HC Deb 26 June 2003 vol 407 cc1194-5
13. Mr. Simon Thomas (Ceredigion)

What estimate he has made of the average debt of students leaving higher education in (a) Wales and (b) England in the last three years. [121707]

The Minister for Lifelong Learning, Further and Higher Education (Alan Johnson)

My Department's last survey of student income and expenditure covered the academic year 1998–99. Results from the 2002–03 survey, including estimates of the debt of students in England and Wales who graduate in summer 2003, will be available later this year. According to the UNITE/MORI student living reports, the average debt anticipated by students at UK universities was £7,026 in 2000–01, £8,133 in 2001–02, and £8,816 in 2002–03. They did not give comparative figures for England and Wales, however.

Mr. Thomas

I thank the Minister for that useful reply. Has he had an opportunity to read the report published yesterday by the Institute for Fiscal Studies, which examined the White Paper's models on top-up fees and student debt? At a conservative estimate, graduates will be burdened with debt for 10 years as a result of the White Paper's proposals. What can the Minister say today about the rising debt burden on students, and about the indisputable fact that that will not help access to higher education for those from poorer backgrounds?

Alan Johnson

I have had a chance to read the headline figures: that same report said that the Conservatives' policy would be to take money from the poor and give it to the rich. Debt is a very important issue. On the White Paper's proposals, it has been said that we are adding another £9,000 to student debt by increasing the current level from£12,000—three student loans of £4,000—to £21,000. However, in terms of the poorest students—the main topic of the question—one must take account of the fact that we will be introducing a £1,000 non-repayable maintenance grant. So provided that a student takes that grant instead of £1,000 worth of loan, the overall figure will be reduced by £3,000. We will also be providing fee remission of up to £1,100 on the same basis as applies to tuition fees, so a further £3,300 can be deducted from the overall figure. So we are comparing £12,000 with £14,700. As to the time it takes to repay—

Mr. Speaker

Order. The Minister should write to the hon. Member.

Mrs. Anne Campbell (Cambridge)

Is it not true that the Government have introduced income-contingent loans rather than mortgage-style loans, which led to an enormous burden, particularly for women? The problem with mortgage-style loans was that, once someone had started to pay back the student loan, payments had to continue at the same rate no matter what the student's earnings, even if there were no earnings at all. Is not income-contingent repayment a much more sensible and fairer way of paying back?

Alan Johnson

I apologise for getting bogged down in figures earlier, Mr. Speaker.

My hon. Friend is absolutely right. We are suggesting a progressive policy. The old system, which still applies to some students paying back their debt, meant that once someone paid a penny over a certain threshold, the whole lot had to be paid back—divided by five or by seven. A woman on maternity leave, for example, would build up more debt. Our proposals are much fairer: unless someone reaches the threshold of £15,000, no money is paid back whatever. Dipping below it in the future will not mean building up debt, because no real rate of interest is attached. Our proposals are therefore much better. Chris Patten, the former chairman of the party, described Conservative proposals as "the worst sort—

Mr. Speaker

Order.

Mr. Henry Bellingham (North-West Norfolk)

The Minister has given two very long answers, and you have rightly called him to order, Mr. Speaker. However, I have a very simple question for him. Is there any evidence that students from poorer backgrounds are put off going to university because of the fear of building up debt?

Alan Johnson

There is obviously a question about debt, as the White Paper clearly states. It is, of course, an issue, but we also say that the main problem of getting youngsters into higher education revolves around the question of aspiration, attainment, application and then admission. [Interruption.] It is not just about whether there is debt or no debt. Debt existed under the previous Government's policies; there has always been student debt. The question is how best to deal with it and ensure that it is not too much of a burden on future aspirations.