Wales makes the excel sheet add up by increasing student debt – and a tuition fee hike could be coming

Presenting Wales’ draft 2024-25 budget in the Senedd today, Finance Minister Rebecca Evans said tha ministers had faced the “most stark and painful budget choices for Wales in the devolution era”.

Jim is an Associate Editor at Wonkhe

It’s inflation again. Wales’ overall budget is worth £1.3 billion less in real terms than when it was set in 2021 – and Evans said that its settlement, which largely comes from the UK government in the form of a block grant, is not sufficient to respond to the extreme pressures that public services, businesses and people are facing.

There’s additional funding for the NHS (a more than a 4 per cent increase for 2024-2025, compared to less than 1 per cent in England), and the core local government settlement, which along with local council tax, funds services including schools, social services and social care, bin collections and local leisure facilities, is also to be protected – with a 3.1 per cent increase.

That leaves unprotected areas to pick up quite a bit of slack – and higher education is in there.

A good wedge of cash is being saved as a result of falling forecast demand for undergraduate student support – some £53.9m in grants will be spent elsewhere, with apparently no direct impact on the undergraduate support scheme.

Of course as well as falling demand, buried in there is another reality – because the mix of loan and grant is determined by household income, a continued freeze of the household income threshold of £18,370 means that more and more students are pulling down more debt than grant as wages grow.

For postgraduates the story is much worse – Wales will switch to providing support only through loans to new students from 2024-25 academic year. It’s still the most generous PG fees/maintenance scheme in the UK, but switching entirely into debt is quite a move given that on the last look, Welsh domiciled PG participation is on the slide – and will hit the poorest hardest given they can currently take £6,885 of their PG costs in the form of a grant.

In addition £3.2m is gone from its incentive bursaries for Welsh-domiciled PGT students – mainly used to support women in science, technology, engineering, mathematics and medicine – and £1.6m is being snatched from the Taith student mobility programme.

Evans also held out the prospect of introducing or increasing charges for some public services – NHS dental care, domiciliary care and crucially tuition fees were all identified as areas where the Welsh pay less but may pay more following consultation. And the central mental health budget is also being cut by £6m.

None of the above helps universities, of course – and buried in the tables is a further cut to HEFCW’s funding of £11m when the pressures are piling up. A Universities Wales spokesperson said:

This is against the backdrop of some of the most alarming participation challenges we’ve seen in many years with fewer Welsh students choosing to enter higher education than at any point in the past decade. The gap in participation between Wales and the rest of the UK is growing.

That prospect of a tuition fee hike will be grasped at by Welsh vice-chancellors – students, increasingly burdened by debt and for whom postgraduate study just got dramatically more expensive, will be less enamoured at the idea.

Following publication, a Welsh Government spokesperson said:

The rate of undergraduate maintenance support in Wales will increase by 3.7% for the 2024/25 academic year for new students, as well as for students who are continuing on a course which they started on or after 1 August 2018. The level of undergraduate maintenance support is linked to the National Living Wage (NLW). The increase to maintenance support in 2024/25 is based on a NLW value of £10.80, compared to £10.42 for the 2023/24 academic year.“

It’s clear that’s what’s happening here is that the WG uses a projection for the NLW from March in the preceding year. But when the projection is so out, students will want to know what steps the WG takes to catch up – to avoid compounding the issue in the way that English student support has been doing over inaccurate projections for inflation. And it also remains unclear as to why it wasn’t able to use the guess that Jeremy Hunt had back on 1st October – and raises the suspicion that doing so has enabled it save money.

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