Asked by: Matt Western (Labour - Warwick and Leamington)
Question to the Department for Education:
To ask the Secretary of State for Education, what recent assessment he has made of the impact on BAME students of any changes to the student loan repayment threshold.
Answered by Michelle Donelan
The student loan system in England removes financial barriers for those hoping to study higher education while sharing its costs between learners and the general taxpayer. The loans offer unique protections to borrowers. During and after study, interest rates are capped so that they do not exceed the prevailing market rate for comparable personal loans. After finishing study, monthly repayments are only required when a borrower is earning over the repayment threshold, currently £27,295 per year, or its weekly or monthly equivalent for Plan 2 (post-2012) loans and do not change based on rates or the amount borrowed. Any outstanding debt is written off after the loan term ends at no detriment to the borrower.
As student loan repayments are income contingent, the impact of the repayment threshold and repayment conditions on students with particular protected characteristics depends on the earnings of those borrowers in each year over the loan term. The department publishes annual data on graduate employment and earnings by years after graduation, including by ethnicity, through the Graduate Outcomes publication which can be found here: https://explore-education-statistics.service.gov.uk/find-statistics/graduate-outcomes-leo/2018-19.
Regular assessments of the student finance system, including forecasts of future loan outlay, repayments and the size of the loan book, are made and published annually. The most recent publication can be found here: https://www.gov.uk/government/statistics/student-loan-forecasts-england-2020-to-2021. This publication notes that the Resource Accounting and Budget (RAB) charge the proportion of loan outlay that is expected to not be repaid when future repayments are valued in present terms, was estimated to be 53% for loans issued to full-time undergraduates in the 2020-21 financial year. The interest rate adds to the total amount of repayments received, and for the 2020-21 loans, the department estimates that repayments due to interest reduces the RAB charge by 4 percentage points.
Potential reforms to student loan terms, with the goal of decreasing the public subsidy on student loans while preserving the income-contingent nature of the current system, were modelled as part of the work done by the independent panel which reported to the Review of Post-18 Education and Funding. We are carefully considering a range of options to ensure that student finance continues to deliver value for money for both students and the taxpayer as we continue to consider the recommendations made by the independent panel. The interim conclusion was published on 21 January 2021, and we plan to set out a conclusion to the review in due course.
Asked by: Matt Western (Labour - Warwick and Leamington)
Question to the Department for Education:
To ask the Secretary of State for Education, what recent assessment he has made of the sustainability of the student loan system and its effect on the public finances under the current repayment thresholds.
Answered by Michelle Donelan
The student loan system in England removes financial barriers for those hoping to study higher education while sharing its costs between learners and the general taxpayer. The loans offer unique protections to borrowers. During and after study, interest rates are capped so that they do not exceed the prevailing market rate for comparable personal loans. After finishing study, monthly repayments are only required when a borrower is earning over the repayment threshold, currently £27,295 per year, or its weekly or monthly equivalent for Plan 2 (post-2012) loans and do not change based on rates or the amount borrowed. Any outstanding debt is written off after the loan term ends at no detriment to the borrower.
As student loan repayments are income contingent, the impact of the repayment threshold and repayment conditions on students with particular protected characteristics depends on the earnings of those borrowers in each year over the loan term. The department publishes annual data on graduate employment and earnings by years after graduation, including by ethnicity, through the Graduate Outcomes publication which can be found here: https://explore-education-statistics.service.gov.uk/find-statistics/graduate-outcomes-leo/2018-19.
Regular assessments of the student finance system, including forecasts of future loan outlay, repayments and the size of the loan book, are made and published annually. The most recent publication can be found here: https://www.gov.uk/government/statistics/student-loan-forecasts-england-2020-to-2021. This publication notes that the Resource Accounting and Budget (RAB) charge the proportion of loan outlay that is expected to not be repaid when future repayments are valued in present terms, was estimated to be 53% for loans issued to full-time undergraduates in the 2020-21 financial year. The interest rate adds to the total amount of repayments received, and for the 2020-21 loans, the department estimates that repayments due to interest reduces the RAB charge by 4 percentage points.
