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Changes to student payments

22/12/2005

The timings and amount of student loan and bursary payments are to be altered to better meet the needs of Scottish students.

From the academic year 2007-08 onwards, Scottish Higher Education students studying in Scotland will be paid on a monthly basis.

At present, loans and the Young Students' Bursary are paid out in three instalments at the start of each term.

Lifelong Learning Minister Nicol Stephen said:

"We recognise that money management is a big issue for many students. I want to ensure that the distribution of payments for living costs support meets the needs of Scottish students studying here.

"Whilst Further Education students are paid on a monthly basis, HE students can run into budgeting difficulties when paid only three times a year with the payments being linked to the first day of the term.

"This arrangement began at a time when the academic year was generally divided into three equal terms. However, as more institutions move away from this pattern, we thought it appropriate to consult on whether the current payment model for loans and bursaries is the right one to best support students.

"As a result, we have decided that a system of monthly payments - with some front-loading of support - will benefit the majority of students by helping them to better manage the funds available to them.

"This will take effect from academic year 2007-08 provided that I am satisfied that all the necessary IT requirements are in place and have been fully tested."

In addition to changes to the frequency of student payments, Mr Stephen also announced that future responsibility for the student maintenance loan component of support will transfer from the Student Loans Company to the Students Awards Agency for Scotland (SAAS). This will also take effect from the academic year 2007-08.

He said:

"Currently Scottish students apply to SAAS for their support in a single operation but receive their payments in two ways - loan payments from the SLC and payment for all other types of support from SAAS.

"By transferring loan payments to SAAS, we will create a 'one-stop shop' for students applying for support, further improving the level of service they receive."

The move towards a monthly system of student support was welcomed by NUS Scotland President Melanie Ward who said:

"NUS Scotland has been calling for a move to more flexible student loans payments for a number of years now, so we welcome the forthcoming introduction of monthly payments.

"The new system will be much more suitable for most students and will assist with planning and budgeting."

Keith Houghton, Chairman of the National Association of Student Money Advisors (NASMA) UK, said:

"NASMA fully supports what the Executive has agreed to do. The new system will be flexible enough to allow a larger payment to help students meet initial costs and provides the opportunity to budget more realistically."

The current position until academic year 2004-05 is that student loans were paid in three equal instalments over the academic year (33 per cent, 33 per cent and 34 per cent) at the start of each term/semester. The Student Awards Agency for Scotland (SAAS) pays the Young Students' Bursary in three instalments, but in amounts which are equivalent to the number of days in each term/semester.

The Interim solution for 2005-06 will be extended to 2006-07: with the percentages of payments for student loans in amounts of 36 per cent, 33 per cent and 31 per cent. This better reflects average term lengths.

The new arrangements surrounding payment of the student maintenance loan component of support will apply to Scottish-domiciled students studying in Scotland only.

For Scottish students studying outside Scotland, but within the UK, payments of loan support will continue to be made in equal termly payments for Academic Year 2006-07. For Academic Year 2007-08 they will still be paid termly but in amounts which are proportionate to the number of weeks in the term/semester/study block and not the current equal split.

Responsibility for the payment of the student maintenance loan will transfer from the SLC to SAAS at the same time as the monthly payments start (academic year 2007-08). The SLC will retain its role of administering student loan accounts and, in conjunction with HM Revenue and Customs, of collecting student loan repayments from Scottish graduates.