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COMMITTEE FOR EMPLOYMENT AND LEARNING Student Finance VOLUME 1 - Report and Proceedings of the Committee Contents IntroductionAppendix 1 - Minutes of Proceedings Relating to the Report Appendix 2 - Minutes of Evidence Appendix 3 - Individuals who Responded The Committee
for Higher and Further Education, The Committee for Higher and Further Education, Training and Employment is a Statutory Committee of the Northern Ireland Assembly, established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement, under Section 29(a) of the Northern Ireland Act 1998 and under Assembly Standing Order No. 46. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Higher and Further Education, Training and Employment and has a role in the initiation of legislation. The Committee has 11 members, including a Chairperson and Deputy Chairperson, and a quorum of 5. The Committee has power:
The Committee is appointed at the start of every Assembly. The membership of the Committee since its establishment on 29 November 1999 has been as follows: Dr Esmond Birnie
(Chairperson) *Mrs Joan Carson replaced Rev Robert Coulter on 11 September 2000. Reports to the Assembly and evidence taken by the Committee are published by the Stationery Office by order of the Committee. Minutes of Committee proceedings and reports of the Committee to the Minister are posted on the Assembly website (www.niassembly.gov.uk). All correspondence should be addressed to: The Clerk to the
Higher and Further Education, ( 02890
521272 Ê
02890 521433 STUDENT FINANCE:
REPORT BY ASSEMBLY COMMITTEE FOR HIGHER This report details the considerations of the Committee for Higher and Further Education, Training and Employment, and its response, in respect of the Review of Student Finance announced in February 2000 by the Department for Higher and Further Education, Training and Employment. We are fully independent of the Department, and we have the power to consider and advise on matters brought to the Committee by the Minister. As a statutory Committee, our wide-ranging duties include a policy development and consultation role with respect to the Department. We believe our recommendations will bring real improvements, through increasing and widening access to further and higher education, giving real financial help to students, extending the capacity of universities and colleges, better targeting finite resources, and simplifying complex systems. The Committee, whose remit extends to higher and further education, but not to the schools sector, takes considerable pride in Northern Ireland’s further and higher education systems. This, our first full-length report submitted to the Assembly, examines the fairness and effectiveness of financial support for full-time and part-time students undertaking further and higher education courses in further education colleges, and through university studies. In the report, we have conscientiously balanced what we believe is affordable, against our desire to maximise opportunity for all to access high quality lifelong learning. We call on the Department to provide the Minister with fully costed options, where these may require additional financial resources. Our recommendations are as follows: We recommend: 1. Abolishing the parental/spouse contribution towards full-time undergraduate tuition costs in Northern Ireland. We regret that we cannot extend this recommendation to Northern Ireland students following courses outside Northern Ireland, because of the possible implications under European Union law. 2. Any resulting shortfall in income to the higher education sector in Northern Ireland should be met by the Northern Ireland government. 3. Additional financial support to full-time Northern Ireland students, including by way of means-tested, non repayable grants. 4. External aid should be sought, including international and EU funding, to establish a new, charitable fund, the Northern Ireland Student Endowment Fund (Charitable Trust) – "the NISEF". Existing access funds should be redirected to the NISEF, and the government should also contribute by way of tapered transitional payments, in advance of the establishing the graduate contribution stream. Resources should be ring-fenced to promote social inclusion, and to increase and widen access to further and higher education, by way of grants to assist disadvantaged students . 5. Business and industry should be encouraged, through a co-ordinated approach by all Government Departments and Agencies, to contribute to the Northern Ireland Student Endowment Fund (Charitable Trust), in line with best practice elsewhere. Proposals should be made to the Chancellor of the Exchequer that business contributions should attract tax incentives, especially for small and medium sized enterprises. 6. Northern Ireland graduates who enjoy clear personal earnings benefits, should make a set contribution totalling no more than £3,150 to the NISEF. This recommendation of the Committee depends critically on the threshold for liability for this contribution being set at an annual salary of at least £25,000. Some Members considered that, to promote social inclusion and wider access, HNC/HND students, mature students, lone parents and disabled students should be exempt from any such contribution. 7. The residual value of the NISEF contribution should be index linked so that it remains constant in real terms. 8. NISEF contributions from Northern Ireland-domiciled students attending Northern Ireland universities, and from business and industry, should be collected and administered in Northern Ireland. 9. All students whose parental/spouse income is less than £23,000 (index linked) should be entitled at least to the maximum student loan. 10. The current system of student loans should be better focused on the needs of Northern Ireland students and graduates. Establishment of local, "one stop shop" arrangements for allocating student maintenance grants, supplemented by low interest loans. 11. Help for students to plan their finances, and improved information on costs and financial support, to be made available to prospective degree and sub degree students (e.g. by means of straightforward pamphlets, well- designed websites, and including through schools). 12. The Minister to obtain, and secure agreement to make public, the findings of the United Kingdom interdepartmental working group which is examining the relationship between the benefits system and student support, so that major disincentives to prospective students may be identified and addressed. 13. No graduate should be required to repay the student loan until he or she is earning at least £20,000. The student loan to be repayable at a rate of 9% per annum of earnings over £20,000. 14. Government should ensure a properly funded higher and further education system. Higher and further education are essential components of social inclusion and economic prosperity, and should have a high priority in this Executive’s Programme for Government and associated funding decisions. Any decisions on funding should ensure equitable provision for the further education sector. 