Budget 2021: Why we need to look at tuition loans
The budget is only a day away and hope is for rapid growth reducing the deficit and stabilizing the national debt as a percentage of GDP. Even so, tax increases are expected in the future.
More income is needed for population-oriented public spending, such as pensions and health, and for young people aged 16-18 more in higher education. Even more is needed for public health and social services, not to mention the increase in funding rates between 16-18 years and secondary education.
There appears to be no guarantee of significant funding for post-18 education. For this reason, fee-based loan proposals deserve special attention.
Revealed: The glaring gap in educational achievement 16-19
Rishi Sunak’s budget: What will this mean for FE?
Boris Johnson: Ending the ‘pointless and senseless chasm’ between FE and HE
The FE White Paper and the Interim Conclusion of the 18-Year Education and Funding Review presents the Lifetime Loan Entitlement (LLE) proposal. They also explain that the LLE is part of the Lifetime Skills Guarantee, rather than a separate one.
A consultation on the LLE is scheduled for early 2021, with consultations on continuing education funding and accountability, the National Skills Fund (NSF) and reform of higher education (HER) released in the spring.
The HER consultation will likely include relaxing the equal or lower qualifying rule so that fee-based loans can be extended to fund retraining at level 4-6. In addition, the consultation is expected to present different approaches to credit accumulation in a single higher education system at level 4-6.
According to current plans, the LLE is expected to be implemented in 2025, the same year that the National Grant-Based Support Fund is to end.
Under the Fixed-Term Parliaments Act, the last general election date in the UK is May 2, 2024. In fact, the right to a lifetime loan is the Conservatives’ response to the National Education Service. workers and the Liberal Democrats’ skills portfolio.
One of the challenges is to identify where fee-based loans will – or should – apply for reasons of equity to certain groups of adults and to the taxpayer. Another is to identify where LGE should be available for adults when LLE is not appropriate.
The LLE is defined as the equivalent of four years of full-time study in higher education for everyone. Assuming the duty is limited to the cost of provision and funding is capped at the regulated fee of £ 9,250, it could be worth £ 37,000 over a lifetime.
The LLE is also expected to be the sole source of fee-based loans for development and requalification to level 4-6. Assuming that adults upgrading their skills to Level 3 could do so through fully funded grants after 2025, loans to adult learners would be limited to requalification to Level 3.
Fee loans or fee subsidies?
The idea of an entitlement to a lifetime loan also offers the government an opportunity to assess whether the funding is in the form of fee loans or fee subsidies.
Adults who have recently reached a first level 4-6 have done so through fee loans. Suppose today they wish to retrain at level 2. The cost of the course would attract a portion of the grants in exchange for a cash contribution.
The government could reasonably conclude that Levels 4-6 are certainly not opposed to fee-based loans. If they need to requalify to level 2, they must use their lifetime loan entitlement.
Both FE and HE sectors seem to assume that lifelong loan entitlement will be limited to skills upgrading and re-qualification to level 4-6. If so, then LLE is definitely not for everyone.
About 44% of young people aged 19 to 64 have at least a Level 4 qualification. Towards the end of the decade, the public retirement age rises to 67. Even with the accumulation of credits in a single level system 4-6, the proportion of adults aged 19 to 67 with a level 4 or more hundred by 2030.
Estimates also suggest that 5 million adults will need to requalify by 2030. It can be assumed, however, that only some will be graduates of level 4-6, and a proportion of them will surely have to requalify to level 3 if not to. level 2.
Delivered by colleges
It would seem strange to tell adults who have achieved a first level 4-5 – potentially at FE college – that they cannot use the Lifetime Loan Right to requalify to Level 3 on courses offered by FE colleges. .
Of course, graduates from levels 4 to 6 deciding to requalify to level 3 could access additional loans through loans to adult learners. But the simplification of FE funding also leads to the conclusion of completely preventing graduates from accessing adult learner loans.
However, Whitehall may have a larger goal in mind. Think of adults who have reached their first level 4-6 and who subsequently experience a life-changing event; a mental health problem, for example. No longer able to take on highly skilled jobs, they might want to use any remaining entitlement to a lifetime loan to fund requalification and lifelong learning. at level 2 or lower.
Perhaps the plan is for LLE to be a wellness mechanism as well as a skills intervention.
If the lifetime loan entitlement is used to fund skill building at level 4-6 alongside retraining of graduates from level 4-6 to all levels throughout life – from level 6 to level 1 – the public target for loans to adult learners is dropping dramatically. They would only be available to level 3 adults looking to requalify to level 3.
Extending the use of LLE to adults with Level 3 who need to requalify to Level 3 would completely eliminate loans to adult learners, thereby simplifying the FE funding system. Also, adults who requalify to Level 3 could use any unspent lifetime loan rights to upgrade to Levels 4 and 5 later in FE colleges.
The Conservative government, it seems, could ask the FE sector some extremely probing questions about the future role of fee-based loans and the right to a lifetime loan. Likewise, the FE sector should ask the Conservative government research questions about the merits of a lifetime grant entitlement.
Two elements of the LGE are well known and related to the improvement of skills. The first is the maintenance of the first level 3 fully funded by grants after 2025. The second is the right to a first level 2 fully funded by grants regardless of the economic situation.
But there is a third. Adults with a level 3 or 2 as the highest qualification should be eligible for a fully funded requalification to level 2 through grants. No loan fees here, please!
Mark Corney is a policy consultant