Potential reforms to student loan terms, with the goal of decreasing the public subsidy on student loans while preserving the income-contingent nature of the current system, were modelled as part of the work done by the independent panel which reported to the Review of Post-18 Education and Funding. We are carefully considering a range of options to ensure that student finance continues to deliver value for money for both students and the taxpayer as we continue to consider the recommendations made by the independent panel. The interim conclusion was published on 21 January 2021, and we plan to set out a conclusion to the review in due course.
Asked by: Matt Western (Labour - Warwick and Leamington)
Question to the Department for Education:
To ask the Secretary of State for Education, what recent assessment he has made through financial modelling of the effect of different interest rates on (a) the size of future debt, (b) students’ ability to repay and (c) the size of the total loan debt arising from student loans.
Answered by Michelle Donelan
The student loan system in England removes financial barriers for those hoping to study higher education while sharing its costs between learners and the general taxpayer. The loans offer unique protections to borrowers. During and after study, interest rates are capped so that they do not exceed the prevailing market rate for comparable personal loans. After finishing study, monthly repayments are only required when a borrower is earning over the repayment threshold, currently £27,295 per year, or its weekly or monthly equivalent for Plan 2 (post-2012) loans and do not change based on rates or the amount borrowed. Any outstanding debt is written off after the loan term ends at no detriment to the borrower.
As student loan repayments are income contingent, the impact of the repayment threshold and repayment conditions on students with particular protected characteristics depends on the earnings of those borrowers in each year over the loan term. The department publishes annual data on graduate employment and earnings by years after graduation, including by ethnicity, through the Graduate Outcomes publication which can be found here: https://explore-education-statistics.service.gov.uk/find-statistics/graduate-outcomes-leo/2018-19.
Regular assessments of the student finance system, including forecasts of future loan outlay, repayments and the size of the loan book, are made and published annually. The most recent publication can be found here: https://www.gov.uk/government/statistics/student-loan-forecasts-england-2020-to-2021. This publication notes that the Resource Accounting and Budget (RAB) charge the proportion of loan outlay that is expected to not be repaid when future repayments are valued in present terms, was estimated to be 53% for loans issued to full-time undergraduates in the 2020-21 financial year. The interest rate adds to the total amount of repayments received, and for the 2020-21 loans, the department estimates that repayments due to interest reduces the RAB charge by 4 percentage points.
Potential reforms to student loan terms, with the goal of decreasing the public subsidy on student loans while preserving the income-contingent nature of the current system, were modelled as part of the work done by the independent panel which reported to the Review of Post-18 Education and Funding. We are carefully considering a range of options to ensure that student finance continues to deliver value for money for both students and the taxpayer as we continue to consider the recommendations made by the independent panel. The interim conclusion was published on 21 January 2021, and we plan to set out a conclusion to the review in due course.
Asked by: Rachael Maskell (Labour (Co-op) - York Central)
Question to the Department for Education:
To ask the Secretary of State for Education, what steps he plans to take to incorporate the (a) development of the Government's draft sustainability strategy and (b) implications for universities of that strategy in potential reforms to higher education that may result from Sir Philip Augar’s review of post-18 education and funding.
Answered by Michelle Donelan
I would like to recognise the excellent work already happening across the higher education sector to reach net zero. Ahead of COP26 in November, 125 universities had signed up to the Race to Zero.
The costs to reach net zero will vary across institutions. The government has committed to work with the sector to explore the mandatory reporting for carbon emissions by universities, which will help to gather a fuller picture of the challenge ahead.
Universities are eligible to receive funding through the Department for Business, Energy and Industrial Strategy’s Public Sector Decarbonisation Scheme. Some universities have already received millions of pounds through this scheme.
Asked by: Tanmanjeet Singh Dhesi (Labour - Slough)
Question to the Department for Education:
To ask the Secretary of State for Education, what assessment his Department has made of the effects of increasing student loan contributions for graduates on the accessibility of higher education for people from lower-income backgrounds.
Answered by Michelle Donelan
The student loan system in England removes financial barriers for those hoping to study higher education courses, while sharing its costs between learners and the general taxpayer.
In 2020, record rates of English 18-year-old state school students who were in receipt of free school meals at age 15 were accepted on full time university courses (up 1.4 percentage points to 20.3%). These students were 74% more likely to go to university in 2020 than in 2009.
