APPENDIX
POST-16 STUDENT SUPPORT
GOVERNMENT RESPONSE TO THE SIXTH REPORT
FROM THE EDUCATION AND SKILLS SELECT COMMITTEE, SESSION 2001-02
Response to the Select Committee's conclusions
and recommendations
The Select Committee's recommendations are in bold
text.
The Department's response is in plain text.
STUDENTS' PAID AND UNPAID WORK
Recommendation 1: The proposal from the Institute
for 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).
1. We fully accept that voluntary work by students
is to be encouraged, both for the benefits it brings to the community
and to them personally, and that there are advantages to offering
incentives for this work. The White Paper The future of higher
education (Cm5735) announced a pilot of a new initiative to encourage
students to undertake paid, parttime support roles in schools
or colleges. This will build on existing work such as the "Teacher
Associate" scheme run by the TTA, and will give students
valuable experience, in addition to the support they will provide
to teachers. The scheme will also cast students in the part of
role models, offering pupils in schools an insight into what university
life is like and potentially raising their aspirations.
2. We do not believe, though, that there is any need
for voluntary work to be linked to fee credits, as under the new
system there will be no requirement to pay any fees up front.
It therefore seems more appropriate to reward students directly,
where any form of financial reward is involved, to help them with
costs associated with studying.
3. The Government supports youth volunteering with
a number of initiatives, including the highly successful Millennium
Volunteers programme. More than 82,000 young people have signed
up to volunteer in their communities through this programme.
Recommendation 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).
4. Students with children and those with disabilities
already get generous grants to pay for childcare and other special
needs. Almost a quarter of a billion pounds are now spent on support
targeted at those who need it most, compared to £124m in
1997-98. A single parent with two children can now get over £16,000
of support, with full loan and grants, each year. From April 2003
students with children will also be able to claim Child Tax Credit
from the Inland Revenue regardless of whether they are in paid
work or not.
5. The Government announced on 28 November 2002 that
it was streamlining support for students with children and those
with disabilities. The number of different grants and bursaries
will be reduced from 14 to 5 over the next two years. From 2003-04,
there will be a new Parents' Learning Allowance of up to £1,300
for course related costs, which will replace three existing grants;
and the Childcare Grant for those using registered childcare will
be increased to meet 85% of actual costs across the whole academic
year. The Parents' Learning Allowance will not count as income
for tax credit purposes. For disabled students we are speeding
up the application process and providing more access centres for
assessments. There will be clearer guidance so that disabled students
can apply for assessment of their needs much earlier and get their
support in place at the beginning of their course.
6. From 2004-05 we are simplifying hardship support
by merging hardship loans and hardship fund into a single, nonrepayable
one stop Access to Learning Fund. We are preparing new guidance
on the Access to Learning Fund to ensure that Higher Education
Institutions (HEIs) assess students on a level playing field.
Students who are unable to work because of family responsibilities,
or a disability, or because of academic study requirements, will
not be disadvantaged when they apply for help from the new Fund.
7. The White Paper "The future of higher education"
includes proposals for improving support for parttime students.
For those on courses which are equivalent to 50% or more of a
fulltime course we will provide meanstested tuition
fee support, and a £250 grant instead of a loan, applied
for through the LEA. Help with childcare will be available from
the Access to Learning Fund. For parttime students on certain
courses which are equivalent to at least 10% of a fulltime
course we will provide tuition fee waivers and, for the first
time, support from the Access to Learning Fund.
POSTCODE PREMIUM
Recommendation 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).
Recommendation 4: We believe that the present
"postcode premium" of 10% 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).
8. We have considered the Select Committee's findings
carefully and, after consultation with HEFCE, we agree with the
Committee that postcode analysis is too crude a measure of disadvantage,
given the variation in circumstances across many postcodes. We
favour reform of the premium to reflect the new performance indicators
also proposed in the White Paper to help institutions and students
see how well they are doing at improving access, all of which
we expect to be in place by 2007. These are family income, parental
levels of education, and average results of the school attended,
which we believe will provide a more sensitive indicator of disadvantage.
9. We also agree that, in the light of a range of
work, including that published by the Select Committee in July
2002, that the present rate of the postcode premium is too low
to meet the real cost faced by institutions. HEFCE are at present
considering the level of funding to support institutions that
recruit students from disadvantaged backgrounds from 2003-04.
I understand that they plan a significant increase, raising the
premium to around 20% additional funding for each student from
a disadvantaged background, compared to around 5% now.
DEVOLVED RESPONSES
Recommendation 6: We do not recommend the adoption
of the Scottish system for England (paragraph 43).
Recommendation 7: We were not persuaded to recommend
the adoption of the Welsh approach for England (paragraph 45).
