A new Department for Education loans scheme for college capital projects has been confirmed today – but cash for the “time-limited” scheme won’t be available until the summer.
The Education and Skills Funding Agency in its weekly update said the DfE capital loans scheme will provide vital funding for FE capital schemes that are either under way or in the pipeline that have been held up as a result of reclassification of colleges into the public sector.
Full details are set to be published next month – which crucially will include eligibility criteria – with loan funding set to be available from “early summer”.
In November’s re-classification by the Office for National Statistics, the DfE said that colleges must gain special and rare permission from the DfE for finance deals with the private sector.
It said that was “very unlikely” given the costs of private sector borrowing were higher than in the public sector.
It left colleges putting key projects on hold and at risk of not being completed.
In January, the DfE said it was “possibly” considering its own loan scheme, but had put in place an additional £150 million of grant funding to be shared among colleges in April.
Today’s announcement confirmed the new DfE loan scheme will be time-limited, with the repayable loan funding to be drawn down by March 2025 at the latest.
The ESFA said it has written to accounting officers at colleges to clarify any undeclared commercial borrowing they had in place at the point of reclassification with regard to capital projects up to March 2025.
The Association of Colleges deputy chief executive Julian Gravatt said: “The fact that DfE will be announcing a two-year loan scheme in April 2023 is progress because this will unlock college capital projects that are currently stalled because of uncertainty about cash.
“However, it’s now three months since DfE introduced a bank borrowing ban so it is disappointing that there’s another month to wait for the terms, conditions and interest rates for the new loans.”
Last week the AoC said colleges have made 55 loan applications to the DfE since the ban on borrowing came into effect on November 29, of which 22 were refused and 10 are pending. The 23 applications that had been approved were all for short-term loans.