After finishing study, monthly student loan repayments are linked to income, not to interest rates or the amount borrowed. This protects lower earners, and any outstanding debt is written off after 30 years at no detriment to individual borrowers.
As part of the Review of Post-18 Education and Funding we are carefully considering a range of options to ensure that student finance continues to deliver value for money for both students and the taxpayer. The interim conclusion of the review was published on 21 January 2021, and we will conclude the review in full in due course.
Asked by: Damien Moore (Conservative - Southport)
Question to the Department for Education:
To ask the Secretary of State for Education, when his Department plans to publish the full response to Sir Philip Augar's review of Post-18 Education and Funding.
Answered by Michelle Donelan
Further to the interim conclusion to the Review of Post-18 Education and Funding published in January 2021, we continue to carefully consider the recommendations made by the independent panel that reported to the Review. We plan to provide a full response in due course.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the Department for Education:
To ask the Secretary of State for Education, what criteria his Department is using to determine whether proposals for a Sharia-compliant alternative student finance system will be included in the conclusion of the Review of Post-18 Education and Funding; if he will publish the (a) timetable for considering the recommendations made by the independent panel that reported to that review and (b) estimated date of conclusion of that review; and if he will make a statement.
Answered by Michelle Donelan
The government has been carefully considering an alternative student finance product, alongside wider reforms to the higher education system, and an update will be provided alongside the conclusion to the Review of Post-18 Education and Funding. The interim conclusion of the review was published on 21 January 2021, and we will conclude the review in full at a future date.
Asked by: Jim Shannon (Democratic Unionist Party - Strangford)
Question to the Department for Education:
To ask the Secretary of State for Education, if he will make an assessment of the financial effect of lowering the student loan repayment threshold on graduates (a) low, (b) middle and (c) high income households.
Answered by Michelle Donelan
The student loan system in England removes financial barriers for those hoping to study higher education courses while sharing its costs between learners and the general taxpayer, which is fair. After finishing study, monthly student loan repayments are linked to income, not to interest rates or the amount borrowed. Repayments are made only on earnings above the repayment threshold, and borrowers are protected; if their income drops, so do their repayments. Any outstanding debt is written off after the loan term ends at no detriment to the borrower.
As part of the Review of Post-18 Education and Funding we are carefully considering a range of options to ensure that student finance continues to deliver value for money for both students and the taxpayer. The interim conclusion of the Review of Post-18 Education and Funding was published on 21 January 2021, and we will conclude the Review in full in due course. Full information about this review and the interim conclusion can be found at https://www.gov.uk/government/publications/post-18-education-and-funding-review-interim-conclusion.
Asked by: Sarah Olney (Liberal Democrat - Richmond Park)
Question to the Department for Education:
To ask the Secretary of State for Education, what assessment he has made of the potential effect of interest rate changes on student loans on graduate income.
Answered by Michelle Donelan
The student loan system in England removes financial barriers for those hoping to study higher education, while sharing its costs between learners and the general taxpayer, which is fair. After finishing study, monthly student loan repayments are linked to income, not to interest rates or the amount borrowed. Repayments are made only on earnings above the repayment threshold, and borrowers are protected. If their income drops, so do their repayments. Any outstanding debt is written off after the loan term ends at no detriment to the borrower.
As part of the review of post-18 education and funding, we are carefully considering a range of options to ensure that student finance continues to deliver value for money for both students and the taxpayer. The interim conclusion of the review of post-18 education and funding was published on 21 January 2021, and we will conclude the review in full in due course.
Asked by: Rachael Maskell (Labour (Co-op) - York Central)
Question to the Department for Education:
To ask the Secretary of State for Education, what assessment he has made of the potential merits of a reduction in student tuition fees.
Answered by Michelle Donelan
The department remains committed to a sustainable funding model for the higher education system which supports high value provision, meets the skills needs of the country and maintains the world-class reputation of UK higher education.
We continue to consider carefully the recommendations made by the independent panel that reported to the Review of Post-18 Education and Funding. This includes their proposals relating to changes to tuition fee caps and the level of Strategic Priorities Grant funding that is paid directly to providers by the Office for Students. The department plans to set out a full conclusion to the Review in due course.
The government has announced that maximum tuition fee caps for academic year 2022/23 will be frozen at their current levels to deliver better value for students and to keep the cost of higher education under control.