15. A single, independent and accountable, integrated higher and further education funding body, operating at arms length from government, should be established for Northern Ireland. With a similar status to similar bodies elsewhere in the United Kingdom (and in the Republic of Ireland), this body would decide on priorities for funding, and bid for additional funding from the Department, both current and capital, across the sectors. 16. The scope of the Department’s review should include recommendations on how the principle of parity of funding should apply to all courses of higher and further education and post-16 funding. 17. In the first instance, and additional to the further 4,200 new places already planned, funding should be provided for at least an additional 2,000 progressing to 4,000 full-time undergraduate places over the next 5 years, to be distributed at sub-degree and degree level, with a focus on skills to support the knowledge economy. This will help ensure that most if not all new students will have a chance to find a place in Northern Ireland and avail of the new arrangements if they wish. 18. The maximum aggregate students numbers cap (on numbers of undergraduate places which universities may offer), is currently set at a level which is too restrictive. When these extra places (Recommendation 17 above) are in place, consideration should be given to lifting it. CONDUCT OF OUR DELIBERATIONS At our first meeting on 16 December 2000, the Higher and Further Education, Training and Employment Committee identified student finance as a priority for action. Over succeeding sessions, we considered research evidence on student flows, drop out, and the emerging findings of the Scottish Executive. We unanimously decided that we urgently needed to consider the whole question of student finance for Northern Ireland. We were pleased that, on taking up office, the Minister of Higher and Further Education, Training and Employment, Dr Sean Farren, had indicated that he wanted the issue to be reviewed. When asked whether his recommendations would be referred to us, the Minister said: "The Committee . is at liberty to debate, discuss and, indeed, investigate these issues. I certainly would welcome any views that the Committee has." We asked representatives of the Association of University Teachers, and of the National Union of Students/Union of Students in Ireland, to brief us on the issues on 3 February 2000. These groups told us about student poverty and scarce institutional resources. We discussed with them a wide range of issues, including tuition fees, drop out (reasons and incidence), student poverty, students and paid employment, participation and access, and social and private gains from education. Soon afterwards, the suspension of devolved government in Northern Ireland, from midnight on 11 February to 30 May 2000, meant that Assembly Committees were prohibited from meeting or conducting any business for a period of almost 3 months. Our work on Student Finance was halted during this time. However, in February 2000, under direct rule arrangements, the Department launched the Review of Student Finance, with the following terms of reference:
Public consultation on the Department’s review was set to close on 2 June 2000. On 1 June 2000, the day after devolved government was resumed, the Committee returned to considering the question of student finance. Members unanimously determined that, although the consultation on the Department’s Review was closing the next day, the Committee would be failing its duty if it did not play its full part. We felt strongly that we needed to make our advice available to the Minister before he reached his decisions on the Review. We also decided that we would scrutinise any changes which the Minister set in place, in order to ensure that student support in Northern Ireland was geared to local students’ needs, and grounded in adequate strategic thinking about the future of higher and further education in Northern Ireland as a whole. We re-emphasised our concern that Northern Ireland’s student finance system should put the interests of Northern Ireland students first. On 15 June 2000, the Committee took evidence from Dr Robson Davison, a senior official with the Department of Higher and Further Education, Training and Employment, on:
We were concerned that suspension had foreshortened Committee consultation, and that we needed further information and, preferably, proper consultation, to fully understand the complexities and problems facing interested parties, including Northern Ireland students. The Department agreed to share with us the responses to their consultation, and we are grateful for this, and for some assistance from the Department with information requested by the Committee. However we consider that consultation in Northern Ireland on student finance proposals has been rather limited – particularly when we compare this to the process which the Cubie Committee undertook in Scotland, which surely succeeded in its intent of listening to all the voices in the debate, particularly those which usually went unheard. We regretted also the lack of readily available information on the current system in Northern Ireland, to inform our deliberations. We believed we should look at what we could learn from other, international models of student finance. Northern Ireland shares tradition and culture with both the United Kingdom and the Republic of Ireland, and we considered it pertinent to evaluate their recent policy reviews in the areas of student finance and institutional funding. In common with our objectives, these reviews sought to remove barriers to participation, increase access and maintain quality. At the same time, we recognised that Northern Ireland has its own problems, which could not simply be solved by lifting the Scottish or the English or the Republic of Ireland models. Even so, we regret that the Department’s consultation document failed to cost the application to Northern Ireland of the most obvious policy options – those of the Scottish Executive, and of the Blunkett decisions for England and Wales. Although the Committee has explicitly raised this issue with the department on a number of occasions, the information has not been provided. It is difficult to make good decisions about policy options in the absence of information about the costs of such policies. We have also reviewed the evidence and research gathered over the past few years by the Dearing and Cubie Committees. We took evidence from Andrew Cubie, and commissioned research from Dr Nuala Bryce-Gormley, who had co-ordinated the research programme in support of the Cubie Inquiry. In addition, we appointed Professor Bob Osborne, and his colleagues Helen Leith and Roisin Thanki, of the Centre for Research on Higher Education (at the University of Ulster and The Queen’s University of Belfast), to advise the Committee and conduct research on:
