FINANCIAL SUPPORT TO STUDENTS IN HIGHER EDUCATION
EXECUTIVE SUMMARY
- With effect from September 2012 the bulk of UK Government grant aid to UK Universities will cease. From then on, universities will be considered to be commercial entities entitled to charge UK students up to £9,000 pa in tuition fees. Each university will be free to set whatever fee it chooses to students from the Crown Dependencies (Jersey, Guernsey and the Isle of Man)
- It is expected that Islands’ students currently attending university will be unaffected by these changes.
- With effect from September 2012 however, new Islands’ students will have to check the university fee when considering university application. There are over 300 organisations offering higher education programmes of study in the UK and each one may set different fees for each course they run. It would be impossible therefore to produce a comprehensive list of universities and the charges they intend to make for tuition to students from the Crown Dependencies.
- The Islands’ strategy has been to encourage all UK universities to charge Islands students the same as a UK student for an identical programme of study (with the exception of medicine which still attracts a UK government grant in addition to the £9,000 pa received from the student).
- It is believed that this strategy has been largely successful although a few universities have indicated an intention to charge Islands’ students £10,500 for expensive programmes such as engineering. Their argument is that they would receive an additional £1,500 UK Government grant for each UK engineering student enrolled and therefore they would wish that additional income reflected in fees charged to Islands students.
- This report describes the background to the proposed changes and Islands’ responses.
- Although, the Islands work together to develop a collective approach on matters of higher education such as tuition fee levels, it is the responsibility of each island to develop a student financial support system appropriate to its own community. This report compares and contrasts the different investment and approaches to student financial support taken in each Island and in the UK. At some point the Minister may wish to consider these other approaches in greater depth and may wish to adopt some practices from other jurisdictions. This report recommends setting aside these considerations at this time however, in order to prioritise the achievement of a timely solution for students and their parents who need reassurance with regard to arrangements for 2012 immediately.
- This report also suggests that without changes to the current level of support, States investment in the Student Grants budget will need to rise from £8.2 M currently to £10.4M in 2015. (Table 7) and that if the demands of some universities for additional funding for programmes of study such as engineering were met in full from the Student Grants Budget the cost would take States expenditure on student grants to £10.6M by 2015 (Table 10).
- The report also explores ways in which these additional costs could be contained or shared by an extension of the student loans facility or by means-testing higher cost programmes, and it provides estimates of the cost of an extended loans scheme to the States and to the student (tables 11,12, & 13).
- The report recommends that no radical changes should be made to the current arrangements for student financial support in 2012 and that the Minister should consider a fundamental review to be launched with immediate effect for implementation in 2013.
- In the meantime for 2012 the Minister is requested to consider
- Whether he wishes to maintain the student contribution at £1,500 (if participating banks are willing to continue)
- Whether he wishes to increase the student contribution from £1,500 to £2,000 pa with effect from 2012. (This would be dependent on securing an agreement with participation banks and the States Treasury).
- Whether he wishes to meet the additional costs for ‘old Band B’ courses by:
- paying the additional £1,500 directly without means-testing
- offering means-tested support to students for the additional amount
- maintaining the stance described in the letter sent to universities in 2011, and passing the additional cost on to the student.
- The extent to which he would be prepared to extend the current student loans facility. Currently it permits students to borrow £1,500 pa to meet the student contribution towards fees. If the contribution were to be raised to £2,000, the Minister may feel that this would be an appropriate new limit. If, additionally he intends to pass the cost of ‘old Band B’ type course on to students or if he wishes to provide a facility which can also assist with rising costs of maintenance he may feel that a £5,000 pa loan facility would be more appropriate.
BACKGROUND
For many years, Jersey, Guernsey and the Isle of Man have worked together, with the representative body of UK Universities, Universities UK (UUK), to agree tuition fees for Islands students attending UK universities.
To date, the agreement with UUK has been based on an old UK Ministerial statement that universities accepting Islands students should obtain no more and no less than they would receive for an English student following an identical programme of study. There was also a recommendation that in instances where a university set an international tuition fee rate lower than the agreed Islands rate; the university should charge the Island student at the lower international rate.
