Select Committee on Education and Skills Sixth Report



This inquiry was stimulated by the Prime Minister's remarks to the 2001 Labour Party Conference and the subsequent announcement of a cross­departmental review of student finance.

Intermittent leaks over a number of months have offered tantalising glimpses of a fascinating private debate at the heart of Government on this subject.

The Committee believes that present Government policies have run into difficulties due to an inappropriate response to the recommendations of the Dearing Report in 1997. This led to a failure of the current system of student support in three important respects: it has made no significant impact on the social profile of entrants to higher education, it is not clear and easily understood by target populations, and it has not delivered a progressive and socially equitable means of supporting students in higher education.

We believe that the critical challenge is to devise a seamless system of support for students from lower income families which assists them through further education and into higher education, especially through the critical first year of undergraduate study. The link between retention of students in further education and then into higher education is critical in meeting the Government's target of increasing participation in higher education towards 50 per cent of those aged 18 to 30 by the end of the decade.

It is our view that there is considerable scope for development of models of student support which are based on adjustable interest rates. The current zero real interest rate for student loans subsidises those from affluent backgrounds while providing insufficient funds to those from poor or otherwise disadvantaged circumstances.

The Committee believes that tuition fees are at a relatively modest level. As they are means­tested, they are a very progressive element in higher education finance and could be increased.

We recommend that the maximum loan available should be set at a level that reflects the realistic costs of pursuing a full­time course of study. We recommend that the repayment threshold for student loans should be raised significantly closer to the level of average earnings.

We expect the Government to publish an in­depth analysis of the advantages and disadvantages of each of the options considered in its review.

We recommend that the Government should make careful appraisals of the devolved administrations' higher education funding initiatives in Scotland and in Wales.

We agree with the Minister's warning on the importance of this issue: "If we do not get it right, we will pay a heavy price, not tomorrow but five or ten years down the line".

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