Recommendation 8: We recommend that the Department
should make careful appraisals of the Scottish and Welsh higher
education funding initiatives (paragraph 46).
10. The Government examined both the Welsh and Scottish
approaches as part of the student finance review. We have not
followed either approach in full, although elements of both systems
feature in our proposals.
11. The new HE grant (see paragraph 7.36 of the White
Paper The future of higher education, Cm 5735) has some features
in common with the Welsh Assembly grant. The Welsh Assembly grant
is paid in full to students from income backgrounds of up to £10,000
and then tapered out to nothing at a family income of £15,000.
This grant is paid to students in both FE and HE. However, our
intention is for the new HE grant announced in the White Paper
to be paid to around 30% of students, targeted at those from the
lowest income backgrounds. Since student support is a reserved
matter the new grant will be paid to students in England and Wales.
We will also continue to provide help with fees for those from
lower income backgrounds, and will pay for the first £1,100
of fees per year for students with family incomes of £20,000
or less, and some support for those with family incomes of £30,000
or less.
12. The proposal to allow students to defer their
fees (see paragraph 7.39 of "The future of higher education")
has some similarities with the Scottish endowment model, where
instead of paying a fee upfront, the students add an amount to
their student loan on graduation instead. The difference with
the model proposed in "The future of higher education"
is that a student's loan for fees will be built up year by year
as they follow the course rather than consisting of a single sum
on graduation.
INCREASING PARTICIPATION AND FINANCIAL SUPPORT/EXTENSION
OF EDUCATIONAL MAINTENANCE ALLOWANCES
Recommendation 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).
13. We know that the key drivers for raising participation
in higher education, and stimulating learning within our society
generally, are raising aspirations and attainment in schools.
To succeed in schools we need to create a challenging, motivating
and flexible curriculum that will help young people develop an
interest in learning that will last for a lifetime. This message
was set out in the "Investment for Reform" paper following
the Spending Review.
14. We also believe that there is a need for more
workfocused learning, both in schools and colleges, and
in higher education. The White Paper makes clear that we envisage
most of the forthcoming expansion in higher education coming through
Foundation Degrees, which will ensure that higher education produces
people with the spread of qualifications and skills necessary
to meet the needs of employers, and of our economy.
15. We have acknowledged that there has been growing
concern about the slow progress children make between the ages
of 11 and 14 and we recently set out our agenda for raising standards
for this age group - the Key Stage 3 strategy. This strategy is
intended to stretch all pupils, and will ensure that the vast
majority of pupils have reached acceptable standards in the basics
of English, mathematics, science and ICT, benefited from a broad
curriculum, and learned how to reason, think logically and creatively
and to take increasing responsibility for their own learning.
16. One of the central themes of Opportunity and
Excellence, our policy response to the recent Green Paper on 14-19
education, is the promotion of more effective pathways beyond
14, including highquality vocational routes that will build
on vocational Alevels and the new GCSEs in vocational subjects
that were introduced from September 2002. Schools will work with
colleges to give better opportunities for workrelated studies
for students aged 14-19. By 2004, over a quarter of young people
will enter modern apprenticeships by the age of 22. We recently
announced a wider vocational target that by 2010, 90% of young
people will have participated in a fulltime programme fitting
them for entry into higher education or skilled employment by
the age of 22.
17. In respect of level 2 qualifications, we have
set ambitious targets for the proportion of 19 year olds who achieve
5 good GCSEs or the equivalent to rise by 3% between 2002 and
2004, with a further 3% increase by 2006.
18. The Education Act 2002 continues the drive to
raise standards throughout the school system, particularly at
secondary level, and beyond. The Act contains a number of provisions
which will free schools to allow them to innovate, create greater
diversity and flexibility and deliver high minimum standards for
all. The Act seeks to deliver this aim by promoting diversity
in the system and supporting the agenda of creating individual
pathways for 14-19 year olds. The Act makes several important
changes to the law to support the development of a more diverse
system, not least by seeking to involve a wider range of partners
and providers.
19. By wedding diversity and choice in education
with the objective of raising aspirations and standards, through
mechanisms such as the successful AimHigher campaign, we believe
more young people will be motivated to stay on in learning beyond
16 to achieve the skills and knowledge that will give them the
opportunity to contribute to society and enjoy the benefits of
a broad and balanced learning experience. We want to ensure that
education and training meets the needs and aspirations of all
young people, so that they are motivated to engage in lifelong
learning.
Recommendation 10: We believe that in the context
of the Government's participation target for higher education,
and the evident underrepresentation 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).
Recommendation 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 fulltime
higher education course, and should include those between 19 and
24 studying fulltime for an initial level 2 [equivalent
to five or more GCSEs at A* to C] qualification (paragraph 97).
