Tuesday, 11 November 2014

Loans for postgrad study is not the answer

Six Russell Group universities reject government loans for postgrad study

Think tank’s proposal for £10,000 state loan wouldn’t help students from less well-off backgrounds, UK universities argue

Dominic Smith

Guardian Professional
Monday 10 November 2014 

‘Undergraduate alumni have said that while they’d like to do a postgraduate course they don’t want to add to their debt burden.’

A consortium representing six of the country’s top universities has urged the government not to adopt a state-backed loan system as a solution to the social mobility crisis in postgraduate education.

A recent report from the Institute for Public Policy Research (IPPR) outlined a “workable and affordable” model where postgraduate students could borrow £10,000 to cover the cost of tuition. This would be paid back at 9% of earnings between £15,000-£21,000.

Chancellor George Osborne has said there will be an announcement on postgraduate funding in next month’s autumn statement. IPPR’s model – which is based on a 2011 proposal by Tim Leunig, who now works as an advisor to the Department for Education – is likely to be considered by the Treasury.

The numbers of those enrolled in UK taught master’s programmes has steadily declined from a peak of 160,000 in 2009-10 to the current level of 140,000 students a year.

Two thirds of those who say they are unlikely to take up postgraduate study cite expensive course fees as the reason, and admit more financial support may help change their mind.

But the chair of a consortium of six Russell Group universities, which was given £3m as part of a Higher Education Funding Council for England project to widen access to postgraduate education, has said a state loan system won’t help those from less well-off backgrounds.

Tony Strike, director of strategy, planning and change at the University of Sheffield said: “The majority of postgraduate students are in the fortunate position that they can and do pay, so the first problem with a state loan scheme is that it’s not very efficient – it would simply displace with taxpayers money the private investment that most postgraduate students are putting in.

“The second issue is that a third of our undergraduate alumni have said that while they’d like to do a postgraduate course they don’t want to add to their debt burden.”

The consortium consists of the universities of Sheffield, Leeds, Manchester, Newcastle, Warwick and York.

Strike said that the consortium’s research shows that students from less well-off backgrounds are more likely than average to say they wish to go onto postgraduate study, but are discouraged by debt.

Still, the loan system has won support from many university chiefs. Sir Steve Smith, vice-chancellor at the University of Exeter and member of IPPR’s commission on the future of higher education, said: “This proposal has the very real potential to help break down the financial barriers that a significant number of students face when pursuing postgraduate studies.

“It is imperative that all students, no matter what their background or circumstances, should have a clear and affordable route to postgraduate education. This recommendation would be affordable to government and, equally importantly, to the students themselves.”

The consortium, which consists of Russell Group universities – led by the University of Sheffield – says scholarships, which are joint-funded by government, institutions and employers, would be a better option. The group also offered the country’s largest-ever scholarship package to 430 students earlier this year.

“If the state was to offer universities funds that institutions would be expected to match to create targeted scholarships, that would have a much more beneficial effect on the widening participation group than offering them a further credit facility,” said Strike.

But Rick Muir, author of the IPPR report, said a mass scholarship programme would be unaffordable. His report claims the postgraduate loan non-repayment rate would be only 7%, much lower than the 40-45% of undergraduate loans which go unpaid.
He said: “I’m in favour of scholarships but there’s a limit to how many we could afford.

“We’re saying give anyone doing a master’s course a £10,000 loan – and the initial outlay is about £1bn. But the government can afford that because it can get 93% of the money back.”

He added: “If you say we’ll have £1bn that won’t be paid back, then that’s £1bn George Osborne will have to find from somewhere else. That is just not going to happen because there’s no money to do that.”

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