The double-whammy of GCSEs and A levels is hitting our house at the moment and, like many parents around the country, we’re navigating our way beyond UCAS and into student finances. With only months to go before our daughter sets off for university, we were taken aback to hear about the changes to the student loan system.
For students starting a new undergraduate programme in September, the new ‘Plan 5’ loans signify three major changes: loan repayments will now stretch from 30 to 40 years; the starting salary for repayments will drop to £25,000 (down almost £2,500), meaning that repayments start earlier for more graduates; and, on a more positive note, the interest rate has dropped from as much as three per cent above the Retail Prices Index (RPI) to RPI only.
For those on middle to low incomes, this will amount to a lifelong ‘graduate tax’ that may stretch all the way to retirement. For many, it may never be worth paying off the loan early.
It’s unlikely these changes will have an impact on students making post-18 choices this year. UCAS applications from students living in England are down, but not noticeably (2.71 per cent), and what little drop there is can be accounted for more by the fall in mature students than any drop in college-leavers progressing straight to undergraduate course. In any case, these changes have been announced quite late in students’ application journey, and if my own experience is anything to go by, awareness of them and their long-term implications are little-known and even less understood.
In the longer term, some may argue that Plan 5 loans, with a prospect of a lifetime of debt and reduced earnings after tax, present apprenticeship providers with an opportunity to offer an alternative to college-leavers. The obvious option is degree apprenticeships. As these are fully ‘paid for’ via the levy or funding, there’s no cost to the apprentice, who earns a salary just like any other employee.
Likewise, it could be argued that any apprenticeship at a level appropriate to the job role can be offered as an ‘alternative’ route to a degree, and the recent move to promote vacancies and opportunities alongside degrees on the UCAS portal is an interesting step toward this. Although they often lack the equivalent opportunities of personal growth (moving to a new city, making new friends, living independently, and so on), apprenticeships offer a range of other benefits, not least the opportunity to gain a ‘hands-on’ education and to pursue a career as part of a structured learning plan.
But in reality, relying on student finance as a lever to nudge more students towards apprenticeships is unlikely to bear results. Instead, we should recognise that presenting options as “apprenticeships versus university” is simply no longer productive. There are plans to build UCAS points into some apprenticeship standards, and the IfATE’s Beta version of the Occupational Maps is intended to simplify “the relationships between education, qualifications, apprenticeships and occupations”.
Providers should take this as a strong hint that developing career-supporting learner journeys is the way forward. Clearly mapped progression routes from Level 2 to Level 7 that may or may not include degree apprenticeships will draw young people keen to avoid debt and who have a career in mind. Presenting employers with long-term CPD solutions will also encourage stronger buy-in from managers and decision makers.
It has always been the case that providers should aim to attend career fairs at local schools and colleges to promote apprenticeships and meet potential candidates face-to-face. However, this is a resource-heavy activity. In my experience, few providers utilise their best advocates – local employers and apprentices – to support these activities. Providers who can coordinate visits and workshops from ‘near-peer’ apprentices and their employers will quickly build partnerships with schools and colleges to promote apprenticeships directly to students. Some of this activity could even be mapped to outcomes for apprentices currently on-programme.
The revised student loans are closer to a ‘learner contribution’ system and should probably be labelled as such; ‘learn now, pay later’ versus ‘earn as you learn’. They won’t put students off going to university, but they may cause more to re-think the route they take to get there.