Student loans are controversial issues. Many believe that students – particularly those in further education who often come from Scotland’s more deprived neighbourhoods – should never be required to get into debt to finance their time in education. Others, however, believe that in the age of credit cards and payday loans, a well set-up loans system is a safe way for students to finance themselves.
Last November, in her independent review of student financial support in Scotland, Jayne-Anne Gadhia, chief executive of Virgin Money, pointed out that 70 per cent of students had to supplement the financial support they receive – and 14 per cent did so with credit cards or other types of loans, including payday loans.
She called for a minimum student income of £8,100 for FE students, delivered through a combination of bursaries and student loans. This would cost the Scottish government an additional £16 million, she said at the time.
She added that students loans’ preferential terms made her confident their introduction to FE would benefit learners. Under her recommendations, such loans would be written off in full for those transitioning from further to higher education and the repayment threshold would be increased to £22,000.
Now, acting chief executive of the Student Loans Company (SLC), Peter Lauener, tells Tes Scotland that while he understands that student finance is a devolved policy and the matter of loans in FE is therefore one for the Scottish government to decide, he could not see a “fundamental problem” with introducing further education student loans in Scotland in the way they already operate in England.
“A lot of people said in England, loans would never work,” says Lauener. “I can’t see the fundamental problem or difference in England in taking a loan for something in further education that you think will help you in your career and taking a loan for higher education that will make a difference in your career.”
He adds: “This is a way of putting more money into the system and helping more young people. We are not talking FE loans of vast sums of money, they tend to be much shorter courses, but they are often things that can make a real difference. Fundamentally, I don’t have any insight why Scotland took the decision they took, and it was a proper decision to take, but the numbers taking the loans in England are rising year on year, and I just view it as another opportunity for people to get the skills and qualifications that will help them in their career. What is really important is that the system works well.”
Lauener took on the role of acting chief executive last year. His predecessor, Steve Lamey, was sacked after an investigation into allegations over his leadership. The SLC provides loans and grants to students in further and higher education across the UK.
‘Fit for purpose’
Jodie Waite, vice-president for education at the NUS Scotland students’ union, says that her organisation has been clear on its reservations around further education loans, “particularly for those students who use further education as a route into higher education”.
“While the student support review addresses some of our concerns, any move to introduce further education loans cannot be taken lightly. Our priority is ensuring an increase in the bursary available, particularly for the poorest students, and a support system that is fit for purpose. We hope to see a bold, ambitious response from the Scottish government to the independent review that delivers just that.”
Shona Struthers, chief executive of Colleges Scotland, advocates the introduction of a fairer financial support system, which ensures that all students can attend college, regardless of their personal circumstances or background.
“We want to see a standard and fair system for student support funding that provides college students with adequate financial support, on a par with university students, as well as reasonable certainty and clarity on the support they are likely to receive for the duration of their study,” she says.
“Specifically on the issue of loans, we are supportive of a funding model whereby all students can access the same amount of financial support, but the bursary to loan ratio is on a sliding scale dependent on household income.
“We favour a means-tested system that guarantees a higher bursary component for students from the lowest socio-economic backgrounds compared to those from more affluent backgrounds.”
A Scottish government spokesman says: “The independent review of student support recommended a minimum income for all students, supported by access to student loans. Given the complex nature of many of the recommendations, the government has committed to taking some time to consider the report and will set out next steps in due course.”
He adds: “Ministers have committed additional investment of more than £5 million in 2018-19 to support initial implementation of the findings of the independent review.”