Augar’s plan to restore England’s maintenance grants is a mistake

There was good and bad in the Augar review of English post-18 education, published last week. The recommendation to restore maintenance grants, though, has been almost universally welcomed. Sorry to burst the bubble, but doing so would be deeply ill-judged: pointless, regressive and wasteful.

When the review was published, Theresa May confidentially declared: “Removing maintenance grants from the least well-off students has not worked.” Really? This academic year set yet another record for the number of school leavers from disadvantaged backgrounds attending university.

Admittedly, there has been a drop in the number of new nursing students since 2017, when NHS bursaries for their training and subsistence were scrapped, obliging them to take out tuition fee and maintenance loans instead. So, to be fair, the removal of maintenance grants for these specific students could be a partial cause of their decline.

The purpose of abolishing grants across the board in 2016 was to enable government to offer low-income students more money for maintenance while at university, since repayable loans are less costly overall to the Treasury. Giving people more cash at this time of their life, when they are often struggling for it, seems sensible.

The Augar review reverses this. It proposes a marginal reduction in the maximum amount of maintenance support available from government to low-income students to enable a decrease in the student loan repayments of affluent, middle-aged graduates. As the Institute for Fiscal Studies has said: “Reintroducing maintenance grants serves to reduce only the repayments of the highest-earning graduates.”

This is because there is presently a 30-year time limit on the repayment period for student loans, with the amount borrowed to pay for tuition fees repaid first before the amount for maintenance, which means that an estimated 60 per cent of the lowest-earning recipients of maintenance loans never pay for any of it anyway.  

In reality, most current recipients do not pay for their maintenance support in the long run. All that the Augar review would do is make maintenance support costless for who go on to be affluent, too, with the biggest discounts going to those with the very highest earnings. Scratch the surface and you see that restoring maintenance grants is, in effect, a tax cut for the well-off.

There is another way that the return of maintenance grants leads to taxpayers’ money being directed to people who don’t really need it. Eligibility for maintenance support is calculated based on the household income of the parent a student lives with. So a student could apply for maximum maintenance support by declaring that they live with their low-income parent who is divorced, even though their other parent is not at all poor. Indeed, when maintenance grants were still offered earlier this decade, a startling quarter of all undergraduate students received maintenance grants despite a much lower proportion of the cohorts coming from genuinely poor backgrounds.

Frankly, it is odd to prioritise additional money from taxpayers – most of whom did not go to university, and many of whom have seen the value of their state benefits reduced in recent years – on further subsidising university students.

Since the average timetabled contact time for undergraduates was, in 2018, just under 14 hours a week, most students should be able to get a job if they need extra cash. If they cannot, then universities – which have done pretty well, financially, over this decade – will have the resources to grant hardship funds to those struggling to afford to live.

Restoring maintenance grants will not cost government the earth, since the majority of current maintenance loans are not repaid anyway. But the cost is still significant. The next prime minister should use that money to help fund measures that will genuinely improve access to further and higher education.

The amount available from the student loan system could be expanded – as could the eligibility criteria. Apprentices should be able to access maintenance loans given that the lower minimum wage to which they are entitled is likely to restrict where they can live and train.

The Augar review’s welcome proposal for a lifelong learning loan allowance will allow further and higher education students to access tuition fee loans for many more courses that they may wish to take throughout their lives, including dropping the restrictions on eligibility for those taking equivalent or lower qualifications. But it will only amount to the equivalent of the maximum cost of a four-year degree. A much more generous allowance is needed to enable the normalisation of lifelong learning.

Ryan Shorthouse is founder and chief executive of Bright Blue, a liberal conservative thinktank.