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Graduate fee scrapped
13/06/2007
Fifty thousand current students - including those graduating this year - will be the first to reap rewards of plans to abolish graduate endowment fees.
Education and Lifelong Learning Secretary Fiona Hyslop announced today that, with Parliamentary approval, the Scottish government intends to scrap the charge with immediate effect, saving new graduates over £2,000.
She told the Scottish Parliament that removing the graduate endowment fee would benefit:
- Students about to graduate this year
- Students currently at university
- Students about to enter university
- The taxpayer as the fee was an inefficient way to raise money because most students added it to their loan. This means the public purse only receives two thirds of the income and only when the loan is repaid
Read the full text of the Minister's statement
Ms Hyslop said:
"Ending this expensive and inefficient system will benefit 50,000 students immediately, removing some of the debt burden which can stifle new graduates or even deter potential university entrants.
"This is not just good news for them, but also for their families and the country at large. I believe abolishing graduate endowment fees is also in the national interest and the best interest of the public purse - as the costs associated with student loans mean the tax payer loses around a third of all fee income collected.
"Delivering on this key manifesto pledge gives an early signal that we are serious about our commitments to reduce the burden of graduate debt.
"Income from the graduate endowment fee goes towards funding student support but I can guarantee that the amount of money distributed under the young students' bursary will not be adversely affected by our proposals.
"I passionately believe that the basic principle of Scottish education is that it should be based on ability to learn - not the ability to pay. Today's announcement is a critical step towards achieving this vision."
Graduate endowment fees were introduced for students entering university from 2001-02 and are a one-off payment on successful completion of a course of three years or more. The first students became liable to pay the fee - currently £2,289 - in 2005-06.
Students with a disability and lone parents are among those who are exempt from the graduate endowment fee. Around half of graduates are liable to pay the fee.
Students can pay the fee in cash, by adding it to their student loan or a mixture of both. Around 60-70 per cent of graduates have been adding fees to loans each year.
Income from graduate endowment fees is £15 million annually. The money is reinvested into the student support system. It is not used for general higher education institutional funding.
Scrapping the graduate endowment fees will require legislation. A consultation on the principle of abolishing endowment fees will take place over the summer. The intention would be to introduce a Bill to the Scottish Parliament in autumn with the legislation in place by April 1, 2008 when this year's graduates become liable to pay the fee.