Reluctant borrowers

FEMALE and Asian students are less likely to take out loans than white males, according to a report published today. Research by the Policy Studies Institute raises concerns about government plans for removing the student maintenance grant in favour of increased loans.

The report Student Loans: who borrows and why? says that under the current system, "some students - especially women - appear to be averse to the idea of debt and may be deterred from entering higher education for this reason".

It says the number of Asian students in the sample is small but that "the models also suggest that Asian students may be more averse to the idea of borrowing than other students".

There appears to be a group of students who disagree with the idea of debt "however economically rational it may be to borrow". The survey found nearly two-thirds of those who did not take out a loan were worried about the principle of borrowing.

The report was based on a survey conducted last year of 1,971 students in 72 institutions of higher education. It found three in five eligible students took out a student loan in 1995/96 and most borrowed the largest sum they could.

Three-quarters had taken out a loan because of financial need with those from the poorest households, particularly single parents, most likely to borrow.

Students with parents who had failed to pay the expected amount of maintenance - one in six of those surveyed and nearly one in four of first-years aged between 20 and 24 - also found the loan invaluable.

But a quarter of those who had taken out loans said they did not need the money at all. Some well-off students had used them to take advantage of the zero real interest rates to buy large consumer goods.