Investing in the Future: Supporting Students in Higher Education

There are two linked documents, "Investment in the Future: Supporting Students in Higher Education" (this document) and "Scottish Higher Education for the 21st Century." (link below)

"Investment in the Future: Supporting Students in Higher Education"

Introduction
Arrangements for 1998/99: An Outline
Why Introduce New Arrangements?
How the Arrangements will Work in Detail
Questions and Answers

"Scottish Higher Education for the 21st Century"

Ministerial Foreword
Introduction
Arrangements for New Students in 1998/99
Further Details
Exemptions
Conclusion

From next year, the Government is proposing new financial arrangements to support new students in full-time higher education. This guide explains what they will mean for students and their parents.

The new arrangements will apply to new students starting courses in the 1998/99 academic year whose homes are in Scotland and who are studying in the United Kingdom.

Students who are already in higher education in the 1997/98 academic year will not be affected. They will retain the current support arrangements throughout their courses and will pay back their loans on the current basis.

This Guide has been sent to all education authorities, higher education institutions, further education colleges, careers services, student unions, and libraries in Scotland.. Further copies of this Guide and copies of the shorter, summary leaflet are available by calling 0131 244 8075, or by writing to the Student Awards Agency for Scotland, Gyleview House, 3 Redheughs Rigg, Edinburgh EH12 9HH. Copies of this Guide and the leaflet are also available here.

Section 1 of this Guide outlines the arrangements for 1998/99. Section 2 explains why new arrangements are being introduced. Section 3 describes the arrangements in more detail and Section 4 answers some of the questions which you may have.

The new arrangements have been designed to ensure that :

• no-one will be prevented from entering higher education because of their financial circumstances;- less well-off students and their parents do not have to pay anything towards tuition fees or maintenance costs;
• students have access to money to help with their living costs when they need it;
• no student, parent or spouse has to face higher up-front costs than under the present system;
• repayments after graduation will be fairer and easier to manage than at present;
• extra support through Access Funds and hardship loans will be provided to students in particular need.

Tuition Fees

From 1998/99 all new entrants to full-time higher education will be assessed for a contribution of up to £1,000 a year as a share of tuition fees. The amount will depend on family circumstances.

Approximately 40% of students will be expected to pay nothing towards their tuition. Students whose parents' income after allowable deductions is less than £26,000 a year will pay less than the full £1000. An independent student's contribution will be assessed against his or her own or spouse's income.

The Government is not proposing that universities or colleges should charge students additional ‘top-up’ fees. No university or college is expected to do so.

‘Gap year’ students who, by 1 August 1997, had received a firm offer of a place deferred until 1998/99 or a provisional offer subsequently confirmed will receive support under the present arrangements if they take up that place in 1998/99.

Living Costs

In 1998/99 new students will be eligible for both a means-tested maintenance grant and a loan with an interest rate linked to inflation. The rates of maintenance grant and loan for 1998/99 will be announced later this year. The maximum grant available will be about half that available in 1997/98 but students will be able to compensate for this reduction by taking out larger loans.

From 1999/2000, maintenance grants will be replaced entirely by means-tested loans. However, students will receive broadly the same amount towards living costs through the loan as under the present mix of grant and loan. Some students may need more help and for these an additional loan of £250 a year will be available. The Access Funds will also continue to offer extra support and will be increased.

Graduates will have a fairer system of paying loans back which will depend on their income as graduates. For many, monthly repayments will be smaller than under the current system and graduates will have longer to repay if they need it.

In July 1997, the independent Dearing Committee reported that we need to change the system of funding higher education in order to avoid continued cuts in standards and funding; and to allow more students to go into higher education.

The Committee proposed that full-time students in higher education should pay some of the cost of their tuition.

The Government agreed with the Committee that the costs of higher education should be shared more fairly between those that benefit.

Research has shown the financial benefits of higher education. On average, a graduate earns 20% more than someone without a degree within about 10 years of graduation. Over a working lifetime, that makes a big difference to their income.

The new arrangements will mean more money is available for universities and colleges to improve the quality of the higher education they provide.