The agreement with UUK was based on the level of grant a university would obtain from the Higher Education Funding Council (HEFC (England)) for teaching a UK resident. The formula recognised however, that UK universities also receive funding from other UK Government departments such as MoD, Health, and Research Councils. This additional funding was factored into the agreed formula which served the Islands and the universities very well for many years.
Essentially, the funding formula recognised that different courses of study incur different costs and therefore four fee bands were created. Table 1 below illustrates the 2010/11 settlement.
Table 1: (2010/11 settlement)
Band A: (Medical clinical practice) | Band B (Engineering) | Band C (courses requiring lab, workshop or studio facilities) | Band D (Classroom based courses |
£23 523 | £10 529 | £8268 | £6574 |
For the academic year 2011/12, the UK Government reduced its HEFC(E) grant to universities and in the spirit of the agreement, the cost of tuition for Islands students at or entering university in September 2011 was also reduced by approximately 6%.
Table 2: (2011/12 settlement)
Band A: (Medical clinical practice) | Band B (Engineering) | Band C (courses requiring lab, workshop or studio facilities) | Band D (Classroom based courses |
£21 938 | £9867 | £7768 | £6194 |
It is believed that this (2011/12) level of fees will be maintained for existing students (subject to RPI increases) for the duration of their course of study.
With regard to new entrants in September 2012 however, the UK government has announced sweeping changes to its funding methodology. These are summarised below:
- the HEFC(E) teaching grant to universities will be terminated for all subjects except the most expensive medical, science and engineering courses;
- universities have been allowed to raise their tuition fees to a maximum of £9,000 per year;
- a new scheme of income-contingent government-funded student loans has been introduced which allows UK students to meet the cost of tuition and obtain some support towards living costs (maintenance) while at university. The loan is taken, at source, from earned income when a graduate achieves a salary in excess of £21,000. Interest at between 1 and 3% above RPI is charged. Outstanding debts are written off after 30 years;
- to control government expenditure on student loans each university will be set admission quotas;
- in order to encourage competition however, a later government announcement stated that students obtaining results better than AAB at ‘A’ Level will not be counted against a university’s quota.
The outcomes of these changes are that:
- the devolved regions of Britain have made different arrangements for their own communities:
- the Scottish Government has determined to pay university fees on behalf of its community if they attend Scottish universities;
- the Welsh Government has determined to fix the fee for their community at the previous level £3,000 per year, regardless of the region in which the student wishes to study;
- English students studying in Scotland or Wales however, will be charged the full cost of the programme (up to £9,000).
- many universities, have declared their intention to charge £9,000 across the board. Others however have set individual fees for individual course. Some, in the hope of attracting or keeping their most able AAB students, or seeking to attract additional students are now reconsidering their pricing and may yet reduce their fee charges;
- under the new arrangements universities are considered to be ‘commercial undertakings’. As such they are subject to the UK Competition Law. This means that:
- UUK may not negotiate an agreed Islands fee rate because this would be deemed to be ‘price fixing’;
- universities may not form groups and act collectively with regard to fees and charges because they would be considered to be forming a cartel;
- with regard to all other students (international and Islands students), the universities understand that they are in the market place and they will charge what they think the market can stand.
ISLANDS’ RESPONSES TO TUITION FEE CHANGES
The intention to change was well heralded from 2006 onwards. All observers of the UK HE system expected a revising of the system probably in 2011. The timing, the extent of the changes, and the implications for the islands however, could not be forecast. A new government and the recent economic downturn led to a more radical approach than what could have been reasonably expected.
