It’s interesting to see that the postgraduate loan scheme announced in the autumn statement is now starting to attract some coverage. The IFS has published some analysis today, which seems to suggest that it is reasonable to believe that the scheme will pay for itself.
In other words, unlike the current undergraduate loan scheme where around 43% of the value of loans made are not currently expected to be recovered, this scheme will be cost-neutral to the public purse. So does that mean that everyone’s a winner?
The IFS make this observation:
While the proposed postgraduate loan scheme does not link loans to fees in the same way as it does at undergraduate level, institutions with high market power might still respond to the increased availability of credit by raising prices, which would reduce the effectiveness of the policy in making the upfront costs of postgraduate study cheaper.
Earlier on this week, I made a similar warning in an article I wrote for Post40Bloggers:
… I’m certain that universities seeing a ‘guaranteed’ £10,000 loan for all students under 30 will be tempted to inflate their fees rather more than they otherwise would have been able to. If they do raise their fees in this way, it will be older postgraduates without access to these loans who will feel the biggest (negative) impact of this change.
Sadly, both sides of the coalition have been nothing but consistent in believing that only “young people” go to university, when the evidence demonstrates this naive belief to be entirely false. Surely access to loans (if it is not possible to make them available universally) should be on the basis of need, rather than on a person’s age? It is, after all, unlawful to discriminate in this way in most other spheres of life.
It’s therefore a difficult call as to whether we should cheer or worry about the impact of government-backed postgraduate loans. I want to cheer them, as they ought to have a positive effect improving social mobility and opportunity for poorer, younger students who are currently denied the chance through being unable to access funding. However, the change could well have the opposite effect on social mobility for poorer, mature students. Perhaps the fairest way of splitting the available funds for loans would have been to offer them to all poorer students first, regardless of their age.
You can read the full text of my article considering the impact of postgraduate loans on mature students over at Post40Bloggers.