Tuition Fees

• Many students who begin their full-time undergraduate courses at publicly-funded higher education institutions in or after 1998/99, or their parents or spouse, will make a means-tested contribution to the costs of tuition.
  
• The level of contribution will relate to the income of the student or his or her parents or spouse, depending on the student’s age and circumstances. Those on lower incomes will not have to make any contribution and will, therefore, receive free tuition. The maximum contribution, for those with higher incomes, will be £1,000 a year.
  
• There will be no loan facility available to pay for the contribution to tuition costs. However, increased loans for maintenance will be available. No student, parent or spouse will have to make a higher contribution than under the current arrangements.
  
• So as to ensure equity of treatment for Scottish students with students on shorter courses in England and Wales, the Government have decided that Scottish students should not pay the £1,000 tuition fee for the final year of a degree course where it is a year longer than the comparable course in England and Wales.

Living costs

• The Government will continue to provide support towards living costs for those students who need it. This financial support will be means-tested against the student's, the student's parents' or spouse’s income as appropriate. and a contribution will be expected where means permit. The assessed contribution towards fees and living costs will be the same, after allowing for inflation, as the expected contribution towards living costs at present. This will ensure that students who cannot fully support themselves, or whose parents or spouse cannot fully support them, have money to live on.
  
• Once students have graduated and are earning at least £10,000 a year they will begin to pay back the financial support they received as a student. The table below illustrates weekly repayments at different income levels.
  

• There will be new, improved arrangements for graduates to make their repayments The Government is looking at whether repayments might be collected through the Inland Revenue. Many graduates will pay less each month than under the present arrangements and the repayment period will be longer for those who need it.
  
• Under the existing system, loan repayments are made in fixed instalments over five or seven years once the graduate’s income reaches a certain level. Under the new arrangements graduates earning less than £10,000 a year will repay nothing. Above that level the size of the repayments and, therefore, the length of the repayment period, will depend directly on the graduate's income.
  
• Some graduates may, therefore, end up repaying only a proportion of their student living costs and some may end up paying nothing. The highest earners - those who have benefited most - will repay the full cost of support towards living costs provided to them as students.

• In 1998/99, transitional arrangements for funding living costs will apply for new students for that year only. Support towards living costs for new students will be provided on the same basis as now, except that the loan will comprise about 75 per cent of the maintenance grant and loan package, rather than 50 per cent as it does now.
  
• The grant will be means-tested against family income and, therefore, some students will receive no grant. However, all students will be entitled to the full loan.
  
• Further details of how the contributions will be assessed is provided in the answers to questions about contributions in section 4 of this Guide
  
• Students who enter higher education in 1998/99 will be subject to he new 1999/2000 arrangements from 1999/2000.

• From 1999/2000 the Government will continue to provide support for living costs, but there will be no entitlement to maintenance grant. The support available from the Government will be means-tested against family income and the funds to which students are entitled after the means-test will be fully repayable after graduation. This means that students from lower income families will receive at least the same amount of Government support towards living costs as they do now.
  
• From 1999/2000 onwards these arrangements will apply both to new students and to students who started their courses in 1998/99, with the exception of certain ‘gap year’ students (see below).

‘Gap year’ students

• Students who fall within the ‘gap year’ scheme, announced on 13 August, will, throughout their course, receive financial support under the current arrangements. They will not have to contribute to tuition fees. To qualify for the scheme, such students had to have, by 1 August 1997, a firm offer of a place deferred until 1998/99, or a provisional offer subsequently confirmed.
  
• Students who are offered places for 1998/99 and who choose to defer until 1999/2000 will receive support on the same basis as all other students starting in 1999/2000.

Implications for parents and spouses

• The contribution from parents or spouses to fees and living costs in the future will be no greater than under the present arrangements. For example, a parent who, under the current system would contribute £1,500 per annum towards living costs, will, under the new arrangements, contribute £1,000 to fees and £500 to living costs. Where a contribution to tuition fees is not required, the parental or spouse contribution will be set wholly against living costs.

