In response to the announcement on the treatment of student loans in the national accounts by the Office for National Statistics (ONS), Nick Hillman, Director of the Higher Education Policy Institute, said:
‘The 180-degree flip by the Office for National Statistics may seem embarrassing for policymakers but it is more embarrassing for the official accountants, who are changing how they regard investment in higher-level skills.
‘The ONS will move on and the politicians will fall in line. Meanwhile, students are likely to get hit because they suddenly look much more costly to current taxpayers, while the extra income tax they will pay as graduates in the future continues to be ignored. Unless we are careful, we are at risk of sleepwalking into a triple whammy of fewer university places, less funding per student and tougher student loan repayment terms.
‘Higher skills are the best way to raise productivity and the best way to insulate the country from any negative economic effects of Brexit, such as fewer skilled migrants. Moreover, our schools are full to bursting and the increase in young people will start to hit universities just after we start counting students as a much bigger current cost, potentially putting today’s school pupils at a particular disadvantage.
‘Over 20 years ago, the Dearing report looked at “treating loans in the same way as grants”. They concluded “It misleads rather than informs.” While some aspects of the recent accounting of loans are unusual, there is now a big risk that, without due care and attention, we will shuffle backwards and fall into the same old trap.’
Note for Editors
The Higher Education Policy Institute’s mission is to ensure that higher education policy-making is better informed by evidence and research. We are UK-wide, independent and non-partisan.