Student financial support for PGT is a forgotten, inadequate mess

Twelve months prior he’d announced that the cap was coming off undergraduate recruitment.

Then in December 2014, he announced that he was going to “revolutionise” the support for postgraduate students too.

Over in the Business, Innovation and Skills (BIS) department, minister of state for universities Jo Johnson was effusive:

‘A postgraduate Master’s qualification can help people advance their careers and provide invaluable skills to support our innovation and growth. We want anyone who has the ability to study at this level, regardless of their circumstances, to be able do so.

Concerned about the upfront costs of postgraduate degrees deterring bright students from poorer backgrounds, the announcement was that government-backed student loans of up to £10,000 were to be made available to all young people undertaking postgraduate masters degrees.

And following a consultation, a proposed age limit of 30 was removed.

At the time, the median PGT fee was £6,061 – and for the purposes of calculating the impact on benefits, the generous assumption placed in legislation was that just 30 per cent of the £10k would count as income.

The repayment rules were set quite differently to those for the then new undergraduate loan scheme. Plan 3 (often referred to simply as the Postgraduate Loans plan) involved a £21,000 per year repayment threshold that has never increased since – with a repayment rate of 6% of income over the threshold. Write-off was set at 30 years, and interest was set at RPI + 3 per cent.

Notwithstanding that the money has to be loaned – and the way in which those repayments can vastly increase the marginal tax rate of those repaying – the costs to government have been negligible.

The latest available estimate of the Resource and Budgeting (RAB) charge – the subsidy involved in making those loans – is 0 per cent. It has been for some time.

Those were the days

But a decade on and the scheme is some distance from where we started. Fees for postgraduate study have soared, while the maximum loan has only been raised by the same mechanism that has been used for undergraduate maintenance – the projection of RPI for the following academic year’s Jan-Mar quarter.

And we know how badly that’s turned out.

In marked contrast to the way the UG maintenance loan increases, it’s actual RPI that has been used for the interest calculation – which from 1 September 2023 to 31 August 2024 was so high, that the 13.5% + 3% has been capped back to 7.7%.

Does the loan cover the fee? One estimate is that while the maximum loan for postgraduate students starting in 23/24 is currently worth 7 per cent less than when it was introduced, excluding clinical programmes the average tuition fee in 2021 had increased by 80 per cent in a decade.

Yet preposterously, that 30 per cent / 70 per cent split on maintenance / fees for the purposes of calculating the impact on benefits remains.

To be fair, back in 2016 the government recognised the risk that fees might rise faster than the loan – and to counteract the risk, respondents to the consultation suggested that some form of tuition fee cap be imposed and/or that institutional fee changes should be subject to greater scrutiny or be made more transparent to mitigate this risk.

The government said it has no intention of introducing new or additional regulation, and instead suggested that there could be a monitoring role for the Higher Education Funding Council for England (HEFCE) and/or the Office for Fair Access (OFFA).

That never came. And it never featured on the workplan or priorities of successor body the Office for Students (OfS) either.

Devolved and unloved

Things aren’t much better in the devolved nations.

Student Finance Northern Ireland only offers a loan of up to £6,500 to help with tuition fees – although Disabled Students Allowance is also available.

Although it has increased substantially over the years, Scotland offers a loan of up to £7,000 to help with tuition fees, and a loan of up to £6,900 to help with living costs. It will also allow PGT students to access the Special Support Loan wheeze that was announced back in December.

Wales has been the most generous in recent years – former Education Minister Kirsty Williams oversaw a system that now offers a loan of up to £18,950 to help with tuition fees and living costs – although even that figure is only being updated by that bogus RPI projection figure that England uses for maintenance.

Back in 2018, Williams said that progression into postgraduate study was Wales’ “next challenge” in widening participation:

By introducing equivalent living costs support for master’s students, we will address this challenge. Therefore I can give a commitment that over the lifetime of this government we will see an increase of at least 10% in the number of Wales domiciled students studying at Master’s level.

Take up of the Master’s loan went from 5k to 5.9k the following year – but having risen to 7.6k, has now fallen back to 5.8k students.

Meanwhile in England, take up has gone from 76.7k students in 2017/18 to a high of 102.3k in 2020/21 – only to fall back again to 76.3k this year.

What might be causing that? It’s hard to avoid thinking that cost of living is having an impact.

There have been repeated surveys telling us that often more generous (depending on the means test) UG maintenance loan isn’t enough to live on, HEPI says that students outside of London need £18,632 to live on, and it’s worth remembering that the Student Income and Expenditure Survey for 2021 told us that of those FT UGs with commercial credit, the median commercial credit borrowings figure was £2,000. Hardly a position from which to take on a PG programme.

Access and participation

From an access perspective, there was initial good news. This Sutton Trust report in 2021 revealed that rates of progression from an undergraduate degree to a postgraduate master’s increased for graduates of all backgrounds, but increased the most for those from socio-economically disadvantaged groups.

In 2013/14, just 6 per cent of first-degree holders from working class backgrounds in England progressed to a taught higher degree (i.e. master’s), compared to 8.6 per cent for those from managerial and professional backgrounds.

By 2017/18, rates for both groups had risen considerably, and the gap in participation had reduced, with 12.9 per cent for those from working class backgrounds and 14.2 per cent from managerial and professional backgrounds going onto this type of study.

But there were important differences across socioeconomic groups in access to institutions with high signalling value. About eight out of every twenty graduates from professional/managerial backgrounds who progressed to a higher degree within 15 months of graduating in 2017/18 did so at a Russell Group university. For working-class graduates the equivalent figure was five out of twenty.

That report argued that the funding system for postgraduate study in England needed reform to eliminate financial barriers, with government support covering full maintenance and course fees, especially for low-income students.

It argued that universities should extend widening access initiatives to postgraduate levels, both by improving attainment for disadvantaged undergraduates and using contextual admissions.

It said that regularly published data on postgraduate participation by the Office for Students and the Department for Education would help track progress, and called on the Office for Students to ensure fair access to postgraduate study, requiring universities to include these efforts in their access plans.

It also said that universities should ensure fair course fees, avoid application fees, and simplify the application process.

If those things were right then, they very much should be taken up now.