This research was completed during July and August 2000, and the main research reports are included in Volume 2 of this report. The research, together with articles prepared by Assembly Research (see Appendices), provided a wide range of contextual material within which the Committee referenced its more specific concerns, and which has informed the Committee’s approach to its response to the Department. Having considered the context within which our examination was taking place, our deliberations were essentially based around a core set of principles, which we formulated into a specific set of objectives. CORE PRINCIPLES AND OBJECTIVES The Committee agreed that its response to the Department should be consistent with a set of objectives, which take account of Northern Ireland’s circumstances. We believe that Northern Ireland’s student finance system should:
Given this background we agreed on a system which would satisfy our core principles, as follows:
We considered models of student funding internationally, within the United Kingdom, and in the Republic of Ireland. We found considerable and substantial evidence, particularly in relation to support for full-time degree and sub-degree students. We decided that more needed to be done, by way of financial support for students, and in terms of encouraging students from under-represented groups to undertake and succeed in courses of further and higher education. We noted that most economic experts conclude that increases in the number of further and higher education students contribute powerful general benefits to society as a whole. A more highly educated and trained work force may well lead to faster economic growth. This is the social benefit. Such a benefit or return represents a sound argument for providing a substantial, publicly funded contribution towards the total costs of tuition. Thus the Committee accepted and recommend that much of tuition costs should continue to be covered by the state. We accept there are also considerable private returns to the individual from university education. The indications are that this premium varies according to academic discipline studied and by sex (women gaining more from being graduates, but still earning considerably less than their male counterparts). Since the United Kindgom tax system has ceased to be progressive once the 40% tax band is reached (tax paid as a percentage of gross income does not increase as that gross income increases) it cannot be claimed that graduates necessarily pay proportionally more income tax. Both the Cubie Report "Fairness for the Future", and subsequent policy review by the Scottish Executive in its proposals "Scotland, the Learning Nation: Helping Students" offered considerable and substantial evidence on the problems of student support, particularly for full-time students, and those on sub-degree courses. We concluded that the abolition of tuition fees, and the introduction of the Scottish Graduate Endowment, offered a model, subject to the threshold for graduate contribution to the endowment being set at no lower than £25,000, index-linked, in order to reflect the private gain from education. OUR CONCERNS The Committee believe that if this Executive is to promote social inclusion and achieve economic progress in Northern Ireland, we must invest in forward looking indigenous education and training provision, as deprivation is inextricably linked to low levels of education, in a pattern often repeated from generation to generation. We believe the individual and public gains are well worth the further investment we are proposing, and we strongly urge the Executive and the Assembly to accept our recommendations and give them high priority in the forthcoming Programme for Government. Our colleges and universities have continued to enrich the social and economic life of Northern Ireland over thirty years of unrest. During the last decade, more and more students of all ages and from all social classes in Northern Ireland have successfully completed higher and further education courses. However we consider it a priority to encourage wider access to sub-degree and degree courses - recent trends indicate that the level of participation of less privileged students in degree and sub degree courses is holding constant rather than increasing. Convincing arguments were put to the Committee about the failings of the current student support system, particularly in the context of Northern Ireland’s particular circumstances. We recognised that many students and their families struggle to pay fees and living costs, perhaps where the student is from a large family, where parental support is denied, or less than the assessed level, or where a mature student with dependants faces a ‘benefits trap’. STUDENT DEBT We believe that high costs, and fear of debt, deter many people of all ages from entering higher education. For example, the shift over the last five to ten years from means tested grants to student support loans for full-time undergraduates in particular, together with changes to the social security benefits system, and the introduction of up-front tuition fees, has meant that many university students are rendered financially dependent on their families, or on part-time employment, in order to complete their studies. These dependencies often are detrimental to the student’s study and academic performance. Our Advisers gathered information which indicated high incidence of part-time working among full time undergraduates here and we received evidence from NUS/USI on the increase in students’ working hours (to meet basic, not recreational living costs) and how this is now a critical factor in increased rates of student drop-outs from courses. We also noted, with concern, recent media reports highlighting the plight of many young students in Northern Ireland, who were forced to live in sub-standard accommodation. There are clear indications that hardship is a grim fact of life for many students. We believe that there may be, in Northern Ireland, as was identified in Scotland, some traditional aversion to debt, particularly among less affluent students. The abolition of the non-repayable grant and the introduction of the student loans system has created a situation of student debt that is still evolving and which is relatively new to Northern Ireland. The research undertaken by the Independent Committee of Inquiry into Student Finance in Scotland indicated that students now consider debt as an unavoidable consequence of being a student, but it was noted that the prospect of student debt was feared most amongst potential students and their parents from less affluent areas. High levels of debt, both current and anticipated, were reported by students participating in the Scottish research, although students chose to avoid debt in various ways, usually at some other cost. While most participating students opposed student loans in principle, these were identified as the preferred source of borrowing. The Committee debated at length the ‘wall of debt’ which