The Islands have acted collectively in their relationship with UK universities and they have maintained regular and close contact with UUK. In 2011 representatives of the Island met with UUK in London in April, July and August. In November 2010, Stuart Laing, Deputy Vice Chancellor of Brighton University, came to Jersey to brief the Corporate Board and Council of Ministers on the possible actions which the UK Government might take and the implications for Jersey. In addition, opinion and advice was sought from senior managers from a variety of universities, as well as the ex-Vice Chancellor of London South Bank University and ex-Chair of the Student Loans Company Sir Deiane Watkins. Meetings were also held with the Government funded Student Loans Company and representatives of the Department for Business Innovation and Skills.
The UK Government’s announcement of the proposed changes for 2012 was made in Autumn 2010 and confirmed in Parliament on December 10th. Universities were given until May 2011 to declare their proposed fees under the new arrangements. Having declared their intentions with regard to fee-levels each university was required to gain approval from the Office of Fair Access (OFA) by illustrating how it would use a portion of the income to support students from lower income families and encourage access to its institution from a broader cross-section of the public (widening access). The deadline for OFA’s acceptance was July 11th. A subsequent deadline of 20th December 2011 was set for universities wishing to vary their fees in light of further market research. To meet OFA requirements it is estimated that a university charging £9,000 per year in tuition fees will have to utilise at least £1,000 of its income per head.
At the meeting of Islands officers and UUK on July 14th2011, purposely scheduled to coincide with the publication of the initial list of proposed university fees agreed by OFA, it became clear that:
many more universities had opted for £9,000 fees across the whole range of subjects than the UK Government had budgeted for;
the UK government would introduce other measures to increase competition and drive tuition fee prices down wherever possible. This led to a recent decision to take AAB students out of university quotas, to free up 20,000 places for universities charging less than £7,500 p.a., and to allow universities additional time to consider their positions in the market-place;
with regard to fees for non EU students universities were deemed to be ‘commercial undertakings’ and were encouraged to charge whatever the market would allow;
as commercial undertakings however, they would be subject to the competition law which carries strong penalties for institutions forming cartels or attempting to fix prices.
From this meeting therefore it was clear:
that UUK would not be able to broker a set fee for Island students as it had done in the past;
there was a risk that Islands students might be charged high international rates by universities who perceive Islanders to be a relatively affluent overseas market.
In view of the above, given the constraints under which the Islands were able to operate and the advice officers had received, it was agreed that a cross section of the most popular university destinations for Islands student should be visited with a view to ascertaining whether universities generally would be prepared to make the same offer to Islands students as English ones. The arguments in favour of this settlement were:
- applications for Island students are processed through the UCAS clearing system; however the students are not counted in the UK limits for funded students;
- the Islands are part of the British Isles and students do not require visas or any exceptional pastoral care services or facilities. Islands students are from the same cultural background as English students – they follow a similar curriculum and sit the same public examinations. Their first language is English and the majority of them and their parents are EU citizens;
- there has been a longstanding principle that tuition fees for Islands students should reflect the income a university could expect from an English student;
- there will be no direct additional support from Islands’ governments to enable students to attend institutions making tuition charges to Islands students which are greater than the charges made to English students for an identical program of study;
- Islands students do not have access to the UK Government loan arrangements and therefore do not have the opportunity to defer the cost of their education over their working lives;
- means tested maintenance grants are provided by the Islands for their students and drop-out rates are below the national average;
- the number of students attending universities from the 3 Islands combined average over 3,200 each year with around 25% of that number taking courses of four years or more, producing an annual tuition fee income of approximately £27m. An average of 200 students per annum undertake separate postgraduate courses representing an annual fee income of approximately £1.9m.
With regard to the more expensive science, engineering and medical programs, the Islands noted that HEFC(E) had proposed an additional grant to universities estimated to be worth £10,500 p. a. per medical student and £1,500 p.a. for engineering. The Islands agreed that they would match the HEFC(E) grant for medicine but resisted paying the additional sum for engineering and science on the grounds that:
by paying up to £9,000 to universities for cheaper classroom based courses, a university would be well recompensed for admitting Islands students on more expensive courses of engineering;
the fact that Islands students stand outside the OFA regulations means that a £9,000 income from an Islands students brings the full value of the fee to the university whereas £9,000 from an English student (once OFA’s requirements are met) carries a value of only £8,000.
