Throughout this paper we will use a number of terms relating to student support and loans 3. To avoid confusion some of the key terms are explained below.
Bursaries or grants - Both describe payments made to students which do not need to be repaid. Grants or bursaries are paid by the Student Awards agency for Scotland ( SAAS) directly to the student. Currently, the main bursary support available is the Young Student's Bursary of up to £2,510 which is available to dependent students with household income of less than £32,515. Other bursaries and grants are available for those in particular circumstances for example lone parents or those with dependents.
Student Loans - Loans are repayable support provided by Government through the Student Loans Company ( SLC). Loan entitlement is calculated by SAAS and paid by the SLC. A student's loan is broken down into three main elements:
- Income-assessed loan. This is the main loan entitlement up to £3,485 offered to students depending on an assessment of their household income. It is available to those with household income up to a level of £53,000 (at home) or £60,000 (away from home).
- Minimum or non income-assessed loan. This is available for those with household income over the maximum level. It is a loan of £590 (at home) or £890 (away from home) and is available to all eligible students, regardless of household income.
- Additional loan. Available to those from low income backgrounds, this is a loan of up to £590. The full amount is available for those with household income of less than £17,400 and it then reduces incrementally until household income reaches £20,695.
There are two different types of loan available to students:
- Mortgage style loans were available for new students until 1997-98. Once an individual's salary reaches a certain point (set at 85% of the national average wage - £25,936 in 2008/09) they begin to repay their loan in equal instalments over a period of either 5 or 7 years depending on the number of loans held. This was seen to place a significant repayment burden on borrowers entering repayment and it relied on borrowers manually deferring each year if they were not earning enough to repay. Generally this was expensive to administer and left scope for default on repayments.
- Income contingent loans replaced the mortgage style loans in 1998-99. These are collected through the income tax system by HM Revenue and Customs. Repayments to income contingent loans start at a lower threshold (£15,000) but also at a lower level (9% of every £1 paid over the £15,000), meaning that repayments begin earlier, but are less onerous.
Dependent students are generally those 24 or under who are still considered to be dependent on their parent or guardian. Those who are 25 and over are considered to be independent. In certain cases those 24 and under can be considered independent. For example if they have lived away from the parental home, been employed or unemployed for 3 years or more before beginning their course or if they are married, have a partner or civil partner, or if they have dependents.
Household income - The majority of student support is income assessed. Recent changes to the income assessment mean that all assessments are now made on the basis of household income. For dependent students parental income is assessed and includes partners and civil partners. For independent students assessment takes account of any spouse, partner or civil partner's income.