some students face on graduation, often including loans at commercial interest rates - the level of the student loan was sometimes seen as inadequate and certain students had to rely on other forms of borrowing, such as overdrafts and credit cards. NUS/USI also drew to our attention a number of difficulties faced by students whose religious beliefs forbid the borrowing or lending of money, and concerns that many such students may withdraw from, or not enter courses because of financial obstacles. In the light of all these considerations, it was clear that we were opposed, in principle, to the current finance support system and its dependence on student loans. Members agreed that previous systems offering non-repayable grants were only possible when delivering to the ‘lucky few’ who proceeded to university. Some Members pointed out that such a high level of provision is simply not affordable at current levels of participation. Some Members felt that an equitable, lasting solution would be to fund universal student grants by way of a progressive taxation system - a solution discussed with us by NUS/USI representatives. However, we decided that, since taxation is not a transferred function, our report should propose solutions which could be implemented in the short to medium term. There was unanimous support for much more generous, consistent and timely arrangements for grants to help widen access. There was also agreement that the government needed to recognise - and act to reduce - the costs and financial burdens, (and accompanying hardship or loss of independence), for students who would not qualify for access grants. We recognised that, taking account of the immediate financial constraints mentioned above, and within which our Executive operates, a number of radical improvements were needed to make the student loans system much more beneficial for individual students. Compared to commercial loans, the rate of interest of the current student loan (in real terms, the loan is interest free) gives a benefit to the borrower. We felt that this benefit should be extended, to help prevent the accumulation of further, expensive debts in the early stages of a graduate’s career. The Committee also examined the varying data presented by Cubie and NUS-USI on student expenditure. We noted that Cubie recommended an increase in the support for students living away from home (but not in London) from £3635 to £4100. While our own research indicated that more information is needed on the spending levels and patterns of local students, we are satisfied with the robustness of the recommendation. We concluded that the maximum loan should be increased, in line with Scottish Executive proposals; and that the current earnings threshold of £10,000, above which graduates currently pay 9% per annum of their residual earnings, towards repayment of the student loan, was too low, and should be set at a level which more accurately reflected an earnings premium from education. As outlined above, these conclusions arose from a recognition that, despite our fundamental opposition to a universal, loans-based system, a system of universal grants was unlikely to be affordable. However we all considered that more financial assistance needed to be made readily available to less privileged students, if we are ever to realise our ambitions of opening up the benefits of higher and further education to all groups in our society. We therefore looked at the various packages of proposals to enhance access which have been announced for England and Wales. We support the introduction in Northern Ireland of new measures, particularly targeted at disadvantaged young people and full-time mature students, including a non-repayable grant of up to £2,000 from the NISEF, available at the start of the academic year. We also recommend the introduction of means-tested assistance towards childcare. Another issue which concerned us is unique to Northern Ireland - the continuing exodus of significant numbers of young school leavers, to study and work elsewhere (which is not balanced by an equivalent inflow of students from elsewhere, although many students from the Republic of Ireland still chose to study in Northern Ireland, despite the fee-free regime there). Many only leave Northern Ireland because they must, in order to find a university place, or a well-paid job with good prospects. (There is the problem of disciplines such as veterinary science which are simply not represented in Northern Ireland universities.) We would like to see more of our students deciding to study, and later work, in and for Northern Ireland - this outflow of young students robs Northern Ireland of an irreplaceable and valuable energy and resource. Currently some 35% of our school leavers, who wish to study a full-time undergraduate course, leave to study at universities outside Northern Ireland. Perhaps two thirds of these are "unwilling leavers", who are unable to secure appropriate higher education places in Northern Ireland institutions. The research indicates that some of the "willing leavers" do so because they strongly wish to leave Northern Ireland. The Committee discussed at length whether and how the higher education system, and wider society, was failing both these groups of young people. We discussed why there were such large numbers of seemingly "willing" leavers, and we concluded that no young person should have to leave unwillingly because there was no university place for him or her in Northern Ireland. We also considered the implications for higher education funding and student finance of the challenge posed by the Russell Group proposals. Twenty leading universities in Great Britain (e.g. London, Oxford, Cambridge, Warwick and Nottingham) now self-style themselves as a premier league within the United Kingdom system. Their intention seems to be to replicate the USA’s Ivy League. In order that such elite universities can obtain the cash resources to maintain their position they want a free market with regard to their entrance fees (perhaps rising to £5,000-10,000, though with the possibility of financial assistance for students from low-income backgrounds). It will be a central government decision whether the Russell Group is allowed to go down this route. There are indications that the Blair Government may be minded so to do. If this does happen then the authorities in Belfast will be powerless to stop the process and the challenge will be to ensure that QUB and UU compete effectively in an American-style higher education market in the United Kingdom. In these developments, there is a danger that students resident in Northern Ireland, as elsewhere, may experience considerable financial barriers to accessing world class teaching and education. ABOLISH PARENT/SPOUSE CONTRIBUTION TO TUITION FEES The maximum current level of private contribution to tuition fees (£1,050 per full year) represents only a fraction of actual costs. Depending on the course of study, the private contribution ranges from 6% to18% of estimated annual, full