It was accepted however, that some universities admit relatively few students on the less expensive programs and therefore the cross-subsidy argument may not carry a great deal of weight. The Islands may yet have to agree a £1,500 additional fee for its science and engineering students.
In August and September 2011, visits were made to Bristol, Bath, Southampton, Southampton Solent, Plymouth, Portsmouth, Exeter, Brighton, Sussex, Sheffield, University of Central Lancashire and Cardiff. All universities visited appeared sympathetic to the argument and, informally stated that they would give the proposal serious consideration.
On 23rd September 2011, the Directors of Education for the three Islands met and agreed that feedback from the universities visited provided them with enough confidence to agree that the ‘English Price’ would be their expectation and that UUK should be requested to notify all universities of the Islands’ position regarding tuition fees and that the statement should indicate that there will be no additional direct support for students from Islands Authorities who seek admission to universities charging more than the English fee. The note was sent on 18th October 2011.
CHANGES TO TUITION FEE CHARGES: IMPLICATIONS FOR STUDENT FINANCIAL SUPPORT
Although the Islands work collectively with regard to negotiating tuition fees with UK universities, each island maintains an independent approach to the way it supports its own students.
The Current System of Grant aid in Jersey
In Jersey, the system of apportioning costs of higher education (tuition and maintenance) between the States and Parents has evolved over a number of years. In 2006, due to increased tuition fees in the UK, a third ‘partner’, the Student (as the ultimate beneficiary of higher education) was included as a contributor to HE costs in order to spread the contribution load.
Today therefore all Jersey students regardless of status are required to find £1,500 pa towards tuition fees. A commercial loans facility has been established to assist students who require it. The loans are guaranteed by the States. To date, loan take up has been less than expected with around 30% of students making use of the facility. In the majority of cases therefore one has to assume that the parents cover this element of cost.
The amount of support that an undergraduate obtains from the States is determined by his or her individual status i.e. whether they are ‘independent’ or ‘dependent’ on their parents. Depending on which status applies the relevant income is taken into account and the Education, Sport and Culture department calculates the support that they will provide towards the expenses based on the parameters illustrated in Table 3.
Table 3: How parental support is calculated
Parameter | Parameter Value | Details |
Minimum Family Income | £26,750 | Last updated 2001. AEI risen between 33 and 36% since 2001 |
Rate | 20.25% | |
Maintenance Amount | £154 per week | Averages out at £5,200 per annum for a normal length course. Since 2010 the value has been increased annually to take account of inflation. |
Max Parent contrib. | £ 13567 | Originally based on band B fees + maintenance amount. In effect, the contribution of parents of children studying medical courses is ‘capped’ at this amount |
“Student” Loan | £ 1,500 | At the moment not all students claim this and it may be that parents pay this part |
Minimum Payment | £ 1,000 | Minimum payment for every extra child at university |
Recent Research
A recent independent report (Greenlight 2010) has suggested that the value of the States of Jersey contribution towards higher education costs has been diminishing in recent years, partly because the family contribution threshold (£26,750pa) has never been changed and therefore fewer people are able to obtain full support.
Table 4: the diminishing value of States contribution to HE costs (tuition + maintenance).
Please note: an assumption has been made in the following table (based on two independent research papers) that the ‘real’ cost of maintenance is in the region of £7,500 per year not £5,200 which is the maximum student maintenance grant currently available.
Year | Method of Adjustment | Parent/Student Contrib. | States Contrib. | Total Cost | Cost per student | % Parent Contr. | % States Contr. |
2001/02 | Current allowances | 4,985,602 | 8,925,398 | 13,911,000 | 11,111 | 36% | 64% |
2009/10 | Current allowances | 9,500,000 | 8,100,000 | 17,600,000 | 13,333 | 54% | 46% |
2009/10 Actual Cost | £7,500 allowance | 12,800,000 | 8,100,000 | 20,900,000 | 15,833 | 61% | 39% |
The following table illustrates the size of contribution families of ‘dependent’ students are making (2009)
Table 5. Family contribution as at 2009.