Extra provision

• The Government will make special provision for students in particular circumstances or who suffer particular hardship. Students will, as before, be able to apply to their university or college for extra assistance from the increased Access Funds. The Government will also introduce a supplementary hardship loan of £250 per annum, available to students in particular difficulty and repayable by graduates on an income contingent basis.
  
• The Government is also considering what other special provisions should be made for students in certain circumstances in order to make the arrangements as fair as possible for all.

Administrative Arrangements		Eligibility for financial support
Students on certain courses		Students from European Union (EU) countries
Grant and Loan Rates		Special provisions
Contribution to fees and living costs		Repayment

Who should prospective students apply to for support if they want to begin study in 1998/99 or 1999/2000?

In 1998/99, arrangements for applying for and receiving grant and loan will be, as now, through the Student Awards Agency for Scotland and the Student Loans Company. Detailed guidance on applying for financial support for 1998/99 will be published nearer the time.

The administrative arrangements for 1999/2000 have still to be finalised, but, again, students will be given information nearer the time.

If students are expected to make a contribution to fees, when must they pay it?

Students will make their payments direct to the university or college. It will, therefore, be for the university or college to decide exactly when to request payment of the assessed contribution to fees.

If students started their course under the current arrangements, how will the new 1998/99 and 1999/2000 arrangements affect them?

They will not affect them at all. The student support arrangements (including the repayment arrangements) which were in place when students started their course will apply throughout the course and after they have graduated. Grant and loan rates for these students will be reviewed each year alongside those for new students.

If students start their course in 1998/99, how will the changes in 1999/2000 affect them?

The 1998/99 arrangements are transitional and will apply to new students (except for certain ‘gap year’ students - see Section 3 above) for their first year only. Those students will then go on to the 1999/2000 arrangements.

Which arrangement will apply to a student who wants to apply for a place in 1998/99 and defer entry until 1999/2000.

The 1999/2000 arrangements will apply, as that is the year he or she will started the course. Special arrangements were made for certain ‘gap year’ students (see Section 3 above) who wished to defer entry from 1997/98 to 1998/99 because they had made definite plans before the Government's proposals were announced.

Will the criteria for eligibility for support from the Government change under the new arrangements?

There will not be any significant changes in the eligibility criteria for the 1998/99 transitional year. The position for 1999/2000 will be reviewed in due course.

Will students be eligible for support under the new arrangements if they have already received support for a previous course under the current arrangements?

The current rules concerning previous study will apply to new 1998/99 students. If a student starts a course in 1998/99 they may not get a student award (which comprises payment of tuition fees and a means-tested grant) if they have already been on a course for which they had help from public funds. However, they will be eligible for a loan towards maintenance.

What support arrangements will apply in future years for a student who is on a foundation year in 1997/98?

The Government has taken careful account of students in this position. Where the foundation year is an integral part of the degree course, the student will be treated as an existing student and the arrangements for 1997/98 will apply to the student throughout the degree course.

Students on arts foundation courses which are an integral part of a degree course and who go on to a degree course in 1998/99 will also be treated as existing students and will be entitled to support under the existing arrangements.

Where the foundation year or arts foundation course is not an integral part of the HND or degree course as appropriate, students will, when they go on to the HND or degree course in 1998/99, be entitled to support under the 1998/99 arrangements.

If a student completes a one-year access course in 1997/98 or 1998/99, what arrangements will apply if they immediately move on to a degree course?

Access courses are further education courses and students on access courses are not currently eligible for a student award. Consequently, a student who begins a degree level or equivalent course in 1998/99 or 1999/2000, after completing an access course, will be treated as a new entrant to higher education and will be subject to the arrangements which apply to new students in that year.

Where a student completes a full-time Higher National Certificate (HNC) or a HND course in 1997/98 or 1998/99, what arrangements will apply if they immediately go on to full-time study at HND or degree level?

Existing full-time HNC or HND students who proceed directly to full-time study at HND or first degree level in session 1998/99 or later will retain entitlement to the existing student support arrangements until they complete their present continuous programme of full-time study.