time fee costs for an undergraduate place at the two local universities. Parent/spouse contributions to full time higher education fees have proved unpopular in many quarters in Northern Ireland as in other parts of the United Kingdom, even though the payment of undergraduate tuition fees is means tested and almost one-half of all students in Northern Ireland are exempted. We noted that the state now fully funds undergraduate fees in Republic of Ireland universities, and that parent/spouse contributions to full time undergraduate fees have been abolished in Scotland. We recognised that private contributions to higher education tuition fees in Northern Ireland higher education institutions, currently some £12.5m each year, represent a considerable source of income, which would have to be found elsewhere. We concluded that the up-front tuition fees for full time further and higher education courses should be abolished. We believe that we can be more specific, and recommend that the fees of all full-time undergraduate students at Northern Ireland universities and colleges should be paid in the first instance by the Northern Ireland government. We would wish, but are unable, to recommend extending this payment of fees to Northern Ireland-domiciled undergraduates studying outside Northern Ireland, as a result of our obligations under European Union law. We understand that, if a Northern Ireland-domiciled student studying in England were to be given more favourable treatment than other EU students, then there would be a danger that EU students in England could seek the same treatment. We may be able to help in some way by providing improved maintenance support, but we believe we cannot assist them to pay fees unless they qualify through the same means test as local students. In addition, our recommendations regarding additional places, and continuing efforts by universities and colleges to maintain and improve quality and relevance of provision, should ensure that, as far as possible, no Northern Ireland-domiciled student suffers disadvantage by being obliged to study elsewhere. Recommendation Abolish the £1,050 per annum up-front parental/spouse contribution to tuition fees for full-time higher education at Northern Ireland institutions. Any resulting shortfall in income to the higher education sector in Northern Ireland should be met by government. ESTABLISH THE NORTHERN IRELAND STUDENT ENDOWMENT FUND (CHARITABLE TRUST) We considered the Scottish Executive’s proposals for the introduction of a graduate endowment which will come into effect in academic year 2001/02. The Scottish Executive saw the payment of the graduate endowment as recognition of the benefits students enjoy from higher education. The graduate endowment in Scotland is expected to be set at £2,000, with all funds being used to provide maintenance for future generations of disadvantaged students. We considered very seriously the representations which had been made concerning the difficulties and hardships facing numbers of students under the current system. The Committee also took account of the enquiries conducted by the Cubie Committee. We noted that attitudinal research conducted for the Cubie Committee had concluded that socially excluded groups (such as the unemployed, people with disabilities and people on low incomes) were thought to be discouraged by the current funding system for further and higher education, because they received a higher, non-repayable income on benefits. Our Committee, in its deliberations, questioned departmental officials closely about the position on financial help for students who needed help towards living costs. We learned that additional help was already available, through hardship funds and through access funding to the universities, and discretionary awards distributed by the education and library boards. The boards can make discretionary awards to individual students on the basis of published criteria – in 2000/01 to the extent of some £3.3m – while access funds of about £1.8m are allocated to Northern Ireland universities for discretionary distribution to help students who are in financial difficulty. We were concerned to learn that discretionary awards had halved from £6m to just over £3m over a 3 year period. (We note that there are some modest institutional incentives to promote access, and funding to schools, to help disadvantaged young people progress to further and higher education). We concluded however that there was overwhelming evidence to indicate that the current, very real financial problems of students were unlikely to reduce without additional financial support being made available. We also agreed that, in order to give greater access to groups which have previously been underrepresented in further and higher education, there needs to be a greater element of assistance, by way of maintenance grants, than there is at present. We recognised the need for additional funds from government, as part of a mixed economy of funding from public, private and other sources, to provide non-repayable grants for disadvantaged students. We supported the introduction of a Northern Ireland Student Endowment Fund (Charitable Trust) – NISEF – whose funds would be ringfenced to provide non-repayable grants to students most in need of financial assistance. We did not consider that a universal graduate contribution to NISEF would be appropriate. The Scottish Executive, which set a low graduate earnings contribution threshold of £10,000, has proposed exemptions in order to promote lifelong learning and ensure social justice – HND/HNC students, mature students, lone parents, and disabled students. We considered whether this approach supported our own concerns at how the present system of private, up-front contribution to fees, had impacted on access and participation in Northern Ireland. (We had, at an early stage, expressed concerns at the implications for participation, particularly regarding mature students, and, potentially, students from the Republic of Ireland). Some of us expressed concern that an earnings threshold of £10,000 was so low that the graduate contribution would have the effect of a universal graduate tax. We unanimously agreed that it would be fair and equitable to raise the earnings threshold to reflect the principle that society should look to graduates who enjoy a substantial salary premium, for help to generations of future students. We considered regional variations which might indicate a higher or lower threshold in Northern Ireland (such as family size, household expenditure, average graduate earnings etc) but concluded that our unanimous support for the graduate contribution to the NISEF should be predicated on acceptance of the £25,000 earnings threshold recommended by the Independent Commission of Enquiry into Student Finance. In so deciding, there were a number of us who considered that, at this threshold, there should be no exemptions. Recommendations The Northern Ireland Student Endowment Fund (Charitable Trust) should be