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Student Loans

Volume 804: debated on Thursday 23 July 2020


Asked by

To ask Her Majesty’s Government what assessment they have made of the presentation of debt by the Student Loans Company on its online student loan repayment system.

My Lords, the student finance system removes barriers to access to a university for all those with the ability to benefit from higher education, irrespective of their background. The Student Loan Company’s new online repayment service is a welcome improvement to the operation of that system. It will help student loan borrowers to keep track of their balance and manage their loan, and includes clear guidance on how the loan system and repayments work.

My Lords, that is all well and good, but the money saving expert, Martin Lewis, has called the changes made by the Student Loans Company to its website “irresponsible and dangerous”, as it still includes the ability to make “quick payments” without logging in and has the large overall debt figure front and centre. Can the Minister explain why recommendations from MSE, the Russell Group and the Augar review have clearly all been ignored, and what steps the Government intend to take to protect students from what is, frankly, rubbish and second-rate advice?

My Lords, the advice was not ignored. The Department for Education worked with Martin Lewis, the Russell Group and others in advance of the preparation of this website, and there are warnings and caution messages throughout explaining to people the point about making early repayments. Due to an oversight, people could, on one section of the website, click through without seeing these messages but, thanks to Mr Lewis bringing it up, they have now been put there and the problem has been rectified.

My Lords, the noble Lord, Lord Bassam, has made a trenchant point about the presentation of these financial statements. The University of Chichester plans to reopen its school of nursing and to recruit locally—to pick up a point made by the noble Lord, Lord Clark, on an earlier Question. For mature and part-time students whom the university seeks to attract, the level of loan debt is as important as the clarity of the information about their loan repayments—perhaps more so. Will the Minister look again at the impact of student loans on recruitment and retention in key public services in the light of their significance to our recovery from the pandemic?

The right reverend Prelate makes an important point, weaving together some of the themes from the first Question and this one. He is absolutely right that we want to encourage people of all ages and backgrounds to take advantage of higher education if that is the course they wish to pursue. Mature students who undertake undergraduate courses can qualify for fee loans to meet the cost of their tuition. Those attending courses at honours degree level also qualify for partially means-tested loans for living costs, and those with adult or child dependants can apply for additional means-tested grants on top of that.

My Lords, as this new system is not compulsory, and as students prefer computers to pieces of paper, does the Minister agree that the criticisms from Mr Lewis, who alleges that the system is dangerous, irresponsible, damaging and demoralising, are, to say the least, rather over the top? The next thing will be that, when members of the public ask their bank manager how much is in their account, he will be obliged to say, “Before I tell you, I must first ask you if you are feeling well and sitting comfortably. If you are, I shall gently begin.”

Mr Lewis certainly has expressed his point colourfully and forcefully, but the department was glad to engage with him before the website launched. He also made his points known to the Augar review, which the Government are considering and to which we will respond alongside the next spending review.

My Lords, can the Minister say how the Government will be more transparent with student loans, so that students are better equipped to make informed decisions on their finances and better understand how the system of repayments works?

My Lords, this website is certainly an improvement on the situation when I was paying back my student loan, when it was very difficult to find out the balance and how much still needed to be paid. That led to many people making excessive repayments, which then had to be paid back. It might be helpful to your Lordships if I cite briefly from the message on the new website, which makes it very clear that “there is no obligation” to make a voluntary repayment and that students should

“carefully consider whether it’s appropriate to make voluntary repayments because any outstanding balance is written off at the end of the loan”.

That makes the situation quite clear.

My Lords, the Student Loans Company states that the online repayments service was

“extensively researched and tested prior to launch”,

and says:

“We constantly listen to our customers to improve our service”.

Are the Government satisfied that this service is being adequately monitored? How will they ensure that comments are taken on board and changes made where necessary?

My Lords, that is a key example of our taking on board comments and making changes. That is exactly what we have done in response to the representation from Martin Lewis pointing out that, on one section of the website, the message that he was keen to see was not present. It has now been put there.

On the Student Loans Company website, David Wallace, the CEO, has written in his blog:

“It’s vitally important that graduates understand that a student loan works very differently to other types of borrowing”.

That statement is not on the part of the site on extra payments, which I think would be helpful. I do not believe that just mentioning the written-off condition helps, so surely that warning, a statement that extra payments will not reduce monthly or annual payments, and, perhaps, a minimum income threshold before extra payments are permitted without additional checks should all be applied.

My Lords, that message, which was present on other parts of the site, has been present since 17 July on the section for making voluntary repayments as well, but student finance is, in law, a loan, so the Student Loans Company of course has to follow the legislation as it stands.

My Lords, at the outset, I declare that I co-chair the APPG on Islamic Finance. In 2013, David Cameron spoke at the World Islamic Economic Forum and made a promise to introduce a sharia-compliant student loan scheme. In March 2017 and in July 2019, I and other noble Lords spoke on the subject in your Lordships’ House. We were told that the Government were committed to introducing a suitable arrangement; I understand that a comprehensive submission has been made by the advisers to the DfE on the arrangements. There is no mention of sharia-compliant student loans on the SLC website. Can my noble friend say what progress has been made regarding the scheme and what is the timetable for its introduction?

My Lords, my noble friend raises a very important point, particularly for the many Muslim students who study or wish to study in our universities. I do not have that information to hand, but I will find out and write to him with the answer.

My Lords, it must be reassuring to students that the website that is the subject of this Question has now been amended, but does the Minister accept that, in the wake of the severe economic recession that the UK is now passing through, the whole structure, purpose and practice of the Student Loans Company, based as it is on the assumption of very high graduate employment for decades to come, now looks seriously unfit for purpose and, indeed, should be the subject of a root and branch review?

My Lords, the Augar review was just such a review; the Government are considering that carefully and will respond alongside the spending review.

My Lords, through Covid-19 restrictions, many university students have missed tuition and access to libraries, laboratories and other university facilities. Although they are awarded degrees, will the Government reduce the loan repayment liability of final-year students, which would be fair to reflect the curtailment of tuition and facilities that they suffered?

The noble and gallant Lord makes an important point about the provision made for students during this pandemic, but universities have responded very swiftly and have very ably risen to the challenge. They have continued to provide high-quality education to people throughout the crisis, using a variety of means—online as well as in person—and we commend them for doing so.

Sitting suspended.