If a student completes a degree course in 1997/98 or 1998/99, what arrangements will apply to them if they immediately go on to do a Postgraduate Certificate of Education (PGCE) in order to train as a teacher?

The £1,000 tuition fee contribution will not apply to students on PGCE courses. They will continue to receive free tuition.

If a student is already on a course, but transfers to a different course in 1998/99 or later, will they continue to get support under the current arrangements?

Yes, provided their award is transferable to the new course.

If a student is already on a course, but takes time out (say a year) from that course in 1998/99 or later, will the current arrangements apply to them when they resume the course?

Yes.

Will part-time students be entitled to support under the new arrangements?

The arrangements described here will not cover part-time students but the position of part-time students is being examined.

Will postgraduates be entitled to support?

No changes are planned to current support arrangements for postgraduates in 1998/99, other than for PGCE students, but the position will be reviewed for 1999/2000.

How will the new arrangements affect students studying at private institutions?

For 1998/99, tuition fee support for students at private higher education institutions will be on the same terms as now. The Government will review the position for 1999/2000 and beyond, in due course.

How will the new arrangements affect students on courses leading to first degrees in nursing, midwifery and professions allied to medicine?

The existing non means-tested bursaries for nursing and midwifery diploma students will be unaffected. For students wishing to undertake degree level courses in nursing, midwifery or the professions allied to medicine, assistance will be available in the form of means-tested Health Department maintenance bursaries, student loans and free tuition. The number of such places will be limited, however, and students who do not succeed in gaining a supported place will receive assistance on the same basis as other students who commence their courses in 1998/99 or later.

How will the new arrangements affect students on medical and dental courses?

For the first 4 years of the course, support for students on these courses in Scotland will be on the same basis as for other students. In year 5 and beyond, students will not have to pay tuition costs and non-repayable Health Department bursaries, assessed against family income, will be available to help meet living costs.

How will the new arrangements affect students on courses of initial teacher education?

The Government has a key interest in the effective training of teachers and in maintaining a healthy supply of teachers. The £1,000 tuition fee contribution will not, therefore, apply to students on PGCE courses or to the final year of the undergraduate initial teacher education courses, in the same way as other Scottish degrees.

How will the new arrangements affect students on sandwich courses?

The maximum tuition fee contribution, subject to means-testing, will be £500 in a year when a student spends the entire year of a course on a sandwich placement (at home or abroad) or in full-time study abroad. This contribution is towards the cost incurred by the institution of administration and pastoral arrangements relating to the placement. Where sandwich or other elements form less than a full year away, the £1,000 fee will be payable, subject to the means-test. In 1998/99, the arrangements for support towards living costs will be unchanged. Loans will be available for placement years but grants will not be available except for specified unpaid placements.

From 1999/2000, students (including those entering in 1998/99 but not before) who are away for a full year on paid placements or taking up paid employment as foreign language assistants will not be eligible for maintenance loans, but they will be eligible to apply for the £250 supplementary hardship loan. All other sandwich course students will be eligible for loans.

How will the new arrangements affect students from other countries in the EU?

The Government is committed to treating students from other EU countries on the same basis as students from the UK as far as tuition fees are concerned. This means that they will make a means-tested contribution to fees assessed against family income. The Government is working out the practical details.

Will the total value of the grant and loan package be increased?

The cash levels of grant and loan for 1998/99 will be announced later in the year, as has been normal practice in previous years. Students in particular financial difficulty will be able to apply for help from the Access Funds administered by the universities and colleges and for the annual £250 supplementary hardship loan.

What special provision will there be for students who currently claim supplementary allowances (Disabled Students’ Allowance, extra weeks’ attendance allowance, Dependants’ Allowance, Single Parents’ Allowance, travel costs allowance and Two Homes’ Allowance) if the grant is being abolished?

New students who enter higher education in 1998/99 will be eligible for these allowances on the same basis as now for 1998/99.

In 1999/2000 the Government will introduce new arrangements for these students and new students, so that broadly the same levels of additional support will be available to them as to their counterparts in earlier years.