established. Its resources should be ring-fenced to provide additional financial support to Northern Ireland-domiciled further and higher education students studying in Northern Ireland, by way of grants to assist disadvantaged students . In principle, we agree that graduates who enjoy clear personal earnings benefits, should make a set contribution to the NISEF. This recommendation of the Committee depends critically on the threshold for liability for this contribution being set at an annual salary of at least £25,000. The commitment to pay the graduate endowment in Scotland, by those who are not exempt, will be made when the student applies for their maintenance support and fees to be paid – on the form they would also undertake to pay the graduate endowment. The body which administers schemes of support for eligible Scottish domiciled students undertaking courses of higher education throughout the United Kingdom, the Student Awards Agency for Scotland, will be informed by the student’s college or university when they have graduated. The individual student may then either pay back the endowment immediately, or 1 year after graduation. (The Scottish Executive believes that when graduates become liable for the Endowment, the majority will take out a fresh student loan to cover the £2,000 cost. This fresh sum will be added to the existing income-contingent loans so there is one lump sum to pay off. Because the two sets of loans would be tied together, repayment would be under the existing arrangements – currently at the rate of 9% per annum of any income over £10,000 per annum). We consider that these arrangements offer a useful model for broadly similar arrangements to be introduced in Northern Ireland. Recommendation Payment would be at 9% of residual income above £25,000, until full contribution is made. CONTRIBUTIONS TO THE NORTHERN IRELAND
STUDENT ENDOWMENT FUND We considered that the purpose of the NISEF is closely allied to social and economic development, and that the Minister should seek to attract international as well as local contributions. Contributors might include the United States and the European Union, and funds such as the International Fund for Ireland, as part of their wider contribution to regenerating society and the economy in Northern Ireland. We recognise too that local business and industry have a major stake in indigenous further and higher education, and we recognised the continuing mutual efforts of the education, business and industry sectors to identify and meet skills needs. (We hope to address this issue in more depth in our enquiry into education and training for industry). We also discussed with our advisers whether, given the large numbers of small and medium enterprises involved in the Northern Ireland economy, there was scope for significant financial contributions to the Northern Ireland Student Endowment Fund (Charitable Trust) from business and industry, perhaps encouraged by tax incentives, while charitable status provided the potential to maximise such contributions. We thought that the Department, acting in concert with other government departments and bodies, could set in place mechanisms to encourage contributions from business and industry to the Northern Ireland Student Endowment Fund (Charitable Trust). The Committee also thought that there was scope for better co-ordination of such effort between government departments and agencies, so that for example established companies or new investors were encouraged to contribute to the Fund, and to inform them of its aims and achievements. Recommendation Business and industry should also be encouraged, through a concerted approach by Government Departments and agencies, to make contributions to the NISEF, in line with best practice elsewhere. ENTITLEMENTS TO SOCIAL SECURITY BENEFITS The Committee noted that mature students with families could be financially significantly worse off as students, than when on training programmes, (e.g. New Deal, where childcare support was available) or working. Several members cited examples of constituents who had experienced particular problems, and we were concerned at the lack of readily available information on interactions between the social security system and student finance, including not only monetary entitlements, but also entitlements to free services (such as dental treatment). We believe that these interactions are extremely complex, and we note that the relationship between the benefits system and student support is currently being examined by an interdepartmental working group on a United Kingdom basis. Recommendation We call for the Minister to obtain, and secure agreement to make public, the findings of the United Kingdom interdepartmental working group which is examining the relationship between the benefits system and student support, so that major disincentives to prospective students may be identified and addressed. STUDENT LOANS All members have concerns about the administration of student loans, while some members objected to the use of loans on principle. We heard and read substantial evidence that students accumulated debt from many sources, including costly commercial sources such as credit cards. To reduce recourse by students to costly borrowing, we considered that the present assumed level of support, and the level of maximum student loan entitlements, should be increased to £4,100 for students living away from home, to £3,240 for students living at home, and to £5,050 for students living in London. We strongly advise that ongoing review of loan entitlements, taking account of information on income and expenditure of students (only limited recent information is available), is required. The Committee also debated whether parental/spouse threshold for entitlement should be revised, or adjusted to make allowance, for example, for large families with dependent children. We concluded that the current threshold of some £17,000 residual income should be revised upwards, in line with proposals of the Independent Committee of Inquiry. Recommendation All students whose parental/spouse income is less than £23,000 (index linked) should be entitled at least to the maximum student loan. While recommending increases to the maximum student loan available, we recognised, as outlined above, the problems of principle which loans present for some students, and we know that many students dread the wall of debt which may face them on graduation. Even those on very modest incomes will, under current arrangements, have to start paying back the student loan. Income contingent repayment, at 9% of residual income over £10,000, can mean a smaller repayment over a longer repayment period, which many find easier to budget for than the previous, mortgage style loans (usually repayable over a 5-year term). However a repayment threshold of £10,000 p.a. engages many more, low-earning graduates in immediate repayments – which they often find difficult to meet. The Committee considered that the loan repayment threshold should be set at £20,000, well