Hansard

Student Loans

Volume 204: debated on Tuesday 18 February 1992

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Mr. Andrew Smith

To ask the Secretary of State for Education and Science if he will indicate the reasons for the variation in the provision for access funds in 1993–94 and 1994–95, relative to 1992–93, in table 1 of his departmental report on the Government's expenditure plans, Cm 1911.

Mr. Alan Howarth

The figures in the departmental report are based on the initial planned GB provision for access funds of some £15 million each year. Provision for the years 1990–91 to 1992–93 was subsequently increased. Provision for 1993–94 and 1994–95 will be reviewed in this year's public expenditure survey.

Mr. Andrew Smith

To ask the Secretary of State for Education and Science if he will list the assumptions on which the projected expenditure on student loans for 1992–93, 1993–94 and 1994–95 are based in table 1 of his departmental report on the Government's expenditure plans, Cm 1911.

Mr. Alan Howarth

As the departmental report makes clear, student loans will continue to be available for all eligible students who apply for them. The level of expenditure on loans will depend on the level of demand and the rates and conditions of loans prescribed in the statutory regulations for each year.Table 1 in Cm 1911 sets out planned public expenditure provision for the years 1992–93, 1993–94 and 1994–95. The plans for future years will be reviewed in successive public expenditure surveys. The assumptions underlying the figures in table 1 include the following:

  • (i) Average student support from basic maintenance grant (disregarding any parental contribution) and loan will rise in line with the GDP deflator assumptions for the years in question;
  • (ii) The number of students eligible for loans will rise in line with the projected increase in the number of mandatory award holders, as shown in table 20 of the departmental report;
  • (iii) Take-up of the available loan facility will be 35 per cent. in each of the academic years 1991–92 and 1992–93, 45 per cent. in the academic year 1993–94 and 55 per cent. in the academic year 1994–95. Take-up in the academic year 1990–91 was some 28 per cent.;
  • (iv) 10 per cent. of borrowers will not have to repay their loans, because their income will never reach the deferment threshold; and
  • (v) 10 per cent. of the remaining 90 per cent. of borrowers will not repay their loans because they default or because their liability is cancelled on death. This is a cautious planning assumption. The Student Loans Company will pursue defaulters vigorously.

    • Experience in the academic year 1990–91 demonstrated how difficult it is to predict exactly what the ultimate level of take-up will be. If the above assumptions over-estimate demand, any excess provision will be surrendered to the Consolidated Fund. If, on the other hand, demand exceeds the level of provision, additional funds will be provided from the reserve. The reserve is the amount within the planning total which provides a margin for uncertainties or—as in this case—for revised estimates of demand.