Gross Income | Parent Contribution (£5,000 allowance) | % Parent contribution | True parental contribution (£7,500 allowance) | % Parent contribution (£7,500 allowance) |
20,000 | - | 0% | 2,500 | 8% |
26,750 | - | 0% | 2,500 | 9% |
30,000 | 658 | 2% | 3,158 | 11% |
40,000 | 2,683 | 7% | 5,183 | 13% |
50,000 | 4,708 | 9% | 7,208 | 14% |
60,000 | 6,733 | 11% | 9,233 | 15% |
70,000 | 8,758 | 13% | 11,258 | 16% |
80,000 | 10,783 | 13% | 13,283 | 17% |
90,000 | 12,808 | 14% | 15,308 | 17% |
100,000 | 14,043 | 14% | 16,543 | 17% |
110,000 | 14,043 | 13% | 16,543 | 15% |
120,000 | 14,043 | 12% | 16,543 | 14% |
130,000 | 14,043 | 11% | 16,543 | 13% |
140,000 | 14,043 | 10% | 16,543 | 12% |
150,000 | 14,043 | 9% | 16,543 | 11% |
The % contribution increases to a maximum of 17%. However this hides the fact that those on lower income have less disposable income and therefore have greater difficulty finding the relevant contribution. These figures do not include the contribution of the student through the student loan facility which in 2009 (when this table was prepared) was £1,455.
Comparison with other jurisdictions
The Greenlight report also suggests that proportionally, Jersey States contribute less to higher education support than the other Island governments.
Table 6: comparison of Islands’ contributions to Higher Education Costs
| Jersey | Guernsey | Isle of Man |
Population 2008 | 91,800 | 62,000 | 82,500 |
GVA 2007/08 (Gross Value Added) | £4.3 billion | £2.07 billion | £1.86 billion |
Undergraduate Finance 2008 | £7.4 million | £5.5 million | £11.5 million |
No. of Undergrads 2008 | 1,295 | 800 | 1,150 |
Average expenditure per student 2008 | 5,714 | 6,875 | 10,000 |
% of GVA | 0.17% | 0.27% | 0.62% |
Tax income 2007 / 08 | £602 million | £365 million | £598 million |
% Tax income spent on higher educ. | 1.23% | 1.51% | 1.92% |
Tax income spent on education | £96 million | £64 million | £101 million |
% of tax income spent on education | 16% | 18% | 17% |
Differences in approaches to financial support for students between the Islands is not simply restricted to the size of resource made available.
The Isle of Man government, for example, pays all tuition fees, it means-tests only for maintenance grants.
Guernsey has a similar, but more generous, approach than Jersey means-testing for both tuition and maintenance.
Both the Isle of Man, and Guernsey base means-tested grant aid on ‘household income rather than ‘parental income’
Forecasting States expenditure on student grants
Calculation of future expenditure on student grants is fraught with problems. There are several important unknown variables:
student numbers can vary each year;
the mix of programs which students follow is subject to change;
parental income of future students is unknown.
Given the above, in order to estimate likely expenditure, certain key assumptions have to be made. The assumptions applied to the following tables are given at appendix 1. Treasury Officers have confirmed that they provide a reasonable basis for calculation and estimation of cost. It must be emphasized however, that even small variations can have a significant impact on forecasts of cost.
The following table illustrates how expenditure on higher education will rise if no changes to the current system of financial support are made. And that students will continue to make a £1,500 contribution to fees. It also assumes that no university will change more than £9,000 pa for any subject other than medicine.
Table 7: Year by year costs of Higher Education apportioned to students parents and the States if the current support arrangements were maintained inc £1,500 student loan.
The following table illustrates the effect on costs if the student contribution were to be increased to £2,000 p a. As above it assumes no university will charge more then £9,000 per year for subjects other than medicine.
Table 8 Year by year costs of Higher Education apportioned to students parents and the States if a new student contribution were to be set at £2,000 and the loan facility were to be extended to enable students to meet the cost.