above average Northern Ireland earnings. No graduate should be required to repay the student loan until he or she is earning at least £20,000 p.a. The student loan to be repayable at a rate of 9% per annum of earnings over £20,000. NORTHERN IRELAND ARRANGEMENTS FOR LOAN ADMINISTRATION Members have already raised, in the Assembly and at Committee, constituents’ problems (which have not diminished this year despite assurances last year) about lack of responsiveness and problems in contacting the Student Loans Company. There are also considerable concerns over levels of loan default. We felt that, particularly in view of the increasing numbers of students, the Minister should speedily investigate the feasibility of separate Northern Ireland arrangements for administering student finance. We believe there are high levels of dissatisfaction with the current system (many students and their families remain bewildered by the process, despite the efforts by institutions, Education and Library Boards, and the Student Loans Company). We felt that any future scheme should be as simple as possible, while getting the message across clearly should be an aim of all involved in introducing changes. Members felt there should be a one-stop shop for students, with decisions on loans and grant assistance quickly available. Information and advice should be readily available. Entitlements should be simply communicated by pamphlets and via the internet, and staff involved in administering any new system should be well trained, with special programmes for specialist staff, including those who would be dealing directly with student queries. The setting up of such local arrangements would be co-terminus with the introduction of the other new student finance arrangements. Recommendations We call on the Department to consider the feasibility of establishing simpler, local arrangements for allocating and administering student grants and loans made to all Northern Ireland degree and sub degree level students. This would provide a fresh start, which would commence with the introduction of the other new student finance arrangements we are recommending. HIGHER AND FURTHER EDUCATION – EQUITY OF TREATMENT In the course of our enquiries, we learned of anomalies in costs, and financial support available to students, depending on whether they decided to pursue their studies through further or higher education routes. We discussed the question of equity of treatment between the higher and further education sectors. The Dearing Report rightly recommended equity of treatment, and the Committee believes it is hard to justify any inequity of treatment between students in the further and higher education sectors. Unfortunately, further education students have often hitherto been treated less favourably than those in higher education. Further education students (not studying higher education courses) are not eligible for student loans. Discretionary awards do not cover the full costs of fees, and although applications for discretionary awards continue to outstrip their availability, the total discretionary awards budget in Northern Ireland declined from £6m in 1997/98 to only £3.3m in 1999/2000. We were concerned that the Department should fully address the whole range of possible anomalies e.g. as regards payment of fees by full-time HND students in further education colleges, by part-time students, etc. We consider that a proper examination of the arrangements for all fees, and student support arrangements, for post 16 education, further and higher education courses is required, in order to secure the principles of equitable treatment, and of contribution by those who benefit. The Committee will take into account the implications for our ongoing enquiry into education and training for industry, and thereafter will return to consideration of these questions with the Department. We are also aware of the need to follow up on the question of support for postgraduate study. Recommendation The Minister’s decisions on the review of student finance should identify and address the existing disparities between funding arrangements for higher and further education. HIGHER AND FURTHER EDUCATION FUNDING ARRANGEMENTS We noted that the Dearing Report in 1997 suggested that higher and further education funding structures ‘should enable distinctive issues and problems within the tertiary sector in Northern Ireland to be addressed (and) should locate outside the Department of Education for Northern Ireland the responsibility for channelling public funds to the institutions, thereby paralleling the position in Great Britain’. We sought advice on how funding arrangements worked elsewhere in the United Kingdom and the Republic of Ireland. The three other British Councils (for Scotland, and for England and Wales) are non departmental public bodies, responsible to their elected parliament and/or executive, through their parent Department and Minister. They bid for, and are allocated funds, through their parent department. Their status gives them autonomy in operating on a day to day basis, within broad strategic and business plans agreed with the Minister. Members of the funding councils in Great Britain are appointed by Ministers on the basis of their personal contribution to the Councils’ work. They have collective responsibility for the affairs of their respective Councils, which include deciding funding criteria, and providing financial support for teaching, research and associated activities in higher education institutions; securing quality of provision, and advising Ministers on development and funding of the sector. In the Republic of Ireland, the Higher Education Authority has a role in overseeing university education and the activities of the colleges of technology. It has a statutory role in assisting the universities, in furthering the development of higher education, and in promoting equality of opportunity in higher education. We recognised the good work which had been done over a number of years by NIHEC, but we considered that it lacked both the freedom, and the accountability, of a more ‘arms length’ body. We concluded that there was a clear need for a body in Northern Ireland, with similar status to those bodies elsewhere in Great Britain, and in the Republic of Ireland, which would have a wide range of specific responsibilities in relation to development and funding of provision in further and higher educarion. Recommendation A single, independent and accountable, integrated higher and further education funding body, operating at arms length from government, should be established for Northern Ireland. With a similar status to similar bodies elsewhere in the United Kingdom (and in the Republic of Ireland), this body would decide on priorities for funding, and bid for additional funding from the Department, both current and capital, across the sectors. INCREASED ACCESS In 1997, the Dearing Report suggested an increase in HE places in Northern Ireland of 12,000. Research indicates that over a fifth of