FE Week hosts House of Commons debate on FE Loans

FE Week hosts House of Commons debate on FE Loans

The Department for Business Innovation and Skills (BIS) are planning to replace funding with loans, for classroom and workplace adults (24+) learners studying Level 3 and above. Their consultation (click here to download) closes on Friday, so FE Week held a debate at the Houses of Commons to discuss the pros and cons.

The proposals for a loans system in further education (FE) were met with caution, and hostility by some. The attendees appreciated the current state of the British economy, as well as the government drive to cut spending and the overwhelming deficit. But the key question was whether introducing loans to FE from 2013/14 was the right policy.

The debate included contributions from Adrian Barley (Chair of the BIS Select Committee), Gordon Marsden (Shadow Minister for FE and Skills), representitives from the University and College Union (UCU), Daniel Khan (Chief Executive of Open College Network London Region) and Denise Brown-Sackey (Principal of Newham College).

The biggest issues surrounded how untested the proposals were and how no-one could predict the consequences of implementing such a significant loans system.

Gordon Marsden, MP for Blackpool South and Shadow Minister for Further Education, Skills and Regional Growth

Gordon Marsden said: “It hasn’t been tried yet. Whether it will be a good idea may become apparent as we go down the route.”

Adrian Barley added: “I think it’s fair to say that in effect this is an experiment and we don’t know what the consequences will be. And there will be many unintended consequences. And it’s very difficult to fully anticipate the way it will work out.”

Liz Shannon, Head of Parliamentary and External Affairs at UCU, said: “We aren’t in favour of having loans in this way. This entire consultation is going on in a bubble, and people aren’t really aware of it.”

 

Caireen Mitchell (Westminster Kingsway College), Denise Brown-Sackey (Newham College) and Liz Shannon (UCU)

Denise Brown-Sackey, Principal at Newham College of FE, said that she was concerned with how an FE loans system would affect her organisation’s ability to recruit adults.

Ms Brown-Sackey said: “I just think it’s an untested model. We need to look at some statistical analysis to see how many Level 3 learner progress onto higher education (HE), and I’d suggest that if it’s a high number of learners you start to have the notion that people are not going to take on the 4 years’ worth of debt to be educated to a degree.”

The proposals, if put into effect, would mean that learners apply for a loan to meet the upfront contribution costs of their course.

Students would receive up to £4,000, and this would be paid by government directly to the FE provider. The loan amount would vary depending on the funding rate of the course or qualification, and learners would only be required to pay the money back once they are earning £21,000 or more.

Any remaining debt would be written off after 30 years.

The whole notion of encouraging learners to take on debt for education is counter intuitive for the government policy on debt.”

The proposals echo the current loans system used in HE, a move which some argue is already controversial and unsuitable for FE.

Mr Barley said: “They’re modelling on the basis of what might be an optimistic assumption of payback of loans in HE. It could well be that if that is extended to FE and part-time courses, then if they go into lower income occupations there will be a higher rate of default of non-payment.”

Shane Chowen, former VP for FE at the NUS and FE Policy Consultant

Shane Chowen, an independent policy consultant, said that he was concerned with how many political figures were talking about FE learners as if they were in HE.

Mr Chowen said: “They use words like mobile, that people are free and that they’re empowered. The reality is that FE learners and nothing like HE learners. They’re not mobile.”

The FE loans system is a difficult proposition, but one many can sympathise with given the country’s bleak economic standing.

Mr Barley said: “It’s a clear demonstration, as with the funding of HE, that this is a finance driven set of proposals. It’s not based on a core educational, philosophical basis, or indeed an economic needs basis.”

Mr Marsden said: “Who knows what the circumstances will be in 2013/14. The present circumstances I would suggest are as adverse as they could possibly be in terms of setting a context for this introduction. So I do think there’s a real issue there.”

“The government is going on the philosophical basis of ‘nudge’ for many of the things they’re trying to do. Not having top down decision making, but putting in frame policies that nudge people in a particular direction,” Mr Marsden added.

The concept of encouraging student debt, however, is a less than perfect solution for tackling the government’s own debt problems.

It’s almost every year that we hear of some kind of horror story where ‘x’ number of people don’t get their loans on time, and that causes all sorts of problems for people paying rent.”

Ms Brown-Sackey said: “The whole notion of encouraging learners to take on debt for education is counter intuitive for the government policy on debt. This government talks constantly about how we’ve got to get the national debt down, and then trying to get learners to increase their personal debt for education and training.”

She added that the majority of the country’s current skill gaps revolved around Level 3 qualifications, and that implementing an FE loans system from this level and upwards was “counter intuitive”.

Ms Brown-Sackey said: “If you’re turning off your potential adult workforce at Level 3, and preventing them in the education and training market because of the amount of debt they’re going to take on, how are you going to get your workforce qualified to Level 3?”

There are other concerns with the government’s proposals though. The consultation states that the Student Loans Company (SLC) will be responsible for loan applications, assessment, the payment to colleges, and the repayments from learners.

Mr Chowen added that he was also concerned with the administrative capacity of the SLC to deal with such a loans system.

“It’s almost every year that we hear of some kind of horror story where ‘x’ number of people don’t get their loans on time, and that causes all sorts of problems for people paying rent.”

Professor Daniel Khan, Chief Executive of the Open College Network London Region

Professor Daniel Khan came armed with  London registration data for the Level 3 Access to HE Diploma in 2009/10. He pointed out that of the 6,882 registrations, 47% were for people age 25 and over. Of these, 72% were female, adding to concerns that the policy of introducing loans for these qualifications would disproportionately affect women.

As the debate concluded attendees expressed their expectation that many of these points would be raised with BIS.  It’ll be a radically different FE landscape in 2013/14, that’s for sure.

Responses to the BIS consultation can be made addressed to Andrew King via email (feloans@bis.gsi.gov.uk) by 21 October 2011. You may also wish to leave a comment on the FE Week website below.