Education: Student Loans

Lord Stevenson of Balmacara Excerpts

Monday 3rd June 2013 Lords Chamber

[Baroness Garden of Frognal]

The noble Lord mentions the burdensome debt that students are accruing, but I would again stress that they will begin to contribute back for what they have gained from their university education only after they graduate and are earning a salary. We will be monitoring the effect on students from disadvantaged backgrounds. I would also point out that there are very generous forms of mean-tested grants for students, while many universities have instituted all sorts of bursaries to try to make absolutely sure that no student feels disadvantaged because they come from a low-income family.

[Lord Stevenson of Balmacara]

My Lords, students who took out loans under the previous Government pay interest based on the base rate plus 1%—so it is currently 1.5%—whereas those who have taken out loans since 2012 will pay RPI plus 3%, currently amounting 6.3%. Does the Minister agree with the recent HEFCE report which suggests that the new financial system contributed to a 12% reduction in students entering HE last autumn?

[Baroness Garden of Frognal]

Those figures are not holding up as the noble Lord says, because substantial numbers of students are still applying for university. There was of course an increase last year when people applied early, ahead of the new scheme, but the figures we are getting back from the higher education authorities show that the numbers going into higher education are still holding up. We very much hope that the new fee structure will not be a deterrent; in fact, it may well help many of the students whom we most wish to attract to higher education.