From 1998/99, the Disabled Students’ Allowance will not be means-tested and will continue to be available as a grant.

Will the amount available in the Access Funds be increased?

The Access Funds will be increased in 1998/99 and both full-time and part-time students in particular financial difficulty will be eligible to apply for help from them.

Why is the amount of support to which a student is entitled dependent on parents' income?

Providing loans to cover the whole of living costs, without means-testing, would disproportionately benefit the better off. It would also be expensive. It is important that resources should be concentrated on those from less well-off backgrounds. In particular, the Government believes that students from less well-off backgrounds should not be required to contribute to fees. The Government will, therefore, be looking to those parents who can afford it to make a contribution towards their children's fees and living costs.

In what circumstances will support not depend on parental income?

In 1998/99, parents’ income will not be taken into account if the student is 25 or over or has been married for at least two years before the start of the academic year for which they are applying for support; or if they have been self-supporting for at least three years before the start of the course.

However, if the student is married and their parents are not expected to contribute, the student’s spouse may be expected to make a means-tested contribution. The Government will review this position for 1999/2000 onwards.

How will the means test work? What will it take account of?

Means-testing arrangements in 1998/1999 will be largely unchanged from now, but the Government will be reviewing them carefully and there may be changes in 1999/2000.

How many parents will be liable for the full contribution to tuition fees? How many will not have to contribute anything?

The contribution scale will be broadly comparable with the 1997/98 scale. The Government estimate that about 40 per cent of Scottish students will make no contribution to tuition fees; about a quarter from the most well-off backgrounds will make the full contribution; and the remainder will contribute, but not the full £1,000 per annum,

What if a student’s parents are divorced or separated?

In 1998/99 any contribution will be based on the income of the parent with whom the student normally lives, as now, but this will also form part of the review for 1999/2000.

What support is available to those families who will have to pay fees?

The Government is clear that lower-income families will not have to pay fees. Where families do have to make a contribution to fees, the overall contribution to fees and living costs will be no more in real terms than now.

Will the maximum annual contribution to tuition fees be the same for all students, irrespective of which course they are on?

The maximum annual contribution to fees will be the same for all new students studying at publicly-funded institutions.

Students studying at private institutions in 1998/99, on courses for which an award is currently payable, will receive limited fee support on the present basis in 1998/99 and the Government will review the position for 1999/2000 and beyond.

Will institutions be able to charge students top-up fees?

Top-up fees play no part in the Government’s proposals. No university or college should proceed on the basis of introducing such additional fees.

Will parents with more than one child in higher education have to pay more than now?

No, parents’ income will be taken into account for each child going into higher education, but the total contribution from parents will, as now, be determined according to their income, rather than the number of children they have in higher education. No parent will have to contribute more under the Government’s proposals than under the current system, however many children they have.

What if parents refuse to make their contribution?
Many parents are already expected to make a contribution. There is no reason why parents should refuse to help their children in the future as they will be expected to contribute no more than they would have to under the current system.

Will the money raised through the contribution to tuition fees be re-invested in higher education?

The tuition fee income raised will be reinvested in universities and colleges to improve quality, standards and opportunity for all in further and higher education.

How will the new repayment arrangements work?

Graduates will not begin repaying until their income reaches £10,000 per annum, but monthly repayments for graduates at the bottom of the repayment scale would be very small. For example, a graduate earning £12,000 a year would pay back about £3 a week, a graduate earning £15,000 a year would pay back about £9 a week and a graduate earning £17,000 a year would pay back about £12 a week.

Will graduates be charged interest?

Interest will be charged but it will be indexed to inflation. This means that graduates will repay no more, after inflation is taken into account, than they received in loans, however long the loan is outstanding.

This Guide has been produced in October 1997 to help prospective students as they consider applying for higher education in 1998/99. All the information is correct at the time of going to press, but readers should be aware that some of the proposals as still subject to agreement by Parliament. Any significant changes to the information in the Guide will be widely publicised. Further information on the arrangements for 1998/99 will be published in the New Year.

WWW Page prepared by Graeme Ingram (EID:Business Support Unit - 3 November 1997)