Chapter seven of Phillip Augar’s independent panel report to the review of post-18 education and funding addressed the English higher education maintenance system.
The panel thought that maintenance support for students should be reformed to become fairer, reflecting the needs and characteristics of students at different levels and across different modes of study.
The government has responded by simply ignoring the chapter in its entirety.
Bring back my grant cheque to me
Augar, for example, called for a limited reintroduction of maintenance grants – the idea was to swap out some loan for grant for those whose families were on the lowest incomes. That wouldn’t have made much difference to their overall repayments – Augar noted that those from the most disadvantaged backgrounds tend to have the worst labour market outcomes – but the panel reckoned that the size of loans has an appreciable impact on prospective students’ perceptions of debt, particularly amongst the disadvantaged, and acts as a deterrent.
It’s not a problem or subsequent idea that the government has even chosen to acknowledge, let alone respond to.
Augar was also concerned that the (maximum) amount of maintenance on offer to a student be addressed. The key input into the review on student costs was from 2014 and was therefore pretty faulty – the estimates just uprated everything for inflation despite clear evidence that housing costs were rising faster. Nevertheless Augar recommended that the maximum (full time, away from home, outside of London) loan be pegged at the level of the National Living Wage, 37.5 hours per week, 30 weeks per year – £10,688 from this September. The government has ignored that recommendation too – instead confirming many weeks ago that this coming September the figure will be £9,706.
Our house
Not everyone gets that maximum loan, of course. The residual household income threshold over which we start reducing the entitlement to a maintenance loan stands at £25,000, which is where it’s been since 2008. If the threshold had been indexed to average earnings, it would now be around £34,000 and about double the number of students would now be eligible for the full maintenance loan. Augar at least recommended that we begin to uprate the £25k for inflation. The government has declined to respond to that call.
That “taper” represents an implied “parental contribution”, which people like Martin “Money Saving Expert” Lewis have been calling to be made more explicit. Augar’s panel made noises in that direction, as well as calling for a rebrand of the student finance system generally away from the language of fees and debt and towards that of an “income-contingent student contribution” system. Nothing has been said on either of those ideas.
Augar was worried about living costs in London, and said it was an area worthy of further enquiry. If that further enquiry has been carried in the intervening three years, we’ve not been told about it. Augar was also worried about whether the present arrangements adequately reflected the higher cost of living, as well as childcare, for families with children. This too was an area “worthy of further enquiry” that seems to have been ignored. And so worried was the panel about the costs of living for commuter students, it called for a study of the characteristics and in-study experience of commuter students and how to support them better. No such study has emerged, and nor has a plan to carry one out.
But the rent
Maintenance isn’t all about giving money to students – in part it’s about the costs they face. Augar argued that the public subsidy of student maintenance, much of which is spent on accommodation, gives OfS a legitimate stake in monitoring the provision of student accommodation in terms of costs, rents, profitability and value for money. Three years on, and the government is silent on that.
And when the independent panel suggested that the government should provide a clearer picture of private sector involvement in student accommodation by commissioning a comprehensive financial analysis of private developers and operators of purpose-built student accommodation to understand the profits that private business and investors are making from student rents, the government has chosen to ignore that issue too.
There was a time when the government used to suggest that the review of post-18 education and funding would address the inability of distance learners to access maintenance loans. That’s left hanging, despite the fact that a decent proportion of students apparently liked being able to study at a distance during Covid. Augar asked that the issue of differentiating between distance and “campus based” learning be kept under review – there’s nothing on that. And the government used to repeatedly suggest that the issue of Sharia-compliant student finance (originally promised in 2010) would be addressed in its response. It has been – by finding even longer grass to kick the issue into by saying that it “could” be delivered as part of the new Lifelong Loan Entitlement.
The good news is that the government has announced that it is extending student finance access for higher technical qualifications (HTQs), allowing learners studying HTQs part-time to access maintenance loans, as they can with degrees. But Augar’s recommendation that learners be able to access student finance for maintenance support for modules of credit-based level four, five and six qualifications in general is downgraded to a suggestion in the consultation mix – alongside better institutional bursary support.
Graduates paying in
When it comes to the amount that students – or rather, graduates – should have to pay in to the system, there’s at least a bit more material to play with.
On the issue of the repayment threshold, the government says that to make the system fairer, the threshold for current borrowers is frozen as is for a few years, and for new borrowers starting courses from September 2023 will be set at £25,000 until 2026-27:
This still means that graduates will not start repaying until they have reached well over the current median young non-graduate salary of £21,500
Of course by the time we get to 2026, on current inflation and wage growth estimates that 21.5k figure from 2020 could easily be £28k.
But it’s also worth noting that “young non-graduate salary” phrase. Augar argued that the repayment threshold should be pegged at the level of median non-graduate earnings in general:
Set the contribution threshold at the level of median non-graduate earnings so that those who are experiencing a financial benefit from HE start contributing towards the cost of their studies. This should apply to new students entering HE from 2021/22.
That figure was £25,500 in 2020, and so by 2026 could very easily be about £35,000 on current inflation and wage growth estimates. In other words, a £25k repayment threshold in 2026 is very low, and breaches both the idea that grads should only start paying back once they’re earning more than non grads in general and young grads specifically. It’s a very nasty bit of stealth tax that also happens to be highly regressive.
Taking an interest
On interest rates – an issue mentioned specifically in the 2019 manifesto – the decision has been taken to abolish interest in real terms, with interest for new borrowers set to be RPI. That decision is fascinating when we look back at what Augar had to say about the idea:
The provision of loans at zero real interest throughout the whole loan period could encourage almost all students to take out loans (as opposed to paying fees with their own funds) and to continue to hold this ‘debt’ throughout the contribution period as it may eventually be written off. This would be at considerable additional cost to government at the expense of investment elsewhere in tertiary education.
As it turns out, it comes without considerable extra cost to government by making lower earning graduates cover the cost of it instead.
In Augar’s view, real interest on student loans had to stay – but the panel was so worried that the rich might end up paying too much as a result that it proposed a 1.2 x loan balance real terms contributions cap. At the time it was demonstrated to be highly regressive – a sop to rich men at the end of their career paid for by the young and women. The abolition of real interest actually takes it a stage further – it’s even better for rich men, paid for by leaning on young/women even more – all under the veil of “fairness”.
Of course there’s also the 40 year term, which Augar did recommend, although is highly regressive. And of course it remains the case that there’s plenty of material on the amount that students can be charged, and how – but nothing on what is allowed to be included and excluded in that fee. Taken as a package, to make our hybrid loan/tax system more “efficient”, the government could have nudged it towards a tax to make it more progressive by asking (mainly) rich men to stump up more. Instead, as the IFS notes, it’s chosen to nudge back towards a loan, which asks (mainly) the young and women to prop up the system.
That it’s also managed to make the overall system even cheaper for those that gain the most in salary is… interesting.
It would be remiss not to briefly mention the investment of “up to” £75 million (we’re not told over how many years) in a new “national scholarship scheme” to support “talented, disadvantaged students in accessing and succeeding in HE”. Although when you think about the number of students that a figure like that will practically support is likely to be painfully small – and even if the £75m is an annual figure, that would be less than the government put in 2013 when it last it ran a national scholarship programme – a figleaf bit of cover for the Lib Dem u-turn on fees that failed badly.
Overall then, almost all students will end up paying significantly more for having significantly less spent on their education. In that context we might have at least expected a response on the bits of Augar that were concerned with students’ costs or their maintenance. That they are not even acknowledged tells us quite a bit about what the government thinks about students and graduates.
