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Student and Graduate Debt
A debate on motion
S2M-2866, in the name of Fiona Hyslop, on
Student and Graduate Debt.
The
Presiding Officer (Mr George Reid):
Good morning. The first item of business is consideration of business motion
S2M-2875, in the name of Margaret Curran, on behalf of the Parliamentary
Bureau, setting out a timetable for stage 3 consideration of the Prohibition
of Female Genital Mutilation (Scotland) Bill. However, as no one is
available to move the motion, we will have to move on. I will take that
motion later.
The next item of business is a debate on motion S2M-2866, in the name of
Fiona Hyslop, on student and graduate debt.
Fiona Hyslop
(Lothians) (SNP): The
Scottish National Party has brought the motion to the chamber today in the
hope that, cross party, we can examine the very real problems facing
students, graduates and Scotland in general. We want the Executive to
acknowledge a problem and be prepared to examine all the options — even the
Conservative one, but also the SNP proposal to replace loans with grants. At
the very least, we must agree to have research on the table and some options
to examine. The Executive amendment mentions research into student poverty
and graduate debt. That research was expected in January this year. I
understand that it has been delayed at the request of the researchers, but
we desperately need it. We should note that the National Assembly for Wales,
where the Opposition defeated the Labour Executive only this week on top-up
fees for Wales, is ahead of us in having a standing committee and research
provided on student and graduate debt. I wonder whether the minister will be
kind enough to give us a date for the publication of the research and to
confirm that it will contain graduate debt information.
The Deputy Minister
for Enterprise and Lifelong Learning (Allan Wilson):
I agree with Fiona Hyslop in that I am glad that we are having the debate,
as I welcome every opportunity to debate Executive policy in the chamber. I
would argue that we have a record on student support and funding for higher
education that is beyond comparison with other parts of the world. The
debate gives me an opportunity to remind members of the significant steps
that the Executive has taken to establish student support arrangements here
in Scotland that are both fair and affordable.
The Executive is doing a great deal to tackle student debt. We want to
ensure that young people have equal access to higher education, regardless
of their background. We are acutely aware that debt or, perhaps more
accurately, the fear of debt, can be an inhibiting factor when prospective
students are deciding whether to undertake higher education study. Of
course, before devolution we were faced with a system that included the
payment of annual fees. It was argued that that was a major barrier to
access for many potential students from underrepresented backgrounds — even
with concessions to those from lower-earning families. It was by agreement
between the Labour and Liberal parties — the first and second parties in
Scotland — that we undertook to abolish the contributions to fees for Scots
studying in Scotland.
Murdo Fraser:
I listened with great interest to what the minister said about the removal
of fees. Was it not the Labour Party that brought in fees in the first
place?
Allan Wilson:
It was indeed the Labour Government. I seem to recall that I stood on
precisely that platform in 1999 and was elected to the Parliament. We
established the Cubie committee as part of the partnership agreement between
the Labour and Liberal Democrat parties, which are, I repeat, the first and
second parties in Scotland. We then abolished the contribution to fees for
Scots who study here in Scotland. We recognised what I think everybody —
perhaps even Murdo Fraser — would agree is the powerful principle of free
tuition. As a result of that, our higher education system now has open
access for students from all backgrounds and is the envy of many countries.
Last week I spoke to Jane Davidson, the Welsh Minister for Education and
Lifelong Learning, on this subject. She was very complimentary about the
system of student support and higher education funding that we enjoy here in
Scotland.
Devolution has given us the opportunity to introduce changes to the student
support system for Scotland. It allows us to remove barriers to higher
education by targeting resources where they are needed most. I will remind
members how we do that. We introduced the young students bursary to
encourage young students from less well-off backgrounds into higher
education. The bursary is non-repayable. It replaces part of the student
loan and therefore reduces the amount of debt that graduates will have.
The Deputy First Minister announced that from 2005-06 we will increase the
maximum bursary that is available to these students to £2,395. That means
that the overall number of students who are eligible to receive the maximum
bursary will increase by no less than 63 per cent. We also increased the
family income ceiling, which allowed the number of students who are eligible
for some sort of bursary to increase by more than 10 per cent.
Tommy Sheridan
(Glasgow) (SSP):
According to the latest statistics, the number of students from
working-class backgrounds throughout Scotland is now 17 per cent. That is a
3 per cent drop in the past two years. Does the minister accept that the
Executive is failing to encourage youngsters from working-class backgrounds
into higher education?
Allan Wilson:
I do not accept the basic charge that Mr Sheridan makes. As I said, we have
introduced a number of important initiatives to broaden access for people
from underrepresented groups. We have a good record in broadening access
more generally and are increasing the total number of students who study in
Scottish higher education institutions to record levels. Although much has
been done, I accept that there is more to do.
