Postgraduate loans could be capped or restricted by subject

Today the Department for Business, Innovation and Skills published its long-awaited consultation on support for postgraduate study.

Following announcements by the chancellor George Osborne in the Autumn Statement and the following Budget, the consultation looks at how to implement income contingent loans of up to £10,000 for postgraduate taught students and £25,000 for postgraduate research students.

In his forward to the consultation, universities and science minister, Greg Clark says that “These proposals will contribute further to the transformation of opportunities for students, universities, businesses and the economy that has taken place under this Government.”

The minister also notes that there has been a decline in the number of UK-domicile Master’s students relative to our overseas competitors, partly due to funding not being widely available.

“As a matter of principle it is right that talented British students should be able to access our excellent universities at postgraduate, as well as undergraduate, level” says Clark.

The consultation states that the government “does not intend to use the introduction of this loan to increase regulation on the higher education sector, and wishes to keep the introduction of new regulation to a minimum”. It also states that the loans come intended as an addition to grant funding “not as a replacement”, in effort to broaden and strengthen support for postgraduate research.

The executive summary outlines that the proposed postgraduate taught loan is not intended to be a universal offer for all postgraduate students, rather “targeted towards those who face the greatest barriers to accessing finance without duplicating the provision of support available through existing funding mechanisms”. Those aged under 30 are suggested as the target group.

The loan will be available for postgraduate taught courses of up to 2 years in duration.

The proposed repayment terms set out in the consultation are an interest rate of RPI+3% with a repayment income threshold of £21,000, frozen for five years. Repayment is 9% of salary above the income threshold and will be concurrent alongside any undergraduate repayments. Similarly to undergraduate loans, any outstanding debt will be written off after 30 years. The consultation notes that it is expected that on average, individuals will repay in full. It asks whether these terms are the right balance of repayment.

The consultation also asks if “institutional eligibility should be restricted to HEFCE fundable institutions and Alternative Providers who have obtained Degree Awarding Powers?”.

Fee inflation is mentioned and the consultation asks if “the availability of up to a £10,000 loan would result in excessive course fee inflation?”. It also asks if government should look at mechanisms safeguard against fee inflation and if so, what these safeguards should be.

Far less is said about the proposal for postgraduate research loans but the consultation asks how can “we broaden and strengthen support for postgraduate research students and excellent postgraduate research?”.

A postgraduate research loan would be of up to £25,000 over the lifetime of a postgraduate research degree, and as with a postgraduate taught loan, repayment would be income contingent.

The consultation states that there is a ‘trade-off’ between the overall number and level of loans and the level of public subsidy. If subsidy were higher, the consultation states that “ we would have to consider for example capping the total number of loans, or restricting to specific subjects.” It asks if it should “prioritise specific subjects where the scientific and economic case is strongest, or instead provide broad support to all subjects, even if this means capping the total number of loans or offering them on less generous terms”.

Alongside the government’s consultation, we running a parallel process, collecting responses to this consultation and plan to publish our own response that accurately reflects the views of the sector, well before the next government announces its plans. This is to ensure that the proposals do not get lost should a change in government and policy after May cause postgraduate support to fall off the agenda.

Professor Michael Gunn, Vice-Chancellor of Staffordshire University and Chair of million+, welcomed the government support for a postgraduate loan scheme but suggests that the age limit of 30 and concurrent repayment scheme may limit take-up and may mean that the scheme does not address the social mobility problems highlighted by ministers.

“The consultation is an important first step in recognising the challenges faced by those who would like to study at postgraduate level. However, it will be important that the final scheme maximises opportunities, including for those who want to study at postgraduate level on a part-time basis or when they are older.” said Gunn.

Find out more about our parallel consultation process.

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