decision to increase the interest rate on student loans.)

3. Will the loans be restricted? They could be limited in number. Or they could be restricted to certain disciplines, such as STEM (science, technology, engineering and maths), which would reduce the costs by limiting the number of recipients and probably improving the average repayment rate. But it is quite hard to justify intellectually and, to date, the Coalition have generally (but not completely) avoided picking off certain disciplines for special treatment.

This is the last autumn statement before the election. So it could conceivably be the Chancellor’s last. When the history of the Coalition’s approach to higher education comes to be written, his autumn statements will feature heavily. It was one year ago, on 5th December 2013, that he announced the removal of student number controls, which was explored in detail in a recent HEPI pamphlet.

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