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Student loans to be replaced by grants

Part-time students in higher education in colleges and universities are to be offered a pound;500 annual grant towards the cost of their fees from next year.

Fiona Hyslop, Cabinet Secretary for Education and Lifelong Learning, announced the funding of pound;38 million over the next three years yesterday as part of the Scottish Government's commitment to replace student loans with grants.

Around 20,000 new and existing students are likely to be eligible for the new payment, provided they earn less than pound;18,000 a year and are studying 50 per cent or more of a full-time course. It is estimated that part-time students currently pay an average of pound;800 a year in fees.

The new funding arrangements will remove the pound;500 loan available for students on a means-tested basis to help towards their living costs. It, however, has had to be repaid. To offset this loss, the Government is putting an extra pound;1 million into the hardship loan "pot" available to all Scottish higher education institutions.

A spokeswoman for the Scottish Government said this source of funding was intended to be more flexible than the loan system. It could cover everything from study costs to childcare or travel, and would be based on individual need rather than a fixed income threshold. In addition, students do not have to repay hardship payments.

The new grant of up to pound;500 will come into effect in 2008-09.

Ms Hyslop will today take part in the official merger and renaming ceremony for Paisley University and Bell College. The new institution will be called the University of the West of Scotland.

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