The Summer Budget 2015 announced that grants would be replace with increased maintenance loans from 2016/17. This change could have an impact on efforts to widen participation in higher education and on long-term public finances.
Download the full report
Student support funding has evolved over the decades. Student maintenance grants were first introduced in 1962- these grants provided students with funding to cover fees and living costs. Overtime the system has changed. In 1990 student loans for maintenance were introduced and the value of grants was gradually reduced. In 1998 students became liable for the payment of upfront tuition fees. Student grants were abolished under the Labour government in 1999, but were subsequently re-introduced by that government in 2006 when a new system of higher variable tuition fees was brought in. For more detail on changes in maintenance support see the briefing paper The value of student maintenance support
The most significant development in student finance in recent years has been the raising of tuition fees to £9,000 per year by the Coalition government in 2010. The new system of fees and the increase in student loan funding has brought into focus the whole issue of the sustainability of higher education funding.
In the Summer Budget 2015 the government announced its intention to abolish grants and replace them with increased maintenance loans. This change could have an impact on student perceptions of the value of higher education, efforts to widen participation in higher education and on long-term public finances.
The proposed changes to maintenance grants and loans are contained in the Education (Student Support) (Amendment) Regulations 2015. The accompanying explanatory memorandum sets out the changes that would be made under the regulations. The memorandum explains that for students on incomes of £25,000 or less, the loan for living costs in 2016-17 will be 10.3% higher than the combined maximum maintenance grant and loan in 2015-16:
New full-time students starting to attend their courses in the 2016/17 academic year ‘2016 cohort students’, will not qualify for a means-tested maintenance grant. They will instead qualify for an increased loan for living costs, which for most 2016 cohort students on household incomes of £25,000 or less will be 10.3% higher than the maximum maintenance grant and loan for living costs package available for low income students in the 2015/16 academic year. (page 3)
For students with incomes above £25,000 the loan for living costs in 2016 will be means-tested down to a minimum non-means tested loan. The minimum loan for new students in 2016-17 will be increased by forecast inflation (2.41%) when compared with the minimum loan for living costs in the 2015-16 academic year.
Other changes made to the student support package by the amendment regulations include:
- Replacing special support grant with loans. In 2015-16, students on household incomes of £42,620 or less and eligible for certain benefits were entitled to a special support grant and an increased living costs loan. The amendment regulations replace the special support grant with loans. The explanatory memorandum states that the loan for new students in 2016-17 who have household incomes of £25,000 or less will be 2.41% higher (forecast inflation) than the combined maximum special support grant and loan package for eligible students in 2015-16. For incomes above £25,000, the loan for living costs for new students in 2016-17 will be means-tested down to a minimum non-means tested loan, which will be increased by forecast inflation (2.41%) when compared to 2015-16.
- Replacing special support grant for students over 60 with loans. In 2015-16 students aged over 60 on household incomes of £42,620 or less qualified for special support grant. They did not qualify for loans towards living costs. The amendment regulations replaces the special support grant for new students in 2016-17 with loans.
- Increasing the maximum loan for living costs for continuing students by forecast inflation (2.41%). The maximum loans for long-courses and for students undertaking a sandwich year will also be increased by forecast inflation. The maximum maintenance grant and special support grant will be maintained at the same level as 2015-16 for continuing students in 2016-17.
An outline of these changes is also provided on pages 17-23 of the following publication from the Department for Business, Innovation and Skills: Higher Education: Student Finance Equality Analysis – The Education (Student Support) (Amendment) Regulations 2015. This document also provides an equality analysis of the changes.
The amendment regulations are subject to the negative resolution procedure. They were considered on Thursday 14 January 2016 by the Third Delegated Legislation Committee. The Committee divided on the question of whether the regulations had been considered; the vote was affirmative by ten votes to eight.
The Opposition subsequently tabled a prayer to annul the regulations:
“That an humble Address be presented to Her Majesty, praying that the Education (Student Support) (Amendment) Regulations 2015 (S.I., 2015, No. 1951), dated 29 November 2015, a copy of which was laid before this House on 2 December 2015, be annulled.” (EDM 829, 2015-16)
An Opposition Day debate was held on student maintenance grants and on the regulations on 19 January 2016. The vote to abandon the policy to remove maintenance grants was lost by 292 votes to 306. A vote to annul the regulations was also lost by 292 votes to 306.