One of our priorities is to take steps to broaden access to higher education
for students from underrepresented backgrounds. Part of the process of
policy development, to which I will refer again in the wake of the
publication of the information on student income and expenditure, will be
designed to do precisely that.
Fiona Hyslop:
Will the minister give way?
Allan Wilson:
I would like to make progress.
We provide hardship funds to every publicly funded institution to help
students who, as a result of undertaking a course, face particular financial
difficulties that may prevent them from starting or continuing their
studies. As I said in response to Mr Sheridan, we are continually looking at
ways to improve the system to ensure, given that there are limits on the
amount of money that is available, that we target financial support where it
is needed most.
We have not stopped there. Since we first started paying loans, many
colleges and universities have changed the lengths of their terms or moved
to semesters. Most students now appear to need to have more of their money
available to them in their first term or semester. We have just finished an
extensive consultation process to consider changing the payment pattern of
living-cost student support. We recognise that the current system of paying
three equal instalments may not be appropriate.
We will make it easier for students to budget by changing the payment
pattern of the student loan and bursary. We will make a further announcement
on that later in the summer.
We will establish, from 2005-06, the higher education child care fund. In
doing that, we will simplify the package of support that is available to
higher education students who have child care needs.
Fairness and affordability are the key criteria for any system of student
support. I argue that the Executive is delivering on both counts.
I move amendment S2M-2866.2, to leave out from "notes with concern" to end
and insert:
"agrees that the support arrangements for students ordinarily resident in
Scotland should continue to be based on fairness and affordability; agrees
that such a system should include free tuition, regardless of family income,
and bursary support for those from less well-off backgrounds; welcomes the
increased level of the Young Students' Bursary and its extended eligibility;
notes that liable graduates pay the graduate endowment in respect of the
higher education benefits that they have received with the payments adding
to the fund to pay support bursaries for students from poorer backgrounds,
and recognises that the publication of the survey of Scottish students'
income and expenditure, later this year, will allow for a better
understanding of the situation facing students and the continued development
of policy to meet their needs."
Murdo Fraser (Mid
Scotland and Fife) (Con):
I welcome the opportunity to
debate the important issue of student debt. At the outset I commend Fiona
Hyslop for the constructive and consensual way in which she moved the
motion. I am sure that in these exciting post-election times we are all
interested in new ideas and we should encourage debates on such subjects.
Fiona Hyslop is entirely right to raise the issue and point out the concern
about the growing levels of debt among graduates. The figures show that
there is a serious concern. In 2004, 1,541 graduates declared themselves
bankrupt — that is
almost 50 times as many as did so in 1997. Sadly, some students see
bankruptcy as a way of getting out of the high levels of debt that they have
accumulated. Those stark figures do not necessarily reflect the difficulty
that many other students have in repaying the loans that they have
accumulated.
The British Medical Association's briefing for the debate points out some
facts about debt for medical students. The average debt for medical students
in Scotland was more than £11,000. One in five Scottish medical students has
more than £20,000-worth of debt. It is not surprising that the BMA is
concerned about the impact that those figures have on recruitment to
medicine as a profession, particularly given that students of medicine study
for longer than students do for
the average profession.
We must recognise that there is a difference between borrowing via student
loans and borrowing via other means. When I went to university in the 1980s,
I was fortunate enough to receive a full grant due to my parental
circumstances. Of course, that was under a Conservative Government.
The Conservative Government of the day massively increased the number of
university places and, in order to fund that increase, it introduced the
student loans scheme. I have no difficulty with that concept. I supported it
at the time and I support it today, because I believe that students should
be prepared to make a contribution towards their own upkeep during their
education. I do not support the idea of students paying towards the
provision of that education, but I support the idea that they should
contribute towards their upkeep. The student loans scheme allowed a whole
new generation of youngsters, whose parents would never have had such an
opportunity, to access higher education.
I listened with interest to what the minister said on fees and specifically
about fees deterring those from underrepresented groups accessing higher
education. Of course, it was the Labour Government — to be fair to him, he
was gracious enough to acknowledge this — that introduced those fees in
1997. I accept that they have now been removed and replaced with a graduate
endowment, but I will not take any lessons from the Labour Party on the cost
of higher education.
I will return to the SNP motion. The problem with student debt is not
primarily to do with the debt of student loans.
Contrary to the assertions that Fiona Hyslop made in her saltire paper on
student finance, the percentage of those who defer student loan repayments
has fallen from more than 24 per cent in 1997 to 13 per cent in 2004. The
figures do not indicate that students are struggling to repay their student
loans. As we know, students start to repay their loans when their salaries
reach the threshold of £15,000, so there is no evidence that student loan
repayments represent a huge burden on most graduates.
Fiona Hyslop:
Is the member aware that of the people who graduated in 1997, the year that
Labour came to power, 34 per cent have yet to start repaying their loans.
Some 34 per cent of graduates are deferring payment, which is a significant
number.
