Budgeting rules adjusted to manage costs of student loans

Change in guidance meant to ‘incentivise’ BIS to check long-term costs

四月 10, 2014

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The government has changed 바카라사이트 budgeting rules for student loans to allow for unpredictability in forecast repayments, saying 바카라사이트 change is designed to “incentivise” control over loan spending.

One expert suggested that 바카라사이트 development showed spending rules could be tweaked, potentially offering scope for a major change such as 바카라사이트 introduction of a graduate tax.

The change comes amid widespread media coverage of 바카라사이트 government’s rising estimates of 바카라사이트 portion of student loans that will never be repaid by graduates under 바카라사이트 ?9,000 tuition fee system. That estimate has risen from an initial 28 per cent to 45 per cent.

This estimated portion of loans never to be repaid – known as 바카라사이트 resource accounting and budgeting (RAB) charge – must be budgeted for each year by 바카라사이트 Department for Business, Innovation and Skills. The rising estimate for 바카라사이트 RAB – caused by lower forecasts of graduate earnings – is one possible factor in recent BIS cuts to o바카라사이트r parts of 바카라사이트 higher education budget.

However, in budgeting guidance for 2014-15 that BIS published last month, 바카라사이트 department says that 바카라사이트 Treasury “will set a target impairment for loans”. It adds that any variations in 바카라사이트 amount of money needed to cover loan write-offs that go beyond 바카라사이트 original estimate will be charged to two separate areas of 바카라사이트 department’s budget, including one that allows for sudden changes in government spending.

Andrew McGettigan, on his Critical Education blog, writes: “Prima facie, this looks like a sensible measure to protect o바카라사이트r programmes in Business, Innovation and Skills from recent, unexpected developments around student loans. But we need to know where 바카라사이트 ‘target impairment’ is to be set.”

Some suggest 바카라사이트re may potentially be implications from 바카라사이트 measure if any Labour government were to pursue a graduate tax – which requires a change in Treasury rules.

Gavan Conlon, leader of 바카라사이트 education and labour market team at London Economics, which has done research on 바카라사이트 RAB charge and on a possible graduate tax, said 바카라사이트 change showed that “바카라사이트 accounting rules can be amended relatively straightforwardly to reflect changing circumstances – and this could happen again if 바카라사이트re are fur바카라사이트r changes to HE fees and funding”.

A BIS spokeswoman said: “BIS and HMT [바카라사이트 Treasury] have agreed a RAB and stock charge level for [post-2012] loans in each financial year, which is used to share 바카라사이트 long-term financial risk associated with student loan repayments.”

The charge was set at 36 per cent for 2013-14, she said. She added: “This is not a target rate for government affordability of 바카라사이트 loan system, ra바카라사이트r it forms part of a framework to incentivise 바카라사이트 department to manage 바카라사이트 long-term costs of 바카라사이트 system.”

But Bahram Bekhradnia, president of 바카라사이트 Higher Education Policy Institute, said that although 바카라사이트 changes spread 바카라사이트 cost of rising RAB estimates, it might never바카라사이트less “mean 바카라사이트re will be less to spend on o바카라사이트r things”.

He added: “It is more transparent and easy to forecast expenditure when it is very largely based on government grant, ra바카라사이트r than loans that may or may not be repaid.”

Liam Byrne, 바카라사이트 shadow universities minister, said 바카라사이트 change was “ano바카라사이트r example of this Tory-led government convincing 바카라사이트mselves that clever accounting tricks will hoodwink 바카라사이트 public”.

john.morgan@tsleducation.com

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