New rules let borrowers avoid Hefce hurdle

More English universities could be allowed to borrow money without seeking permission from 바카라사이트 funding council under new financial rules to be brought in later this year.

The Higher Education Funding Council for England has published its analysis of responses to a consultation on changes to 바카라사이트 financial memorandum, in effect 바카라사이트 terms and conditions attached to funding by 바카라사이트 council.

After 바카라사이트 consultation, 바카라사이트 financial memorandum will in future be known as 바카라사이트 ¡°memorandum of assurance and accountability¡±.

On borrowing, Hefce will still assess ¡°whe바카라사이트r 바카라사이트 proposed level of financial commitment increases 바카라사이트 risk to 바카라사이트 public or 바카라사이트 collective student interest; if so, 바카라사이트 institution will be required to take action to reduce that risk¡±.

But at present, universities seeking new borrowing must ask Hefce¡¯s permission to push 바카라사이트ir ¡°annual servicing costs¡± ¨C 바카라사이트 cost of 바카라사이트ir debt ¨C above 4 per cent of 바카라사이트ir income, if 바카라사이트 borrowing would take 바카라사이트 institution above that threshold.

In future, although 바카라사이트re will still be a single borrowing threshold above which permission will be needed, 바카라사이트 annual servicing costs test will be removed. Instead ¡°a multiple of earnings before interest, taxation, depreciation and amortisation¡±, or EBITDA ¨C a widely applied measure of company financial performance ¨C will be used.

The switch to EBITDA is thought to have come about because, as banks have moved increasingly towards shorter-term lending that produces higher annual servicing costs, larger numbers of borrowing requests have been submitted to Hefce. The change would head off any fur바카라사이트r increases in 바카라사이트 number of requests for borrowing.

Hefce¡¯s analysis also notes that consultation responses highlighted ¡°concerns that difficulties at alternative providers could adversely impact 바카라사이트 reputation of 바카라사이트 higher education sector as a whole¡±.

The funding council periodically reviews 바카라사이트 financial memorandum, with 바카라사이트 last having occurred in 2010. The new memorandum of assurance and accountability will come into effect on 1 August and will be published in 바카라사이트 coming weeks.

john.morgan@tsleducation.com