A consultation report released yesterday by the Department for Business, Innovation & Skills (BIS) outlines a new loan system for further education learners.

Under the proposed plans FE students in England will be able to apply for a loan that pays the upfront cost of a course on their behalf.

Minister for Further Education, Skills and Lifelong Learning, John Hayes, said: “Our proposals describe the next steps towards a more confident, vibrant further education sector, ready to meet the challenges and seize the chances that a rebalanced, high skill economy will present.”

The proposed loans could pay up to £4,000 (rather than up to £9,000 each year for HE courses) and would be used to cover tuition fees – not maintenance costs.

A student would be considered eligible for a loan depending on their residency and chosen course; their financial situation would be deemed irrelevant.

Tom Wilson, director of unionlearn, said: “We will be responding in detail to the proposal for a new loan system for FE students. Further Education should be provided free, however if loans are to be introduced they need to be equitable and fair and in line with those offered to students in HE.”

The loan, managed by Student Loans Company (SLC) and similar to those operating for HE courses, would need to be repaid once the graduate is earning above £21,000 – and would also be written off completely after 30 years.

Lynne Sedgmore CBE, executive director of the 157 Group, said, “We welcome the steps that have already been taken to give colleges greater freedom to meet the needs of their local communities and are delighted that the government is signalling its intention to go even further.”

The consultation, titled New Challenges, New Chances confirms the funding policy that will be put in place for FE Level 3/4 diplomas and apprenticehips.

The loans will apply to all provision at Level 3/4 for students aged 24+, including Access to HE courses, Advanced and Higher Level Apprenticeships.

An AoC spokesperson said: “We welcome the intention to continue funding level 3 courses before the FE loans system is put into place. There remain many questions that need to be answered about what that system would look like, not least how the repayment mechanism might operate.”

The introduction of FE loans is said to reflect the principle ‘that those who benefit more should contribute more to the costs of their learning’ set out in Skills for Sustainable Growth, a ‘radical’ strategy published in November 2010.

You can read New Challenges, New Chances here. The consultation questions are listed below:

Issue 1: Communications

Q1) What information do learners, employers, colleges training organisations and careers advisers need about FE loans to cover learner contributions?

Q2) How can we engage individuals and employers so that they make use of loans to support skills and training?

Q3) How can we support learners who are progressing from FE to HE using loan support?

Q4) Will the introduction of FE loans to cover learner contributions for Level 3/4 for those aged over 24 create any particular barrier(s) to access provision based on (i) race, religion or belief; (ii) disability; (iii) gender; or (iv) age?

Issue 2: Model for FE Level 3/4 loans system

Q5) How can we minimise (additional) bureaucracy as we implement the FE loans model?

Q6) What safeguards should be in place to ensure that learners make the best use of the loans available to them?

Q7) Do respondents believe that payment of FE loans to colleges/training organisations should be made (i) 3 times a year (in line with HE); (ii) quarterly or (iii) monthly?

Q8) Do respondents believe that allocations should be reassessed (i) annually but not in-year, (ii) once during the year and at the end of the year or (iii) more regularly during the year?

Q9) In a demand-led system, what would be the most effective way of ensuring that our spend and commitments stay within the available loans budget?

Responses to the consulation need to be submitted by 21 October 2011. The model for the loans system will be finalised by December 2011 and launched in March 2013.

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