the age cohort of school leavers entering university each year, still leaves Northern Ireland unwillingly to study elsewhere. We are pleased to note that there has been a partial response to these pressures, and that an additional 4,200 additional full-time higher education places are planned for Northern Ireland over the period from 1999 to 2004. We concluded, for the reasons outlined below, that an additional 4,000 places was needed over the next 5 years. We noted that, in this regard, an equitable distribution of additional places across Northern Ireland is important. We debated the extent to which we could advise on distribution of additional places across higher and further education. We note that there is some recent labour market information which indicates that in Northern Ireland there is a high demand for graduates, and that employers do not seek to fill vacancies with those having HND qualifications. We regret these indications that employers do not recognise and value sub-degree qualifications which have been aimed at their specific skill requirements. (A main aim of such courses was to introduce a style of teaching and learning which prepared individuals for the needs of the labour market, without the necessity of a degree). The shortage of sub degree places in the United Kingdom as a whole has been well documented, although the demand for graduate recruits, from employers, belies this evidence. We agreed that the additional places should include both sub degree level and graduate places. Cross-border issues are also relevant in this context, since the Republic of Ireland has recently targeted considerable investment in higher education, towards skills areas such as technology and engineering which will contribute towards modernising the economy. We applaud the economic growth which the Republic of Ireland has achieved, and we recognise the potential for Northern Ireland similarly to move confidently into the forefront of the knowledge economy. However we firmly believe that, in order to do so, we must invest further in developing working partnerships between our business/industrial sectors, and our further and higher education sectors, as a means of supporting any programme for economic growth. (There are wider issues which we will pursue in our current enquiry into education and training for industry). We do not believe that this is possible without a significant increase in the number of further and higher education places, accompanied by an appropriate investment in skills and infrastructure which comprise that provision. We believe that the removal of fees will make Northern Ireland universities an increasingly attractive place to study, particularly in subjects where quality ratings are high. We are dismayed that there are no plans to remove the funding cap which constrains the number of full-time undergraduate places our local higher education institutions may provide. Finally, we believe that a strategic overview of the higher and further education, training and schools sectors is needed whereby Departments plan on an integrated basis, which is consistent with policies on social inclusion, and economic strategy. Planning should include equitable provision for the further education sector, and co-ordinated measures to promote participation in further and higher education by disadvantaged groups and individuals. Progress can only be made on these issues with a concerted effort to tackle early disadvantage, including early years provision, preparation for learning and pre-primary and primary levels, and quality of provision at primary and secondary levels. Our enquiry into education and training for industry is likely to touch on these interrelations further, and we look to the Programme for Government to support such a co-ordinated approach. Recommendations: Higher and further education are essential components of social inclusion and economic prosperity, and should have priority in this Executive’s Programme for Government and associated funding decisions. Funding should ensure equitable provision for the further education sector. Our call for additional full-time degree and sub degree places arises from the equity concerns implicit in only offering our proposed new system of student finance to NI students studying in NI. Our aim is to reduce the numbers of those who leave NI to study because they cannot gain a place in an appropriate course here. In the first instance, and on top of the additional 4,200 additional places already planned, funding should be provided for at least an additional 2,000 progressing to 4,000 higher education places. These places should be phased in as soon as possible, over the next 5 years, to be distributed at both sub degree and degree level courses, with a focus on skills to support the knowledge economy. The numbers of full-time undergraduate places which universities may offer is currently capped in Northern Ireland. This cap is currently set at a level which is too restrictive, and consideration should be given to lifting it. SUPPORTING INCREASED ACCESS Statutory non-repayable grants, which traditionally played a major part in the United Kingdom student finance system, were phased out in 1998, although various discretionary awards were maintained and others introduced. The recently announced changes in Scotland, England and Wales imply that such grants are returning, to an extent, in the other parts of the United Kingdom. Scotland will be providing income dependent "bursaries" (i.e. non-repayable grants) for students of £500 up to £2,000 where annual parental income is between £20,000 and £10,000, and childcare allowances are also part of the Scottish Executive proposals. In England and Wales there will be non-repayable grants of £1,000 (mainly for mature students), and means tested childcare grants for students who are parents. We recommend the introduction in Northern Ireland of new measures targeted at disadvantaged young people and full-time mature students, including a non-repayable grant, depending on need, of up to £2,000 from the NISEF, available at the start of the academic year. (We advise that, although Hardship Loans will still be the first port of call for younger students in financial difficulties - they could also apply to the non-repayable Northern Ireland Student Endowment Fund - mature students should not have to take out such a loan before receiving non-repayable NISEF assistance.) We also recommend the introduction of those measures which are proposed in England and Wales to help needy students, including means-tested assistance towards childcare; and an income-assessed grant to meet children’s school meal costs, which will help lone parents who lose income support when they enter higher education. In addition, income assessment should be eased substantially for mature students, as they have financial commitments which younger students do not. They should have £7500 of their income disregarded without losing their student support entitlement, instead of the current minimum of £820. |