Rationing access to student loans will hit FE colleges harder than universities

25 Feb 2022, 13:43

Students without minimum grades also have a limited choice of other routes, write Andy Westwood and Ben Verinder

Yesterday we got the government’s long-awaited response to the Augar Review, nearly four years after the review was published.  

Beforehand, ministers had briefed the introduction of proposed “minimum entry requirements” for access to student loans. 

These would be either a grade 4 in GCSE English and maths, or two Es at A-level ̶ and the possible return of “student number controls” for “low-value” courses.  

Immediate changes are also being made to the student finance system, with longer repayment periods (40 years), a fixed lower repayment threshold (£25,000) and frozen fee levels at £9,250 until 2025. 

(High inflation means this is a year-on-year, real-terms reduction in fees.) 

While making these decisions, successive Conservative ministers have promised to expand alternatives to university. These include more higher level and degree apprenticeships, and new technical qualifications at level 4 and 5.  

So what will the government offer those without the minimum grades? And what impact will these changes have on degrees and levels 4 and 5 in FE? 

It is clear that the rhetoric does not yet match reality. If you’re leaving school or college aged 18-19 and want a degree or higher-level apprenticeship at level 4, there aren’t very many on offer. 

According to the House of Commons Library, there were just 2,800 higher-level starts for 18-year-olds in 2020, down from 3,400 the previous year. Even if we include the starts among 19-to-24-year-olds, this only increases by a further 13,400.  

That’s very small, given that in the summer of 2021 there were 682,010 applicants for HE places in the current academic year.  

And numbers of level 4 and 5 courses continue to be in freefall, dropping by 32 per cent between 2015/16 and 2019/20 – from 165,865 to 113,380. That’s according to new research from market research organisations Chalkstream and RCU for the Collab Group of colleges. 

Only 23 per cent are under 21 years old, with two-thirds 25 or over. 

So whatever the ambitions, there’s not currently much choice for 18-to-19-year-olds as they leave school or college. Augar’s “missing middle” remains a very real problem.  

Augar’s ‘missing middle’ remains a very real problem

Obviously the government hopes this will change by putting financial support for full- and part-time students “on a par with degrees”, together with “upfront investment for providers up to 2025, to support the rollout of HTQs”. 

But if current numbers are anything to go by, this is going to require serious policy attention to be meaningful and if college-based HE is to be preserved.  

Rationing access to student loans will hit FE colleges harder than universities. According to DfE research, 11 per cent of level 4 and 5 learners had qualifications below level 2.  

And if new loan changes apply to levels 4 and 5 then our research suggests that for level 3 college students, financial considerations are the most significant barrier to progression. 

So these are significant issues to think through as DfE consults on these proposals.  

Minimum entry requirements and increased costs for institutions will threaten level 6 provision in colleges.

In turn, this impacts on their capacity to deliver levels 4 and 5 (they are often taught in similar subject areas and by the same staff).  

Furthermore, the proposed squeeze on university income poses significant risk to validating and franchising agreements – including for levels 4 and 5 – upon which the vast majority of HE in FE depends. 

That’s a real problem, and it’s not clear that ministers have joined up these dots.  

There are other political challenges. HE in FE students are more likely to live in low-participation “cold spots”, and attend institutions in towns and cities where economic performance and living standards are lowest.  

Earlier this month, the “levelling up” white paper promised ten-year missions to raise skills, strengthen institutions and boost human capital in these places. 

Less than a month later, and these promises may already be at risk.

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  1. It’s not surprising, that those from the University sector who have hugely benefitted from the student loans financial bonanza of the past decade, will mount a rearguard action against the government’s proposals to – at last – stop the uncontrolled expansion of three year degree courses. But we can do without scaremongering, and I’m afraid the arguments in this piece are wrong in several important ways. First, the reason why level 4 and 5 are declining is precisely because they’ve been pushed aside by the full time degree juggernaut. Second, many universities have already pulled out of partnership with FE, sometimes at very short notice, because they have chosen to prioritised the recruitment of full time 18 year olds, including the proliferation of Foundation Years which have undermined College Access to HE programmes. Thirdly, most FE students will be eligible for exemption from the minimum entry requirements. The DfE proposals are far from perfect, but a lot better than what we have now!

    • Ben Verinder

      To be clear – competition from degrees (in particular 0 or Foundation Year) poses the greatest threat to higher technical education and is the greatest contributing factor to its (accelerated) decline. The article doesn’t say otherwise. But (as you’ll know from your experience in North London) a financial squeeze on universities is likely to increase, not decrease, competition, apply further pressure from HEIs on to college HE in FE, and pose greater risks to remaining validating/franchising agreements.

      And while MERs and poorer loan conditions are meant to funnel people into HE in FE, for the reasons set out in the article they instead pose a risk to what’s left of higher technical ed. Much bolder policy proposals – that protect HE in FE from Year 0 encroachment, for instance, are required.