Murdo Fraser:
I accept that there are graduates in that position. There are problems in
the economy. Many graduates have not been able to find jobs that pay the
salaries that they expected to earn, and their salaries have not reached the
threshold for repayment. That is a difficulty.
The borrowing that students take on above and beyond their student loans,
through bank overdrafts or even credit cards, is of far greater concern than
is borrowing through student loans, because it incurs higher interest rates.
We must consider ways of expanding the student loans scheme, to allow more
students to access student loans rather than borrow at more expensive rates.
I disagree with Fiona Hyslop on the matter; the expansion rather than the
replacement of the student loans scheme offers the way out of the problem.
Allan Wilson:
The Conservative amendment calls for a change in the student loans system
and proposes that loans would be repaid at a "low, but commercial, rate of
interest".
Will the member be more specific about what is meant by "commercial"?
Murdo Fraser:
We envisage a system in which
a market rate of interest, instead of a subsidised rate, would be paid. We
accept that the market rate would be higher than the rate that is currently
paid by students and I will expand on that.
Allan Wilson:
This has been a good debate. I value the constructive contributions that my
colleagues Duncan McNeil and Pauline McNeill made. They put the issue in
perspective, as James Douglas-Hamilton also attempted to do. I agree with
what
my colleague George Lyon said about our joint approach. In the partnership
agreement, we made it clear that we would review bursaries, which we have
done, and that we would increase the student loan repayment threshold, which
we have also done. We will continue to deliver.
Pauline McNeill made an important point, which I would like to address. The
Scottish student income and expenditure survey, which will be published
shortly, will give us an accurate picture of students' financial position
and will allow us to gain a better understanding of the difficulties, which
members have mentioned, that students in Scottish institutions face. We will
use that information in continuing to develop policy in the area.
Fiona Hyslop:
Will the minister confirm that graduate debt and its impact on the wider
economy will also be considered, as Jim Wallace promised?
Allan Wilson:
I will deal with the point
that the member's colleague made about the wider economy, as I was
interested in what he said, unclear as it was.
The point of the survey is to develop a more coherent and structured system
that tailors help towards those who need it most.
Two principles underpin our approach: fairness and affordability. I repeat
that those principles are key criteria for any student support system.
Duncan McNeil was right to shoot a number of foxes that were running around
the chamber — I refer in particular to what Tommy Sheridan said about
halcyon days of student support in the 1960s and 1970s, when working-class
kids flocked through university portals and their education was paid for
through taxation. Those days did not exist. The proportion of young people,
especially working-class kids, who entered higher education institutions in
that era was much lower than it currently is. The working class paid for the
higher education of people from the middle classes and the upper classes,
many of whom came from the private education system. The facts should be
repeated.
As I said, through the introduction of the young students bursary in
2001-02, we have taken substantial steps to help to ensure that young
students from low-income backgrounds — who are more likely to be discouraged
from applying to university because of the fear of debt — will have less
debt than they would have had under the previous support arrangements. In
January 2005, we announced that, from 2005-06, the young students bursary
will increase by 11 per cent to a maximum of £2,395. The parental income
threshold has also been increased, with the maximum bursary being available
at £17,500 and the minimum being available at £31,000. That means that
approximately 3,000 additional students will be able to receive the bursary
and approximately 20,000 students will receive the maximum bursary. Those
are significant statistics and bear out
our overall approach, which is based on fairness, affordability, expanding
access to higher education and ensuring that higher education is more
available to students from disadvantaged backgrounds.
Under the student loans income-contingent repayment scheme, which Fiona
Hyslop mentioned, borrowers repay at an affordable rate only after their
earnings have reached £15,000. That, too, is an improvement on previous
arrangements, under which borrowers repaid over a fixed period. The period
over which a loan is repaid and the amount of the monthly payment will be
longer or shorter depending on the borrower's earnings, but the amount that
is repaid will be no more in real terms than the amount that is borrowed.
Alex Neil talked about the economy. The fact is that cost sharing is
becoming the rule rather than the exception and students' overall
contributions towards tuition fees and maintenance are comparatively less in
the UK than they are in other countries. Total spending on tertiary
education tends to be higher in countries that do not rely solely on taxes
and that pull in additional resources from other sources — I refer to
countries such as New Zealand, Australia, Canada and the
Netherlands.
It is entirely legitimate to argue, as the SNP has, for grants and not
loans, but we must be honest. The SNP's saltire paper is not honest because,
as George Lyon said, the policy that it proposes would cost money — £231
million, which includes a £70 million subsidy. It would therefore cost the
Executive approximately £180 million to provide grants for living costs
support, if we assume that loans would be repaid at the same rate as they
currently are. Unless taxes were increased in order to raise that £180
million, there would have to be cuts in health services or in other parts of
the education budget.
We must be honest about that.
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the entire debate,
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