Student Loans (Hansard, 6 June 1989)

§ 3. Mr. Frank Field
To ask the Secretary of State for Education and Science if he will make a statement on the implementation of his White Paper on student loans.

§ 4. Mr. Harry Greenway
To ask the Secretary of State for Education and Science if he will make a statement on the progress of his plans for top-up loans for students.

§ The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Jackson)
We are continuing to hold constructive discussions with a range of financial institutions about their possible participation in the administration of top-up loans. My right hon. Friend will announce our conclusions in due course.

§ Mr. Field
As the Government have been collecting information in America, can the Minister tell the House the average size of debt of American students at the end of their courses and the dropout rate, and how both compare with the British scene?

§ Mr. Jackson
It is not possible to make a comparison with the British scene because we do not yet have student loans, but if the hon. Gentleman studies the White Paper he will find that the figures of comparative indebtedness at the end of the course of study for the different countries which have student loans—as just about every other country does—show that total borrowing by students when our system is fully operational will be considerably less then is already the case in many other countries.

§ Mr. Greenway
Is my hon. Friend aware that I welcome the fact that there are 266 more students in higher education than there were 10 years ago? [Interruption.] Does he agree that they are better provided for in terms of grants than any other students in the world? Will he take note of the advice of Polonius to his son: Neither a borrower, nor a lender be"? What would my hon. Friend's answer have been if Polonius had given him that advice.

§ Mr. Jackson
My hon. Friend, in his usual modest way, underestimates the Government's contribution to the expansion of higher education. The number of students has increased by 260,000 since we came to office. I will address the serious question put by my hon. Friend the 6 Member for Ealing, North (Mr. Greenway) about indebtedness in two ways— practically and philosophically. The practical answer is that credit is a fact of life. We know—there is evidence of this in the White Paper—that the use of credit spreads across all classes. We also have evidence from our survey of student income and expenditure of the substantial borrowing that students already incur. The philosophical answer is that is is important for everyone to regard higher education as a form of investment by society on behalf of the economy and of culture. That is the taxpayers' contribution. It is also investment by an individual in his own future. It affords substantial personal benefit, so there should be a reasonable personal contribution to its costs.

§ Mr. Simon Hughes
Does the Minister admit that he has already failed in the objective set out in the White Paper of finding a cost-effective scheme that the financial institutions will administer? On his own estimate of an initial cost of £120 million, and the scheme not being self-balancing until the end of the century, and given all the reports that the Government will have to find more than £500 million to subsidise the banks, is it not already clear that the loans scheme will cost the country and the Government a fortune?

§ Mr. Jackson
I admire the hon. Gentleman's keen speculative intelligence. I refer him to the words of the penultimate Liberal Prime Minister, "Wait and see.".

§ Mr. Haselhurst
Has my hon. Friend considered the particular problems of deaf students and the danger that they will get a lower standard of employment than they deserve and may therefore run into corresponding difficulties in paying off loans which might be higher as a result of their special needs?

§ Mr. Jackson
I should point out to my hon. Friend a feature of the loans scheme which has been much neglected by commentators upon it. The obligation to repay the loan will be related to income. That should be more than enough to take care of the problem to which my hon. Friend has referred.

§ Mr. Andrew Smith
Now that I have obtained and today placed in the House of Commons Library the responses that the Government refused to publish in relation to the loans White Paper, will the Minister come clean and admit what his written answer to me on 15 February kept hidden—that those responses are overwhelmingly in opposition to the Government's proposals? Bearing in mind the reports which the Minister has on his desk and which show that it would cost £530 million even to induce the banks to consider operating his scheme, will not even he now concede that these unworkable and profoundly damaging proposals should be dropped, or does he intend to go on being more economical with the truth than he proposes to be with taxpayers' money?

§ Mr. Jackson
I have here the Labour party's summary of the responses. One third of those responses agreed with the hon. Member for Durham, North (Mr. Radice) in supporting a graduate tax.