‘Don’t copy Welsh funding regime without considering trade-offs’

It has been billed as “the most generous student maintenance package in the UK”, but a new analysis highlights that Wales’ new funding regime may not be quite as rosy as at first glance.

A report by the Higher Education Policy Institute, published on 30 August, highlights that the reforms being introduced for new entrants in 2018-19 mean that poorer Welsh students will get less maintenance support up front and will leave university with more debt than in previous years.

Hepi director Nick Hillman told Times Higher Education that, while there were “some real advantages to the new Welsh regime” – the result of a review of higher education funding led by Sir Ian Diamond, former principal of the University of Aberdeen – there were also some significant trade-offs that “people need to know about”. These issues were of wider significance, he said, because a number of higher education leaders – including Dame Janet Beer, the president of Universities UK – have proffered the Welsh system as a model to be considered by England’s review of post-18 funding.

Under the new system, the poorest Welsh students – those whose parents earn under £18,370 a year – are entitled to a £8,100 maintenance grant and £900 maintenance loan. The balance between these two payments operates on a sliding scale all the way up to students whose parents earn over £60,000, who receive a £1,000 grant and £8,000 loan. Every student will receive a tuition fee loan of about £9,000.

Previously, all Welsh students were entitled to a tuition fee loan of about £4,000 and a tuition fee grant of about £5,000. The poorest students were then entitled to a £5,200 maintenance grant and a £4,300 maintenance loan, whereas the richest students were received no grant but could take out a loan of either £5,200 or £6,900, depending on whether their parents earned more than £60,000.

The Hepi paper highlights that under the new system the poorest students will now leave university with debts of about £30,000, rather than the previous £25,000. They will also have £500 less cash in hand to support their living costs each year.

The richest students will now graduate with debts of about £51,000 rather than £33,000 or £28,000 – potentially a rise in excess of 80 per cent. Nevertheless, such arrangements remain less regressive than the English system, where the poorest students graduate with the largest debts.

Mr Hillman said that the Welsh package was “well designed”.

“It crafts a careful balance between resources for teaching, cash in hand for students and support for different types of students. It deserves close investigation by all, including in England by the current post-18 education and funding review,” he said.

“But it also shows the trade-offs that have to be considered when putting affordable student finance rules in place. Few people seem to recognise that living cost support is being reduced for the poorest Welsh students or that student debt levels are rising by up to 85 per cent.”

A Welsh government spokeswoman said that “care is always taken to ensure that eligibility for student support packages is as fair as possible”.

The system was “designed to ensure that all eligible students are able to access a minimum level of support, regardless of household income”, she added, highlighting that repayment of loans “continues to be based on income after graduation, not what you borrow”.

anna.mckie@timeshighereducation.com