Select Committee on Education and Skills Minutes of Evidence

Annex 1


  82.  Table 1 summarises in simplified form (and with rounded numbers) the system of student support for students who started their degree between 1990 and 1997, and that for students who started their degree in 1998 or later.

  83.  The old system was introduced gradually. When fully phased in, it operated through:

    (a)  50 per cent of student living costs from a mortgage-type loan;

    (b)  50 per cent of living costs from a mixture of grant and parental contribution;

    (c)  no tuition fees paid by the student.

  84.  The arrangements since the 1998 have three components:

    (a)  an income-contingent loan;

    (b)  replacement of the grant by a loan entitlement which is partially income tested;[24]

    (c)  an income-tested tuition fee.

Table 1


   Living expensesTuition
The system until 199850 per cent mortgage-type loan;50 per cent grant/parental contribution Free
The current system     
"Poor" student100 per cent income-contingent loan Free
"Rich" studentParental contribution of 25 per cent of living costs; income-contingent loan the res £1,000 flat-fee from parental contributions

  85.  To amplify the current system:

    —  "Poor" students (ie where parent/spouse net income is below about £18,000 per year) pay no tuition fee and are eligible for an income-contingent loan intended to cover 100 per cent of living costs.

    —  "Rich" students (whose parents' or spouse's net income is above about £34,000 per year) pay the full £1,000 fee. They are entitled to an income-contingent loan equal to 75 per cent of the maximum loan. It is assumed that the parental contribution pays the tuition fee and 25 per cent of living costs.

    —  In between, loan entitlement and fees are calculated on a sliding scale.[25]

  86.  To illustrate these arrangements with a simplified numerical example, suppose that it is estimated that students need £4,000 to cover living costs, made up, under the old system (line 1 of Table 1) of a loan entitlement of £2,000 and grant/parental contribution of £2,000. Thus the maximum parental contribution (for a student not eligible for any grant) is £2,000.

  87.  Under current arrangements, a poor student is eligible for an income-contingent loan of £4,000 to cover living expenses, and does not have to pay a tuition fee. A rich student receives £2,000 in parental contribution, £1,000 to cover the tuition fee and £1,000 towards living costs, and is eligible for an income-contingent loan of £3,000 to cover remaining living costs.

24   Poor students are eligible for "a maintenance loan of the same value as the current grant and loan package" (Hansard, (Commons), 23 July 1997, col. 950). Back

25   Herein lies much of the complexity-for details, see Department for Education and Skills (2001) ( ss-admin/content/dsp-section-29.shtml, Chapter 6). Back

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