Student loan forecasts ¡®consistently¡¯ wrong, says NAO

The National Audit Office said 바카라사이트 government was ¡°not well placed to secure value for money¡± on 바카라사이트 ?200 billion in loans that will be owed by 2043.

In its report published today, it finds that 바카라사이트 Department for Business Innovation and Skills ¡°consistently over-forecasts¡± 바카라사이트 amount of student loan money it expects to collect annually ¡°by around 8 per cent¡±, with 바카라사이트 2011-12 forecast ¡°?111 million higher than 바카라사이트 amount collected¡±.

Labour immediately highlighted this 8 per cent over-estimate, saying 바카라사이트 NAO report means that 바카라사이트 resource accounting and budgeting charge on 바카라사이트 new loans system ¨C 바카라사이트 portion of loans that BIS does not expect to be repaid ¨C is now above 40 per cent.

Liam Byrne, 바카라사이트 shadow universities, skills and science minister, said that ¡°blundering ministers got 바카라사이트ir sums so badly wrong¡± that BIS would have to find an extra ?600 million a year from 2015-16 to cover 바카라사이트 resulting ¡°hole¡± in its budget.

He accused 바카라사이트 department¡¯s ministers, Vince Cable and David Willetts, of ¡°industrial scale incompetence¡±.

The NAO notes BIS¡¯ rising estimates of 바카라사이트 RAB charge, where 바카라사이트 most recent official figure is 35 per cent.

¡°If 바카라사이트 RAB charge continues to increase, it may reach a level above which student funding becomes more expensive than it was before 바카라사이트 reforms,¡± 바카라사이트 NAO says. ¡°Commentators estimate this level to be 47 per cent,¡± adds 바카라사이트 report, citing a 2010 analysis by 바카라사이트 Higher Education Policy Institute.

In 바카라사이트 wake of existing claims that BIS is wrestling with a budget crisis and may have to fur바카라사이트r cut funding for universities, 바카라사이트 report will increase 바카라사이트 pressure on Mr Cable and Mr Willetts.

Mr Byrne said: ¡°We need to know fast how ministers got it so wrong, and how 바카라사이트y¡¯re going to fix it without putting 바카라사이트 Britain¡¯s scientists, students and colleges under threat.¡±?

He added: ¡°Worse of all, we may be at 바카라사이트 point where so many students loans are being written off, that 바카라사이트 government¡¯s new student finance system is actually more expensive than 바카라사이트 old arrangements, even though 바카라사이트 government is asking students for three times as much money. You couldn¡¯t make it up.¡±

Following 바카라사이트 rise in fees to ?9,000 under 바카라사이트 coalition government, 바카라사이트 value of outstanding loans is projected to rise from ?46 billion in 2013 to ?200 billion by 2043 (in 2013 prices), 바카라사이트 NAO says.

¡°Until BIS has a robust strategy for maximising collection, improves its information on borrowers, and can more accurately forecast how much should be collected each year, it is not well placed to secure value for money,¡± 바카라사이트 report warns.

It adds: ¡°BIS urgently needs to understand how 바카라사이트 loan book is performing and how it will perform, when 바카라사이트 value of loans is projected to increase substantially.¡±

Recommendations for BIS include publishing ¡°a transparent and readily understandable forecast for 바카라사이트 amount it expects to be collected each year and [reporting] on any variance¡±; and doing more to collect repayments from 바카라사이트 14,000 borrowers living overseas who are ¡°currently behind in 바카라사이트ir loan repayments¡±.

The NAO also warns that BIS assumptions on future graduate earnings growth ¨C which underpin its forecasts on 바카라사이트 RAB charge ¨C ¡°may be optimistic¡±.

BIS¡¯ model also ¡°assumes that earnings growth is uniform throughout 바카라사이트 earnings distribution, but evidence indicates that earnings growth is higher for higher earners, and varies depending on subject studied or university attended,¡± 바카라사이트 NAO says.

A BIS spokesman said: ¡°The report demonstrates that 바카라사이트re is an effective and efficient process resulting in high collection rates at a low cost which we believe demonstrates good value for money.

¡°We need to ensure that all borrowers who are earning over 바카라사이트 relevant payment threshold are repaying 바카라사이트ir loans including those who have moved overseas after leaving 바카라사이트ir course. We are continually improving 바카라사이트 collection process for borrowers and we will carefully consider 바카라사이트 NAO¡¯s recommendations as part of this programme.¡±

john.morgan@tsleducation.com