Select Committee on Education and Skills Sixth Report


Students' paid and unpaid work

1. The proposal from the Institute of Public Policy Research that voluntary work by students could be linked to fee credits should be considered seriously in the Government's review (paragraph 25).

2. We recommend that in its review of student support the Government should pay particular attention to the needs of a significant group of students who may be unable to work (paragraph 26).

Postcode premium

3. We believe that the present methods of identifying students from more deprived backgrounds are underdeveloped and we call upon the Department for Education and Skills to refine their methods and to learn from private sector methodology in order to improve the precision of targeting (paragraph 32).

4. We believe that the present 'post-code premium' of 10 per cent is still too low and urgent consideration should be given to a higher rate, reflecting the true costs of recruiting and supporting students from disadvantaged backgrounds (paragraph 33).

The Dearing Report

5. It is our view that many of the problems encountered in the present system of student finance originate from a failure by the Government clearly in public to debate the essential elements of the Dearing proposals and the reason for its recommendations and a fear of alienating key elements of the electorate (paragraph 37).

Devolved responses

6. We do not recommend the adoption of the Scottish system for England (paragraph 43).

7. We were not persuaded to recommend the adoption of the Welsh approach for England (paragraph 45).

8. We recommend that the Department should make careful appraisals of the Scottish and Welsh higher education funding initiatives (paragraph 46).

Increasing participation and financial support

9. We support the growth and development of a society that values lifelong learning and encourages participation in learning by all, including those in the Government's target group. While the development of an effective student support strategy will be an important contribution to this objective, there is much else to be done, including raising aspirations and achievement in schools and developing parity of esteem for vocational, professional and academic learning (paragraph 55).

10. We believe that in the context of the Government's participation target for higher education, and the evident under-representation of students from low income homes, it is essential that a seamless system of financial support should be introduced that will encourage poor or otherwise disadvantaged students to continue their studies through further education and into higher education (paragraph 56).

The balance between individual and state contributions

11. During the course of our inquiry we have become convinced that while income-contingent loans may, in principle, be an effective means of sharing the cost of student support between individual beneficiaries and wider society, the scale of the current interest subsidy, combined with the blanket entitlement of all students to 75 per cent of the full loan, channels subsidy to those who do not need it as well as to those who do (paragraph 59).

12. We recommend that the Government should retain a system of contributions to the costs of tuition and that the Government should keep under continuous review not only whether the maximum means-tested contribution should be increased but also whether the thresholds for means-testing of contributions should be altered (paragraph 62).

Public concern or public misunderstanding?

13. We can expect little progress in terms of social inclusion unless the Government is able to communicate more effectively to students and families what the policy will mean to them in practical terms (paragraph 65).

14. Critically, the information for current and prospective students must convey the notion that while a good quality education may require financial sacrifices, it is an investment that is usually worth making (paragraph 66).

The costs of student living

15. We recommend that the maximum loan available should be set at a level that reflects the realistic costs of pursuing a full-time course of study (paragraph 68).

The student support review

16. We expect that the current review of student support will thoroughly explore every possible model for support and offer an in-depth analysis of their advantages and disadvantages (paragraph 73).

17. We believe that the current system of student support has failed in three important respects. It has not made a 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 (paragraph 74).

Interest rate subsidy

18. We recommend that the Government's borrowing costs should be recognised explicitly in the student support review and in future accounting practices (paragraph 77).

19. We are yet to be convinced that the Government's concerns regarding domestic and European consumer credit legislation are likely to be a significant issue in the development of future policy and we urge the Department to look into this matter further (paragraph 82).

20. It is clear to us that 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 (paragraph 83).

21. It is our view that there is considerable scope for development of models of student support which are based on adjustable interest rates. Such models would enable fine tuning according to prevailing economic conditions or policy in relation to particular groups or subject areas (paragraph 84).

Extension of Education Maintenance Allowances

22. We recommend that the Government should thoroughly explore the costs and implications of a seamless support system, based on the EMA model, spanning further and higher education, to underpin this progression. Such support should continue at least as far as the conclusion of the first year of a full-time higher education course, and should include those between 19 and 24 studying full-time for an initial level 2 [equivalent to five or more GCSEs at A* to C] qualification (paragraph 97).

Loan repayment threshold

23. We recommend that the repayment threshold for student loans should be raised significantly closer to the level of average earnings and should keep pace with changes in the level of average earnings (paragraph 101).

Funding for universities

24. The funding of institutions is a matter of grave concern and we are clear that any additional resource for student support should not be at the cost of investment in institutional infrastructure (paragraph 102).

Refined income-contingent loans with reduced subsidy

25. We have been disappointed in the Government's dismissal of the Barr and Crawford proposals. In our view they provide a challenging critique of the current system and present an innovative approach to student support policy. We were therefore astonished to discover that neither Professor Barr or Mr Crawford have been invited to meet with the review team and discuss their proposals in detail. We urge the Department to correct this omission at the earliest opportunity (paragraph 108).

Differential fees

26. Much heat and little light has so far been shed on the top-up fees debate. There is a serious debate to be had on fees policy and the Government should not shrink from evaluating the costs and benefits of a differentiated fees strategy (paragraph 115).

Tiered interest rates

27. It is our view that the proposal to reduce the interest rate subsidy for those who do not need it and the intention to expand take-up of further and higher education are not irreconcilable positions and that the Government should be encouraged to develop innovative and potentially radical solutions to this challenge, without introducing excessive degrees of complexity (paragraph 118).

Hardship funds

28. The Department should give consideration to renaming the hardship fund. The language of hardship conveys an unfortunate stigma and we are concerned that it may discourage some students from making an application. Reforms to streamline and simplify the administration of such funds are urgently needed to give greater certainty to vulnerable students or those in difficult circumstances that timely and effective assistance will be provided to help them successfully to achieve their potential in higher education (paragraph 120).

Exploration of alternative models

29. We expect the findings of the Government review, and the full and detailed arguments they balanced on each of the options they considered, to be published (paragraph 121).

Effective promotion and communication

30. We encourage the Government to explore innovative communication and advertising methods to ensure that the affordability message is effectively conveyed to target communities (paragraph 122).


31. We recommend that the Government should continue to conduct research on the impact of the current student support regime as it affects student choices in terms of subject, institution, career path and patterns of study together with the impact of debt on graduates (paragraph 123).


32. In oral evidence Margaret Hodge offered the following comment on the student support review: " If we do not get it right, we will pay a heavy price, not tomorrow but five or ten years down the line". We concur with this view, commend the Government on its decision to undertake a substantial review, and trust that the outcomes of the review will take fully into account the considerations in this Report (paragraph 127).

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