Higher Education: Finance

Mr. Willetts
To ask the Minister of State, Department for Business, Innovation and Skills what effect (a) the freeze in maintenance loans and grants, (b) the abolition of the guaranteed maximum financial support for new students previously in receipt of the educational maintenance allowance, (c) the reduction in the student loan repayment holiday from five years to two years and (d) the reduction in support for students on initial teacher training courses will have on expenditure on student support in 2010-11; what proportion of originally planned expenditure will be saved in each case; and if he will make a statement.

Mr. Lammy
This Government remain committed to ensuring that financial support should enable students to benefit from higher education, particularly for those who most need help to study, while at the same time being affordable overall.

Regulations for the academic year 2010-11 were laid on 1 July setting out the entitlements for students. Initial estimates indicate that the changes in the regulations, taken together, will reduce expenditure by some £60 million in grants and £130 million in loans1 in financial year 2010-11 compared to previous estimates.

1 Loans expenditure expressed in resource terms. These costs are made up of the interest rate subsidy of loans together with the costs that are never repaid, for example, loans that are written off after 25 years or death of the borrower.

In the current economic climate, we believe these tough decisions are in the interests of students, universities and taxpayers alike. The measures we have taken will help ensure the student support system is affordable and sustainable in the longer term but without damaging access to higher education.