§ Chris GraylingTo ask the Secretary of State for Education and Skills what calculations he made to reach the conclusion in the Regulatory Impact Assessment of the Higher Education Bill that the projected future cost of the student living cost loan subsidy will be 27 per cent. [152567]
§ Alan JohnsonThe Regulatory Impact Assessment states that the future cost of maintenance loans is estimated at 29 per cent. of the value of loans advanced, which comprises the cost of loan write-offs and the interest subsidy. It was estimated using a simulation model of the distribution of future maintenance loan debt, graduate earnings and student loan repayments.
§ Chris GraylingTo ask the Secretary of State for Education and Skills how much total additional money he estimates will have to be advanced each year to students as student loans in order to meet the Government's recently announced increase to maximum loan levels. [152782]
§ Alan JohnsonWe estimate that the additional amount of maintenance loan advanced as a result of the higher maximum loan rates will be around £160 million per annum in cash terms in 2006/07 terms.
As stated in the Regulatory Impact Assessment published on 8 January, the resource cost1 of raising the maximum rate of maintenance loan to match the basic living costs expenditure of the mid-range student is estimated at £65 million in 2006/07 terms. This is the resource cost to the Government of both the additional amount of maintenance loan advanced (given above) and the resulting impact on the repayments of fee loans.
£ Category of student Maximum loan in 2004/05 Maximum loan in 2006/07 (before increase) at 2.5 per cent. inflation per year New maximum loan for 2006/07 First and second year students Living away from home outside London (max.) 4,095 4,300 4,405 Living at home (max.) 3,240 3,405 3,415 Living away from home in London (max.) 5,050 5,305 6,170 Final year students Living away from home outside London (max.) 3,555 3,735 4,075 Living at home (max.) 2,830 2,975 3,085 Living away from home in London (max.) 4,380 4,600 5,620 The minimum means tested student loan for each category of student, as now, will be 75 per cent. of the maximum eg £3,305 for students living away from home outside London in 2006/07 instead of £3,070 in 2004/05. The loan reduces from £4,405 to £3,305 as parental or spouse income rises from about £33,500 to about £44,000. The minimum loan is available to every eligible student regardless of family income.
Where under our proposals low income students receive the maximum combined grant of £2,700, which is in addition to their continuing entitlement to loans, we 1398W 1 Estimates of the resource cost of the loans represent the real economic cost to the Government of providing the loans and take into account the forecast loan repayments, the foregone interest and any loan write-offs.
§ Chris GraylingTo ask the Secretary of State for Education and Skills whether students who receive payments as a grant rather than a fee remission will be entitled to receive the maximum student loan under the Government's proposals. [152783]
§ Alan JohnsonDetails of the proposed arrangements are set out in the Government's discussion paper "Moving toward a single combined grant for higher education". Copies of the paper were placed in the Library of the House on 19 January; it is also available on the Department for Education and Skills website.
§ Chris GraylingTo ask the Secretary of State for Education and Skills how much grant part-time students will be entitled to under the terms of the Higher Education Bill. [152785]
§ Alan JohnsonThe Higher Education Bill does not specify the levels of financial support available to part-time students. Levels are set out in the student support regulations which are made annually. In 2004–05 a new package of support is being introduced for part-time students. Students on low incomes will be able to get a grant of up to £575 for fees and a grant of up to £250 for course costs.
§ Chris GraylingTo ask the Secretary of State for Education and Skills what changes the Government are making to(a) the minimum student loan level and(b) the levels of loan available to students at intermediate levels of family income between the maximum and minimum loan levels. [152786]
§ Alan JohnsonThe proposed new means tested student loan figures are given below. The maximum student loan will be increased to meet the basic living costs expenditure of the mid-range student in the recent Student Income and Expenditure Survey.
currently expect them to have access to loans worth the maximum entitlement to loan as in the table less £850. Details of the proposed arrangements are set out in the Government's discussion paper "Moving toward a single combined grant for higher education".
§ Chris GraylingTo ask the Secretary of State for Education and Skills what estimate he has made of the change in the length of time that students will take to repay an average loan following the increase in the repayment threshold from £10,000 to £15,000. [152787]
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§ Alan JohnsonThe estimate of the length of time to repay is the average across all students who take out a loan. This is different from the length of time it will take for some notional average graduate to repay. The estimate is from a model which simulates student loan repayments, based on assumed distributions of: length of time in Higher Education; size of means-tested loan taken out; size of fee loan, net of any fee remission; and borrower lifetime earnings. Some borrowers will repay more quickly than this estimated average and some less so.
As part of a package of reforms announced with the introduction of the Higher Education Bill, any debt outstanding after 25 years would be written-off. The threshold would increase to £15,000 in April 2005 and be increased with inflation from April 2010 onwards. The average time to repay would be around 13 years. Under the same approach to uprating the threshold, the average time to repay would be around 11 years with a £10,000 threshold.
The answer above is based on modelling on the basis of a separate fee grant and HE grant. Once the grants are combined, as announced by the Secretary of State to the House on 27 January 2004, the balance between
Definition of basic living items Broad basic expenditure groups Detailed items Accommodation Rent/mortgage payments; council tax; utility bills. Household Food; non-alcoholic drink; household items; TV licence; land-line telephone bills; furniture; household appliances over £50; washing machine; fridge; contents insurance. Travel To university; to parental home; field trips Course costs Allowance of £260 per year (includes books; equipment; amenity fees; photocopying; stationery). Personal Clothes; footwear; glasses/contact lenses; medical treatment; personal items; entertainment spending allowance of £300 per year. We recognise that on top of basic living items most students will want to buy goods and services that other young people want. The SIES shows that they manage this through supplementing student loans (where taken out) with a mixture of parental support, paid work and additional borrowing.