Student grants in Scotland: a case of the rocks versus the sun?

by Lucy Hunter, Freelance analyst and formerly Head of Higher Education, Science and Student Support in the Scottish Executive

From this autumn maintenance grants for Scottish full-time students in higher education will fall sharply in value.  New and existing low-income young students studying in Scotland will lose between 34 and 72 per cent of their grant, up to £1,640 a year. More student loan will be offered to make up the loss, keeping graduates who started from poorer homes in repayment for longer and eating into their future ability to cover other costs. 

Tuition of course remains free. Alongside this the government will boost most students’ overall real terms spending power by issuing further loan.  The NUS has offered enthusiastic support for the changes on offer, stressing that immediate hardship is of greater concern than future debt repayment to most of its members, who also remain opposed to fees. 

However, the package of free tuition and extra spending will come at a price for the less well-off.  For example, at household incomes of £20,000, £1,945 more borrowing each year will produce only £427 extra to spend. The rest will be needed to make up for lost grant. For an unfortunate group with incomes around £18,000, £1,760 more loan will mean only £120 more cash in hand.  Across lower incomes, student loan debt will rise much more steeply than spending power. Over a four year  degree young Scots from lower-income homes will now need to borrow £22,000 to obtain their full state support for living costs (£26,000 for mature students, who uniquely in the UK receive less grant).  For the better-off, a rise in the non-means-tested minimum loan will also increase potential borrowing – but not to the same level and with a de facto greater degree of choice for many over whether to use it.

Central to the government presentation has been that this is “the best package of student support in the UK”.  Specific comparisons have not been offered: however, when done these produce some unexpected results.

First, on the major selling point of spending power, Wales is revealed to provide the highest value package in the UK at lower incomes (£7736 a year against Scotland’s £7250).

The other obvious comparison to make is total graduate debt, covering fees and maintenance. The graph shows the amount of student loan debt projected by governments in each part of the UK, for students living away from home and undertaking the cheapest form of honours degree commonly available to them.  As some of the debt in Wales and England is due to higher total support for living costs compared to Scotland (Northern Ireland tends to offer less), a like for like comparison needs to factor that out: the dotted lines show the effect of doing so.

Among the devolved administrations, in the low-grant/no fees Scottish system total debt tends to be on the high side for lower-income honours graduates, even if they stay in Scotland to study, particularly compared to Wales and particularly for mature students.  This is not just because of the extra year required.

Welsh students from low-income backgrounds will get a non-means-tested fee subsidy which caps annual borrowing for fees at £3,575, means-tested maintenance grants of up to £5,161 a year (compared to a Scottish maximum of £1750; or £750 for mature students) and ready access to 3-year degrees anywhere in the UK, as all their support is fully portable.  Some Welsh students will be able to complete a four year degree in Scotland with less final debt than their Scottish counterparts, even with liability for fees. These comparisons ignore a Welsh government promise to write off the first £1,500 of student loan for most graduates.

Graph for article 23 May

At lower incomes, English students will generally face higher debt than Scots. At these incomes, only Scots who leave Scotland will face more debt (not shown in graph). However, higher national grants for English students and local top-up schemes can close the English-Scottish gap substantially.  This is shown using the example of Southampton University, which has a relatively generous scheme, though not the most generous.

With its diminishing use of means-tested support, whether for grant or loans, the Scottish government is unique in the UK in moving towards treating student support as a universal benefit. However, it cannot ignore lower-income students’ more limited access to family contributions and has not chosen to give grant the same way priority as fee subsidy.  It is therefore left with providing poorer students with extra loan. As a result, again uniquely in the UK, the Scottish government plans for graduates from poorer backgrounds to complete with higher official debt, and therefore a larger claim on their future earnings, than their peers from wealthier homes.

Last August’s official announcement made no mention of grant cuts and statements since have been shy of revealing the fact. Nor has there been much coverage or controversy in the media, despite concerns expressed by the opposition. [The way plans in the recent UK spending review to impose a cash freeze on English students’ grants in 2015 were explained, and immediately criticised, offers a marked contrast, as do reported comments that on a “real list of horrors” successfully fought off were Treasury proposals to “get rid of student grants and convert them all into loans”.]

Instead, the Scottish government line that its package represents a huge improvement, and is the best in the UK, continues to dominate reporting north of the border, with criticism (and Wales) largely ignored.  While any suggestion of an end to free tuition remains hugely sensitive, a sharp rise in debt levels for those from lower incomes appears therefore not to interest most of those in Scotland who decide what makes the news.  One clue to this may be contained in the graph: under the Scottish system students from better-off homes, in practice still the majority, will continue to enjoy by far the lowest borrowing of any group in the UK (other than a few low-income students from Wales), as long as they stay in Scotland to study.  Grant cuts will pass them by.

Alex Salmond has famously said that “the rocks will melt with the sun before I allow tuition fees to be imposed on Scottish students – upfront or backdoor”.   The metaphor has proved to be a powerful one and might be regarded as prophetic. Basking in the warm glow of universal free tuition, Scotland appears uniquely willing to allow student grants to melt away, at the long-term expense of the least well-off.

The full analysis on which this article is based is available at http:/adventuresinevidence.com

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