With regard to States expenditure the two tables are summarised below:
Forecasts
Given the assumptions described at appendix 1 –
If: the current arrangements for States support were to be maintained and applied to the new funding arrangements for 2012; and if all universities agreed to make the same charges to Jersey students as they make to English students, with no additional charge for (Band B engineering type programmes) Then: Table 7 suggests: - without change to the current system, costs to the States will rise by £100,000 in 2012 to £2.1M in 2015. Table 8 suggests: – by increasing the student contribution from £1,500 to £2,000 per year the increase in States costs could be contained at £70,000 in 2012 rising to £1.7M in 2015. Both tables suggest :- that the increase in States costs in 2012 is relatively small (an increase of £70,000 - £112,000 depending on whether the student loan facility is extended to £2,000 pa or not). |
Other Considerations
The above forecasts are based on a proposal made by the Islands authorities that Islands students should pay no more or less than English students for an identical programme of study. Many universities appear to have accepted this argument. A few however, have indicated their unwillingness to accept this proposal in its entirety. They argue that:
there are some programmes such as Engineering (referred to as ‘old Band B type’ programmes) which are more expensive to deliver;
the UK government has recognised this and agreed that central government grant funding will be available to universities to help them meet such costs;
the amount under consideration is a £1,500 Government grant to the university for each student following such a course.
The effect would be that a UK university would obtain £10,500 for each student following an ‘old Band B type’ (£9,000 from the student and £1,500 from the UK Government = £10,500 pa.).
The universities argue that they should receive this additional funding for Islands students and therefore they have set their fees for these types of course at £10,500 for Islands students.
Options
In arriving at a settlement for Jersey students therefore, consideration will need to be given to whether the States of Jersey should offer support to local students seeking to follow ‘old Band B’ type courses. The Minister may decide to:
- meet the additional costs – thus capping means tested student/parental contribution at £9,000 (including the student contribution of £1,500 or £2,000);
- include the additional cost within the means –test, so that wealthier parents/students would be expected to contribute up to £10,500 if their child decided to follow engineering at one of the resistant universities;
- pass the additional cost on to the student (with a suitably increased loan facility to enable him or her to meet the addition £1,500).
The following table illustrates the additional sums which would need to be added to States expenditure in Tables 7 & 8 if options 1 or 2 above were taken.
Table 9: Additional costs if the States meets all or part of the costs of ‘Old Band B’ type courses
Year | States pays all additional costs for ‘old Band B’ | States include additional costs for ‘old Band B’ to means-tested parental contribution |
2012 | £32,000 | £23,360 |
2013 | £128,000 | £93,440 |
2014 | £192,000 | £140,160 |
2015 | £262,000 | £191,260 |
The full effect of these options is illustrated overleaf.
Table 10: Addition costs to the States due to changes described in tables 7, 8 and 9.
Year | Total Costs to States if students contribute £1,500 towards cost of tuition and States pay all addition ‘Band B’ type costs | Total Costs to States if students contribute £1,500 towards cost of tuition and Parents make means –tested contribution to addition ‘Band B’ type costs | Total Costs to States if students contribute £2,000 towards cost of tuition and States pay all addition ‘Band B’ type costs | Total Costs to States if students contribute £2,000 towards cost of tuition and Parents make means –tested contribution to addition ‘Band B’ type costs |
2012 | £8,344,540 | £8,335,540 | £8,302,386 | £8,293,386 |
2013 | £9,042,967 | £9,008,407 | £8,873,940 | £8,839,380 |
2014 | £9,842,159 | £9,790,319 | £9,532,017 | £9,480,177 |
2015 | £10,622,358 | £10,551,618 | £10,163,477 | £10,092,737 |
Student Loans
Option three above suggests that the additional charge for ‘old Band B’ type programmes could be passed on to the Student. In effect, the Minister could argue that there are universities willing to offer ‘Old Band B’ type programmes to Jersey students for £9,000. So, if a student prefers to attend a university which has set higher fees, it would be up to the student to determine whether the additional cost was worth paying and, if so, he or she would have to find the additional funding.
