Documents to download

On 24 February 2022, the Government concluded its review of post-18 education and funding. It announced several reforms to higher education and the student finance system in England, and launched consultations on related policy proposals, including the lifelong loan entitlement.

Background

In February 2018, the then-Prime Minister, Theresa May, announced a wide-ranging review of post-18 education and funding. The review aimed to create a joined-up post-18 education system, which would facilitate lifelong learning and improve the integration of the further and higher education systems.

The review was to be informed by independent advice from a panel led by Philip Augar.

The independent panel report (Augar report)

The Independent panel report (Augar report) was published on 30 May 2019. It contained 53 recommendations on the future structure of the sector and funding proposals. These included reducing higher education tuition fees, extending the student loan repayment period, reducing the income threshold for student loan repayment, and reintroducing maintenance grants for disadvantaged students.

Interim conclusion

On 21 January 2021, the Government published an Interim Conclusion of the Review, which contained commitments to implementing some of the independent panel report’s recommendations.

Other recommendations were included in the Skills for Jobs White Paper published on the same day, and have since made their way into the Skills and Post-16 Education Act 2022.

Conclusion of the review: Policies and proposals for consultation

The Government’s conclusion to its post-18 education and funding review comprised a statement setting out policy interventions and proposals for consultation, a consultation on the lifelong loan entitlement, and an equality analysis.

The conclusion of the review announced several changes to the student finance system for new students and existing borrowers. For new students starting study from academic year 2023/24, this included:

  • the annual salary threshold at which student loans are repaid will be lowered to £25,000 and remain at this level until 2027;
  • the repayment term of the student loan will be extended from 30 years to 40 years; and
  • the maximum interest rate on student loans will be set at inflation only, as measured by the rate of the Retail Prices Index (RPI).

For current borrowers, the salary repayment threshold will be maintained at its current level of £27,295 until 2025.

The Government also announced tuition fees will be frozen for a further two years at £9,250, and the student finance available for higher technical qualifications at levels 4 and 5 will be aligned with the support available for degrees.

Consultations on whether to introduce caps on student numbers in higher education, and whether to establish minimum eligibility requirements to access student finance, such as achieving a grade 4 (previously a C) in English and maths at GCSE or two E grades at A level, were also announced.

The Government also launched a consultation on the ambition and scope of the lifelong loan entitlement, which, from 2025, will provide four years of funding for post-18 education for use over a person’s lifetime.

Impact on new students

Responses

Labour has said the Government is “slamming the door on opportunity” and the reforms to student finance will hit those on low incomes hardest.

The higher education sector welcomed the announcement of increased investment in capital funding and teaching grants, but the freeze on tuition fees, changes to the student finance system, and possible student number caps and minimum entry requirements were all criticised.

Financial impact

The Government’s equality analysis said its reforms would cut the amount the student finance system adds to the fiscal deficit by half over the next six years. The cut compared to the current system is put at around £7 billion in 2026-27.

These savings are larger than those estimated by the Institute for Fiscal Studies of £2.3 billion, per cohort of students.

The Government expects that around half of new borrowers from 2023/24 will repay their loans in full, compared to 25% of current students. The proposed reforms will result in higher repayments among middle and lower earning graduates, but lower repayments for those who earn the highest.

The Government estimates that for new borrowers from 2023/24, the proposed changes will increase the real value of lifetime repayments by 30% or £5,800. The increase is expected to be larger among female borrowers at 37% compared to 23% among male borrowers.

Source: Higher education policy statement & reform consultation Equality Analysis (February 2022), DfE

Further reading

The following Library publications provide information on the review and the working of the student finance system:


Documents to download

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