The worst of both worlds

15th June 2007 at 01:00
Graduate endowment fees could be abolished by spring, says Fiona Hyslop

FIONA HYSLOP's pledge this week to scrap graduate endowment fees with immediate effect could benefit as many as 50,000 current students, including those graduating this year.

The Education and Lifelong Learning Cabinet Secretary said not only did the fee impact on graduates as a "back-end" tuition fee, but the law prevented any of it going towards paying for learning or teaching at university. That made it "the worst of both worlds", she said.

She told MSPs on Wednesday that she planned to introduce a bill to abolish endowment fees in the autumn. If it receives the necessary backing from other parties, legislation could be in place by April 1 next year - the date when this year's graduates become liable to pay the fee.

The Liberal Democrats and Greens said they would support the abolition. But the Tories dismissed it as a "populist stunt" and Labour said the money saved could have been used as a "down payment" to employ more than 1,000 extra teachers.

Proposals to replace student loans with means-tested grants and reduce students' debt repayments were under consideration as part of the spending review, said Ms Hyslop. But the minority SNP administration will face greater difficulty in attracting political support for these measures.

The cost of abolishing the endowment fee is approximately pound;15 million net, but Ms Hyslop guaranteed that this money, which currently supports less well off students through bursaries and grants, would continue to be provided directly by the executive.

The graduate endowment was introduced by the previous Labour-Liberal Democrat coalition as a replacement for up-front tuition fees in 2002. But, in reality, it is only since 2005 that graduates have been liable to pay the pound;2,289 fee - and only once they are earning pound;17,000 a year.

Ms Hyslop argued that the fee had failed to promote social inclusion or remove barriers to widening access - priorities for the Cubie committee on student support.

"The fee is an example of policy where parties with different views adopted a compromise which has benefited no one," she said. "It has failed our graduates and their families by burdening them with excessive debt; it has failed vulnerable youngsters by creating financial barriers to accessing higher education; and it has failed the Scottish taxpayer by not raising the levels of income initially projected."

In the three years it had been in operation, two-thirds of those who were to pay the fee had not paid it back directly but had added it to their student loan. The costs associated with the resulting interest rate subsidy meant that the taxpayer lost around one-third of all the income collected, Ms Hyslop added.

"As well as being inefficient, the graduate endowment is difficult to collect. From the graduates who were liable in April this year, more than 1,400 have still to respond to payment letters from the Student Awards Agency for Scotland. This is equivalent to almost pound;3 million in potential income."

Sir Muir Russell, convener of Universities Scotland, the body representing higher education principals, said. "We are happy to see the burden reduced - but this is a separate matter from funding the universities," he commented.

Universities Scotland want an increase of pound;168 million in real terms by way of investment in higher education by the end of three years, he said.

James Alex-ander, NUS Scotland president, welcomed the move but warned that it did not address student hardship. "Until the Government increases the amount of money students have to live on while they study, those without the backing of a wealthy family will continue to be forced into working long hours for low pay to the detriment of their studies.

"Non-traditional students will continue to abandon their courses before completion, and many will never enter higher education."

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