In effect, the States could:
insist that the student pays the first £1,500 or £2,000 of any tuition fees
cap means tested family support for tuition fees at £7,000 (except for Medical etc);
insist that in instances where universities wished to charge any amount over £9,000, the student or family should pay.
It may be possible to negotiate a student loan facility of up to £5,000 p.a to cover:
the first student payment of £1,500 or £2,000;
an additional £1,500 for universities seeking to set a higher fee for whatever reason;
an additional £1,500 or £2,000 pa to assist with living expenses if required.
Discussions with Banks
Two commercial banks have indicated their willingness to work with the States of Jersey to develop an extended student loans facility. Both have suggested different approaches, interest rates, pay-back periods etc. They are willing however, to work together to provide a single offer. They would provide the funding to students but would require the States to guarantee the loans.
Initial work with the banks suggests an interest rate of 3% above base. In must be remembers however, that the current base rate is at an all time low and any change to the base rate is likely to be upwards.
The States of Jersey Treasury suggests that this scheme would be a ‘low risk’ option providing the amount of loan remains small enough to enable students to repay after graduation. The following tables offer an initial analysis of how the current scheme could be extended to enable students to borrow up to £5,000 per year. They also suggest repayment costs against a sample of interest rate
Table 11. Possible student Loan Facility of £2000 and £5,000 pa based on current interest rate. (3% above 0.5% Base).
The following table suggest how the scheme would differ from above if base rates pushed the overall interest rates to 5% and 7%.
Table 12 Possible student Loan Facility of £2000 and £5,000 pa based on current interest rate. (3% above 2% Base).
Table 13. Possible student Loan Facility of £2000 and £5,000 pa based on current interest rate. (3% above 4% Base).
In any of the above loan options, the Treasury would require DfESC to set aside an amount annually to meet the calculated default figure. This will have to be factored into cost calculations.
Summary
Discussions with universities suggest that the majority of UK universities will be willing to admit Jersey students for the same fee as they would charge an English student.
The implications for Jersey are significant but gradual. They apply to first year students only and therefore although they could add up to £2.4M to States expenditure by 2015, the 2012 effect is estimated to be between £70,000 and £144,000 depending on the decisions taken by the Minister.
With regard to 2012 there is an urgent need to advise students and parents of the support they can expect to receive from the States.
There are a number of changes which could be made to the current scheme of student financial support and the Minister may decide to explore and number of these, and consult the wider community before making proposals
It would be difficult however, to make widespread or radical changes to the current system of Grant Aid for 2012. There is little, if any, time for consultation and no time for parents and students to make necessary adjustments to plans.
Recommendations
In view of the above the Minister is recommended to reassure students and parents by making limited interim changes for 2012 to create time for a more fundamental review and consultation on support beyond 2013 to be launched immediately.
In making the settlement for 2012 therefore the Minister is requested to consider:
- Whether he wishes to maintain the student contribution at £1,500 (if participating banks are willing to continue)
- Whether he wishes to increase the student contribution from £1,500 and if so, when and to what level. (This would be dependent on securing an agreement with participation banks and the States Treasury).
- Whether he wishes to meet the additional costs for ‘old Band B’ courses by:
- paying the additional £1,500 directly without means-testing
- offering means-tested support to students for the additional amount
- maintaining the stance described in the letter sent to universities in 2011, and passing the additional cost on to the student.
- The extent to which he would be prepared to extend the current student loans facility. Currently it permits students to borrow £1,500 pa to meet the student contribution towards fees. If the contribution were to be raised to £2,000, the Minister may feel that this would be an appropriate new limit. If, additionally he intends to pass the cost of ‘old Band B’ type course on to students or if he wishes to provide a facility which can also assist with rising costs of maintenance he may feel that a £5,000 pa loan facility would be more appropriate.
- Whether he would wish to take a proposition to the States to increase funding for student grants
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