20. We are currently undertaking a Review of the
Funding of Adult Learning. The overarching aim of the Review is
to examine the arrangements for funding for adult learners post
19, including how the Government's various support mechanisms
for learning could be more effectively deployed to:
(a) Provide incentives to employers to engage
in training;
(b) encourage institutions to be responsive
to employer needs, building their capacity to work with employers;
(c) widen participation in learning by the
low skilled; and
(d) enable Regional Development Agencies
(RDAs) to play their full and effective role in developing and
implementing regional skills strategies.
21. The Committee will welcome our announcement that
a national system of Education Maintenance Allowances (EMAs) will
be introduced from September 2004.
22. The White Paper announced that support for those
from lower income backgrounds will now be available in higher
education, in the form of the Higher Education Grant. Our intention
is to offer a full grant of £1,000 a year to around 30% of
students, with some grant being available to those whose families
earn up to £20,000 a year, on a sliding scale. This is in
addition to funds for fee remission, which will continue at the
current level, with Government paying for the first £1,100
of fees for those from poorer backgrounds (family income of £20,000
or less, with some help provided up to a family income of £30,000).
23. As we have said above, the Department is reviewing
the funding of individual adult learners aged 19 or over outside
higher education, and is considering the most cost effective ways
of targeting financial assistance.
24. This pilot, taken alongside the new Higher Education
Grant, will be an important part of making sure the system of
support for learners is focused on their needs at each stage of
education. We agree with the Select Committee that we should be
working to create, as far as possible, a seamless system that
supports and encourages people to progress through education in
a way that best fits their learning and skill needs.
THE BALANCE BETWEEN INDIVIDUAL AND STATE CONTRIBUTIONS/REFINED
INCOME-CONTINGENT LOANS WITH REDUCED SUBSIDY /TIERED INTEREST
RATES
Recommendation 11: During the course of our inquiry
we have become convinced that while incomecontingent 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% of the full loan, channels
subsidy to those who do not need it as well as to those who do
(paragraph 59).
Recommendation 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).
Recommendation 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).
Recommendation 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).
Recommendation 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 takeup 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).
25. The Government does not accept this analysis.
The interest rate subsidy is targeted at those on lower incomes.
26. It is important to distinguish between the family
income background of the student before and while undergoing higher
education on the one hand; and the income earned by the student
after graduation on the other. Much of the commentary on this
issue confuses these two points.
27. A student grant is a subsidy which assists the
former case: the family income background from which the student
comes. We have reintroduced student grants because we know from
research that potential students from nontraditional and
lower income backgrounds tend to be more deterred by the prospect
of incurring debt to finance their higher education. Hence a grant
helps these students to come into higher education in the first
place.
28. A key feature of our proposals is that they treat
students as independent adults at 18 - which is an important reason
for removing upfront costs. The interest rate subsidy on student
loans is a subsidy targeted on the graduate while the loan is
in repayment, meaning that it supports the graduate themselves,
irrespective of their family background. Here it is important
to understand the interaction between rates of interest and the
incomecontingent loan repayment regime.
29. With incomecontingent loans, the amount
a graduate repays each year depends on how much they earn. The
repayments are set at 9% of income above a threshold, which we
are raising to £15,000 to make repayments easier for those
on lower incomes (see paragraph 7.41 of "The future of higher
education"). If the loans are subsidised so that no real
rates of interest are charged (ie the loan is just uprated to
match inflation), this means that the loan just takes longer to
repay - there is no penalty associated with paying over a longer
period because your income is lower.
30. However, if a real rate of interest is charged,
the effect is highly regressive. The effect is that graduates
on lower incomes, since they pay for a longer period, will pay
more in interest. And those that earn the least will pay the most.
So it is clear that the effect of an interest rate subsidy, when
combined with an incomecontingent repayment regime, targets
the subsidy rather well, in direct proportion to income. Those
who benefit most from the subsidy are those who earn the least.
31. Charging a real rate of interest would cause
particular difficulties with those who choose lower paid professions
after graduation, for example in the voluntary sector, and those
taking career breaks - such as women on maternity leave. We illustrated
the effects of these in the memorandum for the select committee
on 27 May 2002. It would of course be possible to devise a complex
system whereby the interest rate charged is reduced for those
on lower earnings and on career breaks. However, such a system
would be significantly more complex and expensive to administer
and still would only have the effect of channelling the subsidy
back to those people - ie on lower earnings - who are the principal
beneficiaries of the subsidy at the moment.
32. Officials from the Department met Professor Barr
and Dr Crawford in Autumn 2002 and discussed these issues in full
detail.
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