The FE loans system could lead to a drop in learner numbers of up to 18 per cent, a thinktank has suggested.

Research by New Economy predicts the number of 24-plus learners in skills training in Greater Manchester will fall by between 15 and 18 per cent in the wake of the introduction of advanced learning loans.

The government itself had previously projected a 20 per cent drop, according to New Economy.

It comes after Business Secretary Vince Cable told FE Week last month that the apprenticeship FE loans policy was being dropped, but other FE loans would remain.

However, the Student Loans Company (SLC) was still processing apprentice FE loans at the time of going to press and could not confirm when they would stop.

Nevertheless, the New Economy research found that hardly any adults in Greater Manchester had taken out a loan to pursue an apprenticeship because of the significant cost involved.

New Economy director of skills and employment James Farr said: “It is a relief that apprenticeships are now not going to be included in the loans policy.

“The growth of apprenticeships among adults over 24 can be counted as being as one of the conurbation’s success stories of recent years. Loans would have wiped out much of this progress.

“But our research carries warnings should the government decide to extend the system of loans to other target groups in the future — to older learners at level two, for example.

“The clear implication is that the loans policy will lower investment in skills and harm employment prospects in years to come.”

The FE loans system was introduced by the Department for Business, Innovation and Skills (BIS) after it stopped part-funding study for those aged over 24. Now, loans to cover the full cost of training, which must be met by the learner, are handed out by the SLC.

New Economy claims its research is the first authoritative investigation anywhere in the UK into the impact of loans since the policy was introduced.

Its research was based on a survey of level three and above learners over 24 in Greater Manchester, of whom 83 per cent had taken out a loan to fund study.

A BIS spokesperson said: “Nationally, we have had more than 55,000 applications for 24+ advanced learning loans, which is in line with our expectations.”

He added: “To raise awareness of the loans and help learners to make their decisions we have used feedback from learners to develop a range of communication materials for providers.”