This guest blog has been kindly written for us by Mark Corney. Mark is a post-16 education and labour market consultant.
The review of post-18 education and funding in England is a creature of the present Conservative government.
Under Labour, a fee-free system would apply in both the higher education (HE) and adult further education (FE) sectors, although apart from replacing maintenance loans with grants for full-time HE students, the maintenance arrangements for part-time HE and adult FE students are less clear.
Today’s post-18 review, however, is not easy. Conventional thinking is that HE and adult FE are different: they have different budgets, funding councils and above all policy objectives.
The review is challenging this orthodoxy. The sectors are converging not diverging.
Fee-based income contingent loans operate in both. Higher education institutions are delivering Level 6-7 apprenticeships, and FE colleges and higher education institutions deliver Level 4-5 vocational sub-degrees.
More importantly, the policy objectives for HE and adult FE are converging. A more restrictive immigration policy after Brexit from 2021, an increase in the state pension age to 67 by 2028, and increasing job uncertainty arising from automation during the 2020s is creating a retraining challenge that neither HE nor adult FE can meet alone.
Maintenance is the key
Arguably, however, the greatest financial barrier confronting both HE and adult FE students is the ‘value’ of maintenance loans or the lack of them altogether.
Participation in full-time higher education is virtually impossible without maintenance support even in a free-fee system. And the squeeze in real incomes since the 2008 financial crash is impacting on most families supporting full-time higher education students.
Certainly there will be no retraining revolution without re-expanding part-time undergraduate higher education. The reasons for the decline in participation are complex but the squeeze in real incomes must be a contributory factor. A linked point is that the government in its Equality Analysis on part-time maintenance loans published in March 2017 stated they should reduce the pressure to earn more through working extra hours rather than studying.
Sadly, however, the debate about reintroducing maintenance grants for full-time higher education students is crowding-out the fact that maintenance loans are being introduced for part-time students from this August.
In addition, the ‘HE and adult FE are different’ orthodoxy has perpetuated a myth which says full-time and part-time HE students need maintenance but adult FE students do not. Only by examining budget-line by budget-line of HE and adult FE funding together does the irrationality and unfairness of the maintenance loans gap become apparent.
A living loan for full-time higher education students
An alternative to reintroducing maintenance grants for full-time higher education students is to increase the value of maintenance loans. Students from poor households will not repay their maintenance – or fee – loan if they remain ‘poor’ after graduation: nor will students from wealthier households who become ‘poor’ after graduation.
Raising the income threshold is one way to protect graduates. The government could set an ambition to increase the threshold from £25,000 to median gross annual earnings which is currently £28,600.
To offset the cost to the Treasury, the repayment period could be extended. Ceasing repayments when state pension age is reached than death when life expectancy could be 15 years longer would be preferable.
Maintenance loans for part-time higher education students
The cash cost of fee-loans for part-time undergraduate higher education is £240m. To support participation, the Treasury has allocated £40m for maintenance loans in 2018/19 rising to £475m in 2020/21.
The higher education sector, however, has hardly gone out of its way to acknowledge their introduction as a positive step. If this maintenance money is not wanted it could be transferred to adult further education.
Adult FE learning from HE
One of the lessons the adult further education sector can learn from higher education, however, is the specificity over budget-lines for income contingent loans.
Income-contingent loans in adult FE are fee-loans but are confusingly called Advanced Learner Loans. They also fund three different types of provision, Level 4-6 (£15m), Level 3 including A-levels (£166m) and Access to HE courses (£55m).
Maintenance loans for level 4-6 FE students
The take-up of fee-loans for Level 4-6 FE courses is clearly low. Every conceivable barrier is used to explain the low take-up by the FE world. Lack of maintenance loans is not usually one of them.
Maintenance loans for 19-24 year olds without a first level 3
Increasing the number of 19-24 year olds with Level 3 qualifications will expand the pool of potential entrants into Level 4-6 higher education. Around 850,000 19-24 year olds in England have a Level 2 but not a Level 3. This age group seeking a first Level 3 are entitled to fully-funded provision via the devolved Adult Education Budget. Although fee-loans are not required, no maintenance loans are available.
Reforming technical education
In fact, the debate over maintenance loans in adult FE is inextricably linked to technical education reform.
The post-18 review panel is expected to assess the type of Level 4-6 technical qualifications the taxpayer should support, including full-time and part-time Level 4-5 foundation degrees, HNDs and HNCs, and Level 4-6 FE courses.
Additionally, the panel must judge whether Level 3 is within the scope of advanced technical education as used in the terms of reference. If so, the panel must explain whether (i) Level 3 technical education should be seen as an end-in-itself on the grounds that this where the ‘technical skills’ gap exists or (ii) progression to technical Level 4-5 is essential to meet the productivity challenge of the 2020s.
Maintenance loans for level 4-6 technical education
The second view is the most sensible and would build on the commitment by the Treasury to introducing maintenance loans for Level 4-6 technical education. By 2021/22 the budget available will be £75m.
Maintenance loans for 19-24 year olds on level 3 technical courses
Nevertheless, there is a real danger that Level 3 technical education will get stuck in the 16-18 T-level silo. Level 3 technical education must be accessible to adults too, with maintenance loans available to 19-24 year olds.