Student loans – “Far reaching negative effects on students,” says expert

The Independent Commission on Fees has published its final report which looks at trends in applications for higher education. The Commission urges the Office for Budget Responsibility to investigate the current student loans scheme.

The report also shows how significant numbers of sixth formers are concerned about the cost of going on to higher education; the gap between the numbers of disadvantaged and advantaged pupils going to university and the numbers of part time and mature students applying.

The Commission was set up by the Sutton Trust in 2011 to monitor the impact of new fees for English universities.

You can read the full report and press release here.

Expert reaction from Dr Claire Crawford, Assistant Professor of Economics at the University of Warwick and Research Fellow at the Institute for Fiscal Studies, said:

“It is encouraging that the difference in full-time university participation between those from advantaged and disadvantaged backgrounds has been falling in recent years, but the gap remains substantial. This is largely explained by the fact that those from poorer backgrounds tend to have lower GCSE and A-level attainment than those from richer backgrounds. Until we tackle this difference in school attainment, the gap in university access will not go away. That is not to say that universities cannot do anything to help tackle this issue; but they will need to do so by working with children earlier and for longer than many currently do.”

“The reforms announced in the Summer Budget – especially the proposal to freeze the threshold above which loan repayments are made – will do much to reduce the cost to government of higher education, if they are implemented. But they will do so primarily by extracting higher loan repayments from low and middle income graduates. They will also lead to substantial increases in debt for the poorest students. While the reforms introduced in 2012 do not appear to have had a negative effect on full-time participation amongst students from poorer backgrounds, this likely reflects the fact that the system was designed to protect both that group and those with low expected lifetime income. Only time will tell whether these new changes will be similarly benign in their effect on full-time participation.”

Expert reaction from Professor Anne West, Director, Education Research Group, LSE:

“The research published by the Independent Commission on Fees raises serious concerns about the current student loans system. Moreover, the planned changes to fees and to student financial support are likely to have far-reaching negative effects on students from disadvantaged backgrounds, who have been beneficiaries of maintenance grants, which reduce later indebtedness.

This is important as our research has found that more affluent parents are better able to shield their children from debt – by paying all or part of their higher education costs, by putting money aside for future property purchases, by being prepared to step in to support loan repayments or by using other financial resources to pay off the debt. Parents with lower household incomes are not able to shield their children from debt in similar ways.

There are very clear differences in the extent to which parents are able to mitigate the impacts of the student loan debt – more affluent parents are able to transmit their financial advantage to their children in a way that poorer parents are not, so creating a new form of inequality, which the abolition of student maintenance grants will exacerbate.”

NOTE TO JOURNALISTS: RESEARCH REFERENCE: West, A., Roberts, J. Lewis, J. and Noden, P (2015) Paying for Higher Education in England: Funding Policy and Families http://www.tandfonline.com/eprint/EnSD8vbNTkcbPsFGq4e3/full

The research was funded by the Leverhulme Trust.

 

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