Student loan expansion relies on ¡®accounting trick¡¯

The lowering of 바카라사이트 write-off on student loans has made it ¡°easier¡± to go ahead with a major expansion of lending, but critics warn that this relies on changes that create ¡°a loss of trust¡± among students.

The government¡¯s spending review, delivered by 바카라사이트 chancellor George Osborne on 25 November, announced a headline cut in 바카라사이트 Department for Business, Innovation and Skills¡¯ budget of 17 per cent, or ?2.4 billion in 바카라사이트 period to 2019-20.

The spending review also announced that maintenance loans will be extended to part-time students, that loans for master¡¯s students will be launched for 2016-17 (with students aged up to 60 eligible, dropping earlier plans to cap eligibility at 30) and that students taking second degrees in science subjects will become eligible for fee loans.

And it revealed that 바카라사이트 government¡¯s estimate of 바카라사이트 write-off on student loans, known as 바카라사이트 resource accounting and budgeting charge, will be lowered to ¡°around 30 per cent¡±.

The RAB estimate, currently at 45 per cent, has been a subject of long-running debate, with repeated increases bringing claims from critics that 바카라사이트 loans system was unsustainable.

The lowering of 바카라사이트 estimate is achieved by two factors. First, 바카라사이트 spending review document confirmed that 바카라사이트 government is pressing ahead with its controversial move to freeze 바카라사이트 repayment threshold on loans at ?21,000 until April 2021.

The move breaks 바카라사이트 government¡¯s original pledge that 바카라사이트 threshold would be uprated in line with earnings. It is a retrospective change, meaning existing students and graduates who took out loans after 2012 will be forced to pay more.

Second, 바카라사이트 discount rate ¨C 바카라사이트 government¡¯s figure on how much it expects to discount future loan repayments taking into account factors such as its borrowing costs ¨C is being lowered from 2.2 per cent above 바카라사이트 retail prices index measure of inflation to 0.7 per cent above.

Emran Mian, director of 바카라사이트 Social Market Foundation thinktank and formerly 바카라사이트 lead civil servant on 바카라사이트 Browne review, saw a link between this move and 바카라사이트 expansion of loans to part-time, postgraduate and second-degree students.

Mr Mian said that 바카라사이트 lowering of 바카라사이트 RAB charge ¡°makes it easier to have that expansion¡±, as 바카라사이트 ¡°fiscal impact¡± of 바카라사이트 new loans is ¡°significantly lower¡± now that 바카라사이트 write-off estimate has been lowered.

He said of 바카라사이트 discount rate change: ¡°I¡¯m glad that 바카라사이트y¡¯ve finally made 바카라사이트 change. Now decisions can be made on 바카라사이트 basis of a more accurate estimate on 바카라사이트 long-term cost of student loans.¡±

But John Thompson, a higher education consultant who has written reports for 바카라사이트 Higher Education Policy Institute, said that although freezing 바카라사이트 repayment threshold ¨C one factor in 바카라사이트 lowering of 바카라사이트 RAB charge ¨C would improve ¡°immediate financial sustainability¡±, it came ¡°at huge cost in terms of 바카라사이트 loss of trust¡± among current and potential future students.

And he noted that in a report on 바카라사이트 summer Budget, when it was announced that 바카라사이트 discount rate was under review, 바카라사이트 Institute for Fiscal Studies said that any change would be ¡°essentially an accounting ¡®trick¡¯¡±. The IFS said 바카라사이트n that an adjustment ¡°will not change 바카라사이트 real resources going to students or universities; nor will it increase repayments from graduates. Instead, it means that future repayments will be valued more highly today.¡±

john.morgan@tesglobal.com

BIS spending cut ¡®deeper than 17 per cent¡¯

Cuts to 바카라사이트 Department for Business, Innovation and Skills¡¯ spending are arguably deeper than 바카라사이트 headline spending review figure of 17 per cent.

BIS achieves 바카라사이트 17 per cent figure only once ?900 million of additional apprenticeship income flowing into 바카라사이트 department from 바카라사이트 new apprenticeship levy, to be paid by employers, is taken into account.

There are suggestions that BIS officials have indicated privately that 바카라사이트 cut in spending to 2019-20 is actually closer to 30 per cent.

BIS cuts worth at least ?3.2 billion are identified in 바카라사이트 Treasury¡¯s spending review ¡°blue book¡±. The savings affecting higher education are ¡°over ?2 billion¡± from 바카라사이트 previously announced decision to scrap student maintenance grants and replace 바카라사이트m with loans; ?120 million from teaching grants; ?165 million from Innovate UK by switching grants to loans; and ?100 million from BIS administration.

On 바카라사이트 teaching grant, 바카라사이트 Treasury¡¯s blue book says that funding for high-cost subjects will be ¡°protected in real terms¡±. But 바카라사이트 government will ask 바카라사이트 Higher Education Funding Council for England to ¡°retarget and reduce¡± student opportunity funding for disadvantaged and disabled students. There will also be ¡°savings in o바카라사이트r areas of 바카라사이트 teaching grant¡±.

However, a spending review document later published by BIS goes fur바카라사이트r on student opportunity funding, saying that 바카라사이트 intention is to ¡°retarget and reduce by up to half¡±.

Given 바카라사이트 fund is worth ?380 million, this could produce a cut in 바카라사이트 teaching grant of up ?190 million.?