Oral - Higher Education Student Finance

Last November, I made a statement to Plenary, announcing a formal consultation into proposals to remodel the student finance system. These proposals followed the recommendations of phase 1 of the higher education review, led by Professor Merfyn Jones, and were based on our 'One Wales’ commitments to provide extra assistance with student debt and to provide investment in the higher education sector. Today, I want to provide Members with an update on the results of consultation and indicate the way forward that the Welsh Assembly Government intends to pursue.

During the consultation period, a total of 28 responses were received. Respondents were in broad agreement with the fundamental principle of targeting support towards students from low-income households entering higher education. Student representatives were behind our efforts to target resources at those in most need of support. A series of key stakeholders also supported the proposition that a proportion of the resources released from remodelling our current system should be reinvested in the Welsh higher education sector.

We will phase out the tuition fee grant for new students from academic year 2010-11 and remodel the student finance system. We will redirect resources away from the tuition fee grant and allocate them as follows. A total of £44 million will be re-invested in the student finance system to enhance the Assembly learning grant. As a result, we will raise the level of a full Assembly learning grant from £2,906 in 2009-10 to £5,000 in 2010-11, which will have a particular impact on students from families with the lowest incomes. At the same time, and in order to ensure that no Welsh domiciled full-time undergraduate student is eligible for less grant support for living costs than they would be under the English 2009-10 student finance system, I will increase the household income threshold for partial Assembly learning grants by £10,000.

By the 2015-16 financial year, the new system will release £31 million each year to be newly directed to the higher education sector. That will include the provision of targeted bursaries and scholarships, a national bursary framework, and support for other Assembly Government priorities, such as the university of the Heads of the Valleys and the coleg ffederal. We will also redirect £2 million to postgraduate initial teacher training incentives.

I am also pleased to announce an innovative scheme under which £1 million will be set aside for a new graduate recruitment grant. That will encourage new graduates who have been supported by Student Finance Wales through their higher education to take up employment in Wales, in specified priority professions or occupations. By 2015-16, and underpinning this new system, there will be £63 million of additional support, ensuring that no Welsh full-time undergraduate student will need to pay any tuition fees up front.

In the consultation paper, I signalled clearly this administration’s intention to introduce a new, uniquely Welsh element into our system of student support. Together with the enhanced Assembly learning grant, the provision of an element of debt relief will help the least well-off students to overcome the pressures that they can experience in taking up study in higher education.

The outcome, which I can report today, has three different elements. The Assembly Government makes a commitment to write off up to £1,500 of student loan debt for continuing Welsh domiciled students who take out a maintenance loan in academic year 2010-11 from Student Finance Wales. Among these will be many who were unable to benefit from the tuition fee grant in previous years. For students entering study under the new system, and who take out a maintenance loan from Student Finance Wales from academic year 2010-11, we plan to write off up to £1,500 of student loan debt at the point at which any individual has to start making repayments. Our planning assumption in relation to this second aspect of debt relief is that it will be set at up to £1,500 for each Welsh student, irrespective of where he or she has studied in the UK.

I drew attention earlier to the third element in this package, namely a graduate recruitment scheme. As part of the package, the Assembly Government intends to look at options, within the powers of Welsh Ministers, to fund a scheme to encourage new graduates who have been supported by Student Finance Wales through their higher education, to take up employment in Wales in specified priority professions or occupations. Such a scheme would be developed in partnership with Welsh employers, the Wales employment and skills board, and the sector skills councils.

In all of this, let me be clear that eligibility for existing grants and loans will not change for any student currently entitled to the tuition fee grant for the duration of their present course of study. Neither will the remodelled system impact on entitlement for students entering higher education at Welsh higher education institutions in the academic year 2009-10. Change would be phased in, beginning from the start of the academic year 2010-11 for new students.

As to the position of Welsh higher education institutions, the remodelled scheme will provide substantial additional resources for Welsh higher education, amounting to over £31 million each year by 2015-16. At a time when overall investment in the public and private sector looks set to be under considerable restraint, this will be all the more important in addressing the challenges that Wales faces. As I have made clear throughout, however, these additional resources will be allocated in line with One Wales Government priorities. I will look to phase 2 of the review of higher education in Wales to help shape our thinking further on the types of investment which provide best value for Wales. I am grateful to Merfyn Jones and his team for their work to date and for their close support throughout this process.

I will also be mindful of the issues that impact on students. For example, I am concerned about the impact of hidden study costs, including for course materials, library services or photocopying and the position of part time students. It is important that there are no barriers to people reaching their full potential through higher education, regardless of financial circumstances.

Looking ahead, the immediate next steps will include a technical consultation period on the student finance regulations to give effect to the changes that I have announced today. The result of this will be a system which is made in Wales, equitable and sustainable, meets 'One Wales’ commitments, and is acceptable to students, the HE sector and the wider Welsh public.