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Lord Glenamara: I wish to make a point about maintenance grants because people who are not associated with universities do not appreciate the kind of costs that students have to bear. The minority of students who have rooms in universities pay £43.50 a week. If they move out to private accommodation they often pay £50 a week, plus their daily fares to the university. An increasing number are moving out, particularly in my town where some 40,000 students are moving further away from the university. They have to pay their fares home during the vacations and they have to pay for books and stationery. They also have to feed themselves and I am sure that many do not have

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sufficient to eat. Today, a student in a modern university has high maintenance costs. Therefore, I hope that the Government will look at the amendment favourably.

Baroness Maddock: I believe that the amendment reinstates the previous government's policy of 50 per cent. grants, the rest being taken in loans. The Liberal Democrats have not changed their view of the proposal. We have examined it carefully and have concluded that students' tuition fees should be paid in full and that maintenance should be paid for by student loans.

Like the noble Baroness, Lady Carnegy, I have spoken to many students about the matter. As student numbers increase we must find ways of paying for that. Many of them reluctantly agree with our solution. We on these Benches cannot support the amendment.

Lord Desai: I wish to make an observation regarding the horrific statistics presented by the noble Baroness, Lady Blatch. It is important to remember that the loans are not like mortgages. There is a cut-off point after 65 years. The noble Baroness is telling me that the poorest people, rather than repaying for the required 83 years, will repay for only 40 years. The poorer the student the larger the subsidy of non-payment as regards the remainder of the loan. It is a progressive scheme. The noble Baroness proved that the rich will pay the full amount and the poor will pay half. That is exactly what we want, is it not?

Baroness Blatch: The rich will not pay the full amount. That is the point. The rich will borrow only half of the maintenance grant and the poor will have to borrow the full amount. If you are a medical student from a poor family, you will borrow £24,000, which is the maintenance for each of the six years at university. The noble Baroness is shaking her head but I am not talking about tuition fees; I am talking about maintenance. If you are on a four-year course, you will borrow £4,000 for four years and if you are on a three-year course, you will borrow £4,000 for three years. Therefore, somebody from a low income family may come out of university with a debt of £12,000, £16,000 or £24,000. But if you are a student who comes from a wealthy family, your parents will meet half of the cost and you leave university with only half of that debt but pay the £1,000 tuition fees. Therefore, the burden on the poorer students is greater.

I know what the noble Lord, Lord Desai, is saying, and the way in which the scheme would work if he were the architect of it would be fairer. But this scheme leaves students from low income families with a greater burden of debt. At present, they receive a grant and they will move to a situation in which they have no grant and will have to borrow all the money. They are the only students who will have to borrow all the money; the wealthy students will borrow only half.

Perhaps I may answer the noble Baroness, Lady Maddock. We have spoken to a large number of students. When they were consulted about how they felt as regards paying more of their maintenance grants, they acquiesced in the early stages. They were minded to go

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along with the Government because they knew that more money must go to the universities. They did so for two reasons. First, they believed that more money would accrue to students in universities. That is not the case. It pays for more students but it is not putting in more money per student.

Secondly, at that time it was not proposed that there would be the introduction of tuition fees and the abolition of grants. Students were surprised by that. They are now having second thoughts about this package which is very dramatic and is having a very real impact on students who come from low income families.

The last point is a matter to which the noble Lord, Lord Glenamara, referred. The Government are sounding extremely generous about helping people in particular from low income families. I know the noble Baroness is very irritated by what I am saying but these are important points and I am speaking on behalf of students who will have that burden to meet. They are told that the Government will meet their tuition fees. However, they are not aware--in particular, those coming from families which do not have a tradition of going to university--that they will have to meet their maintenance costs by borrowing heavily each year at university. That means that they must start to pay off the debt almost immediately on leaving university.

7.15 p.m.

Baroness Lockwood: A few amendments back, the noble Baroness and her noble friends were arguing that parents do not meet their parental contributions. That was being said in relation to earlier debates on student fees. Student fees and maintenance were being brought together on many of the amendments that we have so far considered.

Baroness Blatch: I do not know whether the noble Baroness has heard somebody else say that, but she certainly would not have heard me say it. I am a parent who met my contribution to my children's fees when they were means-tested. Indeed, at this moment, parents are meeting 50 per cent. of students' fees. There are some parents who do not, but I have not prayed in aid for my case that parents are not meeting their obligations to their children. I am talking about parents who are means-tested or--I use the jargon--affluence-tested to the point at which they are not in a position to meet any or all of the fees for their children.

Baroness Lockwood: If the noble Baroness, Lady Blatch, was not making that point, I apologise. But others on those Benches and on the Liberal Democrat Benches too have been arguing that the reason that we should treat 18 year-olds as adults is that one could not always expect their parents to meet the obligations. That has been said around the Committee.

We are now being told in relation to this particular amendment that students who come from less well-off families will bear a heavier burden than students coming from better-off families because the students coming from the better-off families will have to pay only half the cost of maintenance in terms of loans. All I am

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saying is that we cannot have it both ways. Either parents are meeting their parental obligations or they are not.

But the main point that I want to make on this amendment is that one of the reasons that the British system of higher education has been regarded as more expensive than many of the continental systems of higher education has been because we have been very generous indeed in relation to maintenance grants for students at university and in higher education. We have been more generous to students in higher education than we have been in further education. Parents of students in further education have had to help maintain their children in a way that parents of students in higher education have not been doing.

This particular change in the funding of higher education reflects the principle which is now being accepted widely: that those who benefit from higher education should pay for that higher education. Therefore, maintenance grants are being ended and student loans are being made available for all students, including students in lower income groups. The difference is in the repayment system of the loan which in future will be income-contingent. That means that those who can afford to pay will do so.

The only question that I raise--and it is quite different from that raised by the amendment--is whether £10,000 is the right amount at which repayment should start. But the principle behind this scheme is correct because it means that maintenance of those people who are enjoying higher education, with the opportunity to earn higher incomes in the future, should pay for that privilege.

Lord Pilkington of Oxenford: Perhaps I may add one point which was made on Second Reading by the noble Lord, Lord Glenamara, and myself, and the same point has been made by the noble Baroness, Lady Warnock; namely, the problem of people in teaching carrying that load. I fear that the noble Baroness has glossed over that.

I consulted three banks. They spoke off the record. I put to them the same situation to which the noble Lord, Lord Glenamara, referred on Second Reading; namely, a teacher earning about £20,000 who has a loan of possibly £12,000 plus because, as the noble Lord, Lord Glenamara, said, students often have to pay rent for 52 weeks of the year. The banks said that there was no chance of such a teacher obtaining a mortgage because he might take ill or he might lose his job. Therefore, the only people to benefit from this long-term scheme will be those who become barristers or go into highly paid jobs. It is a positive disincentive for people to go into teaching. Of that there can be no doubt. There will be never the chance of them obtaining a mortgage.

Lord Desai: I do not believe that the noble Lord listened carefully to his noble friend: the teacher will not pay the full loan. No one has to pay the loan; they will only have to pay the flow charges and a certain amount of interest per year. Therefore, by the time they stop paying at the age of 65 they will not have repaid the full loan. There is, perhaps, one criticism. If I were

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an orthodox finance champion, I might say that the scheme would encourage over-borrowing. Why should I not borrow £32,000 as I am not going to pay it back? I am only going to pay income tax relative to my income, and if I earn very little, I shall repay very little. It is a perfectly sensible proposal. The bank may not like the teacher